Hydrogen imports from Africa could be much more expensive than assumed – study

Importing shipped green hydrogen from Africa could be more expensive for Germany than previously thought, according to a joint study by TU Munich, Oxford University and ETH Zurich. The researchers found that previous models often used a flat rate for investment costs which failed to account for socio-political risks in source countries. Correcting this, the study found that, at current interest rates, imports from Africa are only economically viable if purchase and price guarantees are in place for hydrogen providers. "Only two percent of the 10,000 locations studied were found to be competitive for exports to Europe," said TU Munich.

Analysing the cost calculations of existing green hydrogen trial projects where shipping of converted ammonia would be the main method of transporting the fuel, the researchers found that they were riddled with imprecision. "The conditions for investments are very different in each country, and in many African countries they carry a lot of risk," said researcher Florian Egli. After factoring in technical aspects such as transport and stockpiling, as well as legal security and political stability in 31 countries, the study found that, depending on the scenario, interest rates for projects varied between eight and 27 percent. Earlier models had assumed a range of four to eight percent.

Currently, this would mean that the lowest import price for one kilogram of hydrogen is five euros. However, with purchase and price guarantees provided by European states, costs could drop to three euros per kilogram. This made it difficult to achieve a cost advantage for production in Europe by 2030, according to the study. Political instruments would therefore be needed to launch a supply chain and make these locations competitive, allowing prices to drop further in the future, said researcher Egli.

Green hydrogen produced using renewable energy sources is considered essential for German and European energy transition plans, particularly in the steel industry. However, it is unlikely that Europe will be able to cover its own demand domestically. National strategies, such as Germany's, therefore rely on importing large quantities of hydrogen from countries with low production costs. Thanks to their ample potential for producing renewable energy from solar power, wind turbines and other technologies, African countries have been identified as potential partners in hydrogen trading, for which also pipeline-based transport could be an option.