Green hydrogen in Southern Africa: A reality check as conference season returns

A necessary dose of realism

The honest starting point is that green hydrogen in Africa remains overwhelmingly a story of announcements rather than delivery. The International Energy Agency’s (IEA) Global Hydrogen Review 2026 records that of the 31 low-emissions hydrogen projects announced across Africa for 2030, representing some 17 gigawatts of electrolyser capacity, only one has reached final investment decision (FID). A separate tracking exercise by the Energy Industries Council found that of 78 announced green hydrogen projects across the continent, with combined investment needs of around USD 194 billion, only two small-scale projects are currently operating, both in Namibia, with a combined capacity of just 17 MW against an announced pipeline of 38 GW.

This is not unique to Africa. Globally, developers have cancelled or paused a string of flagship projects over the past two years, including a USD 4 billion project in Texas, funding cuts to major US hydrogen hubs, and cancellations in Australia and Europe. Closer to home, a major European utility withdrew in September 2025 from a non-binding offtake arrangement with Namibia’s flagship green hydrogen project, citing slower than expected growth in European demand for hydrogen derivatives, and an Australian developer paused its own USD 40 billion green ammonia project in Mauritania in June 2025 for want of committed buyers.

The pattern across these setbacks is consistent: it is not the resource endowment that is missing, but bankable, long-term offtake. The IEA’s analysis is blunt on this point: without firm offtake agreements, projects do not reach FID, and without FID, the sector cannot scale. The cost of capital compounds the problem. The IEA’s regional data shows financing costs of 6.6 to 8.3% in Namibia, Morocco and South Africa, against 2.3% in Germany and 3.6% in China, with each percentage point of additional cost of capital adding roughly USD 0.20 per kilogram to the levelised cost of hydrogen production.

The Middle East factor

The conflict in the Middle East has added an unexpected dimension to the hydrogen conversation. The IEA’s Global Hydrogen Review 2026 found that the conflict disrupted global production and trade in hydrogen-based products, particularly fertilisers, with urea prices roughly doubling between January and May 2026, and the heaviest impact falling on import-dependent economies in Africa and Asia. Morocco imports the whole of its ammonia requirement, while South Africa, alongside Brazil, Australia and Thailand, imports all of its urea, with 40 to 85% of that supply historically sourced from the Middle East.

The IEA’s own conclusion is carefully calibrated: renewable hydrogen cannot provide an immediate response to the current crisis, but it can become an important element of strategies to improve long-term energy and food security. That is a materially different pitch from the decarbonisation-led case that dominated hydrogen strategy documents in 2021 and 2022. For South Africa and Namibia, both exposed to imported fertiliser and energy price shocks, it reframes domestic green ammonia production as a question of strategic resilience and food security, not only export revenue and climate commitments. It is a more modest but arguably more durable case for the sector’s relevance.

Where the flagship projects actually stand

Namibia’s flagship green hydrogen project, and the region’s most advanced, remains the furthest along, but has not reached FID. It targets roughly USD 10 billion of investment across phases, with phase one intended to produce one million tonnes of green ammonia annually by 2028, scaling to two million tonnes by 2030, and financial close was most recently targeted for 2027. In December 2025 the project secured a USD 10 million pre-investment loan from the African Development Bank’s Sustainable Energy Fund for Africa, a sum that illustrates the scale mismatch between available de-risking instruments and the capital ultimately required. Namibia’s own regulatory picture has not yet caught up with its ambition: the Synthetic Fuels Act remains in draft, and in the interim the flagship project continues to operate on the basis of non-binding memorandums of understanding (MoUs) rather than a comprehensive statutory framework.

South Africa’s most advanced project, a large green ammonia development near Nelson Mandela Bay, tells a similar story, though with a more encouraging recent turn. The USD 5,8 billion project plans a 1.2 GW electrolyser powered by 3.6 GW of renewable capacity, targeting around one million tonnes of green ammonia annually for export, with front-end engineering and design targeted for the third quarter of 2026, FID expected only by the third quarter of 2027, and commercial operations projected for late 2029 or 2030. It holds Strategic Integrated Project status and backing from the SA-H2 Fund, and is described by industry trackers as the most advanced project in Africa’s entire hydrogen pipeline.

