Norad has provided NOK 85 million in funding to the Norwegian company Scatec to develop green hydrogen projects in Africa. This is the first time that Norad has supported green hydrogen projects. Norad’s Director General believes green hydrogen can be a game changer.
“There is huge potential in the production of green hydrogen in Africa. The continent has access to large amounts of renewable and inexpensive energy, and the interest in green hydrogen has grown enormously over a short period of time. We believe this is the right time to support these projects,” Says Norad Director General Bård Vegar Solhjell.
Green hydrogen is produced via electrolysis whereby the power is derived from renewable sources of energy such as wind and solar power and is particularly suitable for reducing CO2 emissions in both industry and the transport sector.
“Green hydrogen might represent a shift of paradigm. If we succeed in increasing investments in green hydrogen, it could be a turning point in our efforts to achieve global climate goals. It will also make a significant contribution to increased food security in Africa,” Solhjell believes.
Green hydrogen can be converted into ammonia, which can be used to make fertilizer. There is a huge shortage of fertilizer in African markets, and increased access could strengthen food security on a continent that is already impacted by the climate crisis, drought, and increased food prices.
Support for hydrogen projects in Egypt, Tunisia, Morocco, and South Africa
Scatec has been granted funding totaling NOK 85 million for the development of hydrogen projects in Egypt, Tunisia, Morocco, and South Africa. The hydrogen will be used to produce green ammonia.
Part of the support is for the risk premium in funding Scatec’s planned hydrogen plant in Egypt. Scatec has entered into an agreement with Fertiglobe and Egypt’s Sovereign Fund to develop and build a green hydrogen plant to produce green hydrogen gas to be sold to manufacturers of ammonia.
“We are proud that Norad’s first funding for large-scale green hydrogen production has been awarded to Scatec. We have no time to lose.” Scatec has three specific projects under development, as well as extensive plans for more projects in the future. Green hydrogen and green ammonia production are now in the start-up phase, but will make an extremely important contribution to energy security and the zero-growth target,” says Scatec CEO, Terje Pilskog.
The project in Egypt is large and innovative. The support from Norad will help to reduce the risk, thereby attracting private capital that will ensure project implementation.
“When we choose to support Scatec’s commitment to green hydrogen in Africa, it is because this can trigger significant private investments in green hydrogen and contribute to the green transition in the industry during a phase that still involves risk for project developers,” says Solhjell.
A recent report from the International Energy Agency (IEA) on the energy outlook in Africa shows that private investments in renewable energy must double annually if are to achieve UN SDG 7: Ensure access to affordable, reliable, sustainable, and modern energy for all by 2030.
The war in Ukraine increases the demand
The war in Ukraine has led to a global energy crisis. Green hydrogen can replace gas from Russia, and there is increasing demand in both the OECD and middle-income countries for green hydrogen.
“Norway is in a very good position to support the development of the hydrogen sector in our partner countries in the south, both through knowledge exchange and through various forms of financial support and risk mitigation,” says Solhjell.