Four pathways to final investment decision: A data-driven perspective on clean hydrogen in Africa

Clean hydrogen is poised to become a critical pillar of the global energy transition, yet actual investment and project deployment remain highly uneven across regions. While more than 2,600 clean hydrogen projects are currently tracked worldwide according to the International Energy Agency (IEA), only a small share has progressed to final investment decision (FID) or operation, and these are overwhelmingly concentrated in the Global North and China. In Africa, only eight of 122 projects have reached FID, underscoring a substantial maturity gap.This report explains these differences through a data-driven analysis of global project success factors. Using the IEA hydrogen project database enriched with AI-assisted research, the study identifies four distinct success pathways: export-oriented large-scale projects; vertically integrated sponsor–offtaker models; mid-scale projects situated in favorable economic environments; and small-scale, domestically oriented projects driven by industrial growth and climate-related opportunity. Africa’s announced projects show a heavy bias toward large, export-oriented models, with 89% of projects in North Africa and 76% in Sub-Saharan Africa targeting export markets. This approach increases exposure to offtake uncertainty—one of the most significant barriers to securing investment. Limited value-chain integration and weaker economic and institutional environments compound these challenges. Despite vast renewable energy resources and strong industrial growth potential, African projects often lack the domestic anchors and risk-mitigation structures characteristic of successful global projects.A key opportunity lies in building stronger domestic or regional anchors, particularly around established demand centers such as fertilizers. Exploring local or regional offtake options can substantially lower commercial risk by reducing reliance on distant and uncertain export markets. Complementing such strategic project design with concessional finance and targeted financial support instruments also plays a decisive role. These mechanisms are essential to de-risk clean hydrogen projects and mobilize the capital required to reach FID, especially during costly early development stages.However, the financing landscape further illustrates the continent’s structural constraints. Africa currently has €4 billion in targeted financial support for clean hydrogen, compared to USD 222 billion (€192 billion) available to the rest of the world. In addition, only 20% of these funds available to African projects have been disbursed, highlighting a disconnect between available capital and project readiness. Funding is highly concentrated—78% originates from EU institutions and governments, particularly through the European Investment Bank, the EU Global Gateway, and German instruments such as H2Global (€887 million committed)i and KfW’s PtX Platform. Although multilateral actors such as the Climate Investment Funds (CIF) and national investment funds in Egypt, Namibia, and South Africa contribute additional support, these remain small relative to needs.Based on the data-driven analysis of success pathways for clean hydrogen projects and the complementary analysis of the financial landscape in Africa, the report identifies targeted, actionable recommendations to accelerate project development: Establishing stronger domestic anchors—through regional value-chain development, industrial integration, and local offtake—will be key to reducing commercial risk and enhancing long-term socio-economic benefits. African countries should broaden the geographic base of financial partners while deepening cooperation with the EU. Funding structures must evolve beyond simple grants and loans toward more catalytic financial instruments—including blended-finance vehicles, guarantee mechanisms, and structured offtake agreements—to mitigate risk and mobilize private investment. Expanding technical assistance and early-stage project development finance is essential, as early-phase costs can reach several million euros and often represent a major bottleneck for African project developers. Overall, the report concludes that Africa holds significant potential to develop a robust clean hydrogen sector, yet realizing this opportunity will require a shift in project design, targeted de-risking instruments, and broader international financial engagement. Strengthening early-stage support and fostering domestic value chains will be essential to unlock investment, accelerate project maturity, and ensure that Africa can meaningfully participate in the global hydrogen economy.