Africa’s drive to become a major exporter of green hydrogen is losing momentum as projects struggle to secure buyers, build supporting infrastructure and develop local supply chains, according to a new report by the Energy Industries Council (EIC).

EIC Insight’s 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 fuelled a wave of announcements, most projects remain far from reaching final investment decision (FID).

Only two small-scale projects are currently operational in Africa, both in Namibia, with a combined capacity of just 17MW, the report found.

Planned capacity, however, is substantial. Africa’s proposed electrolyser capacity totals around 38GW, backed by an estimated $194bn in planned investment. By comparison, Europe has more capacity in the pipeline but lower overall capital costs of about $166bn.

The higher African figure reflects the need for extensive supporting infrastructure, including pipelines, renewable power generation and desalination plants to secure water supply.

Project development is also highly concentrated. Egypt, Morocco and South Africa account for roughly80% of Africa’s proposed hydrogen capital spending, with Egypt alone representing almost $88.5bn of planned investment, underpinned 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 exports to Asia, particularly Japan and South Korea.

A major stumbling block remains the lack 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 EIC warned that Africa’s hydrogen push has leaned too heavily toward large, multi-gigawatt developments that lack secured buyers and essential infrastructure.

“Smaller, phased projects that can move more quickly toward execution should be prioritised,” the report said.

Supply chain constraints pose another challenge. The report noted that no electrolyser manufacturers currently operate in Africa, leaving early projects dependent on imported equipment.

Egypt stands out as a partial exception, having introduced a 20% local content requirement tied to investment incentives and restrictions on foreign labour participation.

Rebecca Groundwater, EIC’s global head of external affairs, said clearer and more consistent policy frameworks are needed to move projects forward.

“Governments need to stick to the basics investors need. Set clear rules, keep policy stable, speed up permits, and get the basics in place on grid and water,” she said.

 “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.”

Despite the headwinds, the report said Africa’s long-term potential remains strong due to its abundant renewable resources and proximity to major export markets, but warned that execution risk is now the central challenge as the sector moves from ambition to delivery.

EIC is the world's largest, energy-agnostic trade association, supporting companies that supply goods and services to the world’s energy industries.