South Africa, Kenya and Ghana have been identified as sub-Saharan Africa’s (SSA) top-three-ranked green hydrogen markets, according to Fitch Solutions.

Based on Fitch’s green hydrogen index, South Africa ranks 1st with an index score of 55.08/100, a position it has held for the past few years, while Kenya ranks second (43.32) and Ghana 3rd (41.33) on the continent.

However, on the global scale, these top countries perform rather unsatisfactorily, as the only country to be among the first 50 countries, ranking 42^nd globally, with Kenya and Ghana ranking 65^th and 69^th respectively. The average score for the region is 32.1 compared to the global average of 46.6.

“South Africa is still the region’s top-ranked market given that it is the most industrialised economy in SSA and has the largest installed base of non-hydroelectric renewables capacity in the region.”
Fitch Solutions

Meanwhile, most markets in the SSA region perform poorly on the ‘Green Hydrogen Suitability Index’, although several countries on the continent have potential for green hydrogen production.

Structural, Political Risks Reason for Poor SSA Performance

According to Fitch, structural economic and political risks, as well as limited power capacity across most markets in SSA results in the region performing poorly in this regard.

Accounting for expected non-hydropower renewable projects that countries on the continent are likely to invest in, Kenya and Namibia are the only two markets with intentions to increase their shares in non-hydropower renewables. Their shares are expected to make up an average of more than 10% of total electricity generation between 2022 and 2030.

Furthermore, the region’s highest ranking market, South Africa, will only see renewables represent 10% of total electricity output by 2030, Fitch said, adding that this marks the reason for “the limited scope for green hydrogen production in the SSA region”.

“However, we do highlight a few key markets in the region that will have potential for hydrogen development going forward. Particularly in countries where the government will aim towards economic diversification by producing and exporting green hydrogen.”
Fitch Solutions

Globally, it is expected that there will be an increase in both the demand and supply of green hydrogen over the decade despite the majority of the gas currently being supplied by fossil fuels.

“While other regions are taking a leading role in the technologies development thanks to… the advanced transition of their power sectors to renewable energy and high levels of manufacturing capability, hydrogen production capacity will remain limited in the SSA region”.
Fitch Solutions

Peering into the future, some countries are likely to lose their rankings in the coming years while others perform better. For instance, Tanzania and Botswana hold potential to improve in their rankings, considering Fitch’s 2030 forecast.

Kenya and Ghana, on the other hand may lose their current spot in the next decade, as countries like Angola and Nigeria exhibit potential to take their place. Nigeria provides a slightly higher amount of future demand potential compared to Ghana and Kenya.

Given that Nigeria boasts of the largest gas-fired power capacity in SSA, this indicates further demand potential where hydrogen could be mixed with natural gas to reduce emissions from the market’s power sector, Fitch said.

Indeed, Nigeria recently signed an agreement with the German government for a roadmap of green hydrogen alongside other countries in ECOWAS. However, Fitch remains bearish given high risks in the sub-region as well as the lack of established non-hydroelectric renewables capacity in the country.