A recent study has revealed that producing green hydrogen in Africa for export to Europe will be significantly more costly than previously thought.
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A recent study led by the Technical University of Munich (TUM) has revealed that producing green hydrogen in Africa for export to Europe will be significantly more costly than previously thought, with only a small percentage of potential production locations proving to be economically competitive.
The research highlights that, to make such production feasible, price and offtake guarantees from European governments will be essential.
The study, which involved TUM, the University of Oxford, and ETH Zurich, analyzed over 10,000 locations across Africa to assess the viability of green hydrogen exports.
It was found that only 2% of these locations would be competitive under current conditions.
This includes countries such as Algeria, Kenya, Mauritania, Morocco, Namibia, and Sudan.
The study’s findings suggest that even under the most favorable conditions, such as lower interest rates and government guarantees, green hydrogen produced in Africa would still cost around €3/kg, which is higher than previous estimates.
Florian Egli, Professor for Public Policy for the Green Transition at TUM, explains, “Our new financing model, which considers local conditions such as political stability, transportation infrastructure, and storage options, shows that previous cost models have been too optimistic.
"The risks involved in producing green hydrogen in African countries are higher than previously assumed, leading to much higher financing costs.â€
The study, which analyzed different financing scenarios, found that operators would face interest rates as high as 27% depending on the location, with financing costs significantly impacting the price of green hydrogen.
If European governments were to provide guarantees and lower interest rates, production costs could drop to around €3/kg, but even then, Africa would face stiff competition from other regions.
Stephanie Hirmer, Professor of Climate-Compatible Growth at the University of Oxford, adds, “This new data shows that producing green hydrogen in Africa for export to Europe is much more expensive than initially believed.
"The socio-political risks, which have often been overlooked, play a major role in driving up the costs.â€
The research team concluded that to make green hydrogen production from Africa competitive for export to Europe, European governments must offer price guarantees for fixed quantities of hydrogen, backed by loan default guarantees from institutions like the World Bank.
Without such policy interventions, the dream of a viable green hydrogen trade between Africa and Europe may not be realized.
The study also highlights the need for long-term, stable agreements to ensure that African countries benefit from these projects, creating economic value locally and promoting fairness.
“It’s not just about the costs; it’s also about ensuring that these projects provide meaningful benefits to local populations,†says Hirmer.
The full study, titled Mapping the Cost Competitiveness of African Green Hydrogen Imports to Europe, is published in Nature Energy (2025). ■