The Untapped Potential of Africa's Renewable Resources
Africa boasts an impressive array of renewable energy resources capable of generating a staggering 1000 terawatts. This extraordinary capacity could potentially yield over 45 billion tons of green hydrogen annually. However, the current output of low-emission hydrogen on the continent is merely around 6,000 tons, which starkly contrasts with the vast resources available. Morocco stands out as a frontrunner in green hydrogen production, with costs projected at just $3.2 per kilogram. In comparison, most production opportunities in Algeria fall within the range of $4.5 per kilogram, illustrating significant variations in production costs across different African nations, despite the continent's vast renewable energy potential.
According to a recent report reviewed by the Energy Research Unit based in Washington, Morocco and Algeria are poised to become the most cost-effective among eight African nations projected to produce green hydrogen by 2030. The continent is rich in solar and wind energy resources, with capacities that theoretically surpass 1000 terawatts, enough to produce over 45 billion tons of green hydrogen each year, based on estimates from the International Energy Agency (IEA). Notably, approximately 60% of this potential is concentrated in countries that are already active in the green hydrogen sector through various policies and projects, including Algeria, which alone possesses 14% of the regional capacity.
Challenges Facing Renewable Energy Resources in Africa
All African nations are endowed with significant renewable capabilities, particularly in solar and wind energy, far exceeding their local electricity needs and green hydrogen production. The best solar resources are located in the southern part of the continent (Namibia and South Africa) and the northern regions (Algeria, Egypt, and Libya), while optimal wind energy resources are found in the Sahara Desert and the Horn of Africa. Furthermore, South Africa holds 89% of the world's reserves of the six well-known platinum group metals, already being the second-largest global producer of these metals. The IEA indicates that these reserves could be leveraged to establish a substantial global supply chain for manufacturing proton exchange membrane electrolyzers, which require platinum group metals for production.
Despite having such abundant resources, the high cost of capital remains a significant barrier to their economic exploitation, thus diminishing the attractiveness of foreign investment in Africa's renewable energy sector. For example, the weighted average cost of capital in Tunisia and Ghana hovers around 16%, whereas countries like Namibia, Morocco, and South Africa enjoy lower rates, ranging from 6.6% to 8.3%. However, these figures remain considerably higher than those in advanced economies and some developing nations, where the average cost of capital in Germany is 2.3% and 3.6% in China. The weighted average cost of capital (WACC) reflects the cost of funds that companies borrow or raise to finance their projects, varying from country to country based on interest rates, investment environment, returns, taxes, and more, as noted by the Energy Research Unit.
Most of the high costs associated with green hydrogen production in Africa can be attributed to this elevated weighted average cost of capital rather than capital expenditures or production capacity factors. Based on these estimates, Morocco could produce green hydrogen at a cost starting from $3.2 per kilogram by 2030, potentially making it the cheapest among the eight African countries expected to produce green hydrogen by then, which include South Africa, Mauritania, Kenya, Angola, Namibia, Tunisia, and Algeria. The IEA estimates that Morocco could account for 12% of the total 120 million tons of green hydrogen that can be produced on the continent at a cost of less than $4.5 per kilogram.
Additionally, 80% of Algeria's green hydrogen production opportunities fall below this cost threshold, positioning it as potentially the second cheapest African nation for green hydrogen production by 2030. In contrast, countries like Kenya and Mauritania currently executing green hydrogen projects face estimated production costs starting at $4.2 and $5.1 per kilogram, respectively. Meanwhile, Angola and Namibia are likely to see costs beginning at $6.5 per kilogram, with Tunisia's costs slightly higher. Even though Morocco and Kenya are ranked among the leading countries for low-cost green hydrogen production, their projected cost curves may rise by 40% and 70%, respectively, once they utilize 20% of their available capacities. This increase is primarily because initial projects will commence at the best sites near existing water and energy infrastructure, making costs seem lower, a benefit that may gradually diminish as the focus shifts to more remote areas for further project development.
Ultimately, while analyzing the potential costs of green hydrogen production across Africa, it is essential to acknowledge that current production remains limited to just 6,000 tons of low-emission hydrogen annually, according to IEA data for 2025. Although most of this output is green or produced through electrolysis, it is concentrated in three primary countries—South Africa, Egypt, and Namibia—highlighting the disparity between the continent's vast potential and its actual production capabilities.
As reported by attaqa.net.
