Africa’s Hydrogen Push Stalls Without Offtake, Pipelines, EIC Says
Africa’s green hydrogen ambitions are slowing as projects struggle with missing offtake deals, limited pipeline infrastructure, and an immature supply chain, according to a new Energy Industries Council report.
(P&GJ) — Africa’s ambition to become a major exporter of green hydrogen is running into structural barriers, including a lack of firm offtake agreements, limited pipeline infrastructure, and an underdeveloped local supply chain, according to a new report from the Energy Industries Council (EIC).
The Africa Hydrogen Report identifies 78 proposed green hydrogen projects across the continent, led by Egypt, Morocco, and South Africa. While national strategies and government-backed agreements have fueled project announcements, most developments remain far from final investment decision (FID).
Only two small-scale green hydrogen projects are currently operating in Africa, both located in Namibia, with a combined capacity of 17 megawatts, the report found.
Planned capacity, however, is substantial. Africa’s proposed electrolyzer capacity totals roughly 38 gigawatts, backed by an estimated $194 billion in planned investment. By comparison, Europe has more capacity planned but lower overall capital costs, at about $166 billion. The higher African figure reflects the need for extensive supporting infrastructure, including pipelines, power generation, and desalination facilities to secure water supply.
Project development is also heavily concentrated. Egypt, Morocco, and South Africa account for about 80% of Africa’s proposed hydrogen capital spending, with Egypt alone representing nearly $88.5 billion of planned investment, supported by its national low-carbon hydrogen strategy.
According to the report, North African projects are largely aimed at supplying European markets, with Germany identified as a key destination, while sub-Saharan projects are more focused on ammonia production for export to Asian buyers such as Japan and South Korea.
A central obstacle remains the absence of binding offtake agreements.
“Offtake agreements are a critical factor in transitioning projects from pre-FID to construction,” the report’s authors wrote. “Without revenue certainty, even well-located projects face delays to say the least.”
The report also warns that Africa’s hydrogen strategy has leaned too heavily toward large, multi-gigawatt developments that lack secured buyers and essential infrastructure. It recommends prioritizing smaller, phased projects that can move more quickly toward execution.
Supply chain limitations pose another challenge. The report notes that no electrolyzer manufacturers currently operate in Africa, leaving early projects dependent on imported equipment. Egypt stands out as an exception, having introduced a 20% local content requirement tied to incentives and restrictions on foreign labor participation.
Rebecca Groundwater, EIC’s global head of external affairs, said clearer policy direction is needed to move projects toward FID.
“Governments need to stick to the basics investors need,” she said. “Set clear rules, keep policy stable, speed up permits, and get the basics in place on grid and water. Use finance tools that share risk and bring in development lenders where needed while costs are still high. And match project timing to what export buyers can take. Without that, a lot of this won’t go beyond concept.”