Trade press reporting in early September 2026 indicates the project is progressing well, with an electrolyser and ammonia loop solution already selected and further major announcements expected from the developer at the Cape Town summit; even so, it has not yet reached FID.

Elsewhere in the region, Mauritania’s experience is a caution against scale for its own sake. A USD 40 billion, 30 GW green hydrogen initiative that would have been one of the largest in the world was suspended in June 2025 after its developer concluded that no buyer was willing to pay a price that made the project viable, with the country’s two largest land-concession agreements, together accounting for 20 of 23 million tonnes of announced ammonia capacity, also put on hold.

Regional hubs and the export logic

The regional hub concept, producing green hydrogen and converting it to ammonia or methanol for export by sea, remains the organising logic behind both Namibia’s Southern Corridor Development Initiative around Lüderitz and South Africa’s Boegoebaai and Coega nodes. Analysts tracking the sector note that South Africa, Namibia and Mauritania are the region’s most advanced markets, with Egypt, Morocco and South Africa together accounting for roughly 80% of Africa’s USD 194 billion announced pipeline, reflecting export strategies aimed principally at European, and in South Africa’s case also Asian, offtake markets.

That export orientation is itself now under scrutiny. More than 80% of Africa’s announced low-emissions ammonia capacity targets export to Europe and Asia, yet Africa’s own nitrogen fertiliser use sits at a fraction of the global average despite the continent holding a fifth of the world’s cropland, a mismatch the African Union’s 2024 Fertiliser and Soil Health Action Plan seeks to address by tripling domestic fertiliser use by 2034. The realism the sector needs is not only about timelines; it is also about whether regional hubs should be calibrated first to domestic and regional demand, including discussions around cross-border ammonia supply between Namibia and South African industrial users, before being sized for export markets that have themselves been slower to commit than developers assumed in 2022.

What this means for the region

None of this means the opportunity has disappeared. It means the sector has moved from a phase defined by ambition and announcement to one that will be defined by bankability: firm offtake, credible de-risking instruments and regulatory frameworks robust enough to satisfy long-term lenders. There are signs that governments are responding. In South Africa, a presidency-level study has recently been commissioned to identify budget-neutral fiscal instruments that can support green hydrogen investments and accelerate final investment decisions, with findings intended to inform Cabinet-level decisions within the 2027/28 budget cycle.

The study’s own framing is instructive: it acknowledges that the Green Hydrogen Commercialisation Strategy remains an unfunded government priority, that key assumptions underpinning it require empirical validation, and that South Africa’s constrained fiscal position makes new public funding allocations for the sector unlikely. The focus is accordingly on leveraging existing programmes, regulatory reforms and revenue-neutral tax or fee adjustments rather than fresh appropriations. For South Africa and Namibia specifically, three points stand out as this year’s conference season gets under way.

• Regulatory certainty remains unfinished business. Namibia’s Synthetic Fuels Act is still in draft, leaving its flagship project to rely on MoUs rather than a binding statutory framework, while South Africa’s hydrogen regime continues to be assembled from a patchwork of energy, environmental, safety and planning laws rather than dedicated hydrogen legislation.
• Offtake, not resource, is the binding constraint. The region’s wind and solar endowment was never in question; what is now evident is that FID will follow committed, creditworthy buyers rather than the other way around, and that smaller, phased projects may reach that milestone faster than gigawatt-scale flagships.
• The strategic case is broadening. The Middle East conflict’s disruption of global fertiliser and ammonia trade has added energy and food security to the original decarbonisation and export rationale, a shift worth reflecting in how projects are structured, financed and pitched to government and development finance institutions alike.

CDH will be following the discussions at each of this month’s hydrogen gatherings and will issue further updates on regulatory developments in South Africa and Namibia, including progress on Namibia’s Synthetic Fuels Act, as they occur.