Pulse-check on our green hydrogen ambitions: Egypt is poised to emerge as a relatively cost-competitive producer in the global green hydrogen and green ammonia markets by 2030 as the costs of electrolyzer systems and tariff prices for renewable energy generation fall, according to a report(pdf) by India-based management consulting firm Alvarez and Marshal that evaluates the competitiveness of 10 high-potential countries. However, higher financing costs put Egypt at a relative disadvantage.

Where will Egypt stand? Across the countries examined in the report, Egypt is expected to produce the seventh cheapest green hydrogen and green ammonia in 2030. The production cost of green hydrogen is expected to drop to USD 2.7 per kg, down from USD 4.5 per kg last year, while that of ammonia is forecasted at USD 635 per ton, down from USD 962 per ton last year.

The competition? The UAE is projected to produce the cheapest green hydrogen and green ammonia of the lot in 2030 — at USD 1.7 per kg and USD 436 per ton, respectively. India is expected to come second — producing green hydrogen at USD 1.8 per kg and green ammonia at USD 467 per ton — and Saudi Arabia third (USD 1.8 per kg and USD 475 per ton). The top three contenders are followed by Chile, the US, and Australia.

ICYMI- The government in August launched the National Low-Carbon Hydrogen Strategy, which targets 5-8% of the global hydrogen market by 2040. The strategy outlines two scenarios: a “central” scenario which sees the country producing 1.5 mn tons per annum of green hydrogen by 2030 with 1.4 mn tons pegged for export and a more ambitious, “green” scenario that sees the country producing 3.2 mn metric tons of green hydrogen annually by 2030, with 2.8 mn metric tons marked for export.

THE FACTORS SHAPING THE COMPETITION-

The prices of renewables are expected to dip: Solar tariffs in Egypt, the UAE, Saudi Arabia, Chile and India are expected to fall below USD 20 per MWh by 2030, while wind tariffs are expected to reach under USD 30 per MWh in Egypt, Saudi Arabia, the US, and India by then.

As are those of electrolyzers: The costs for alkaline electrolyzers are expected to drop to USD 310–440 per kW across the countries examined in 2030, down from around USD 735–945 per kW in 2023.

However, the cost of capital is the primary sticking point for Egypt: Despite Egypt’s high solar and wind resource capabilities, its higher financing costs — which come on the back of higher country risk — put it at a disadvantage compared to its peers. Financing costs significantly impact the final price because green hydrogen production is a capital-intensive process, with 70-90% of costs stemming from renewable energy and electrolyzer capital expenditure. Elevated costs are one of the key challenges facing the expansion of green hydrogen production in Egypt, Ahmed Hegazy, head of the Egypt Green Energy Association, told EnterpriseAM.

And there’s a handful of other stumbling blocks along the road: Egypt also ranks second to last — right behind Argentina — in terms of how conducive its overall energy ecosystem is to green hydrogen production. It received a score of “medium” across a handful of parameters, including the size of its power grid, its current hydrogen usage, and port infrastructure. It scored “low” on its renewable energy ecosystem, manufacturing ecosystem, petrochemicals and gas consumption, ease of doing business, and trade relationships with the EU and Japan.

All in all, Egypt is well-positioned to compete in the green hydrogen market: Egypt’s significant experience in gray and green hydrogen production and ammonia production is an optimal starting point to establish a thriving low-carbon hydrogen economy. The country also has substantial renewable energy capacity, a strategic geographic location in terms of proximity to Europe, well-developed port infrastructure, and access to global maritime traffic through the Suez Canal.

One thing going for us is a whole lot of green hydrogen projects in the pipeline: Since 2021, Egypt has signed around 32 MoUs for green hydrogen production, 15 of which have been converted into binding contracts with the Egyptian government. Two additional agreements were signed on the sidelines of the European Investment Forum in Egypt, bringing the total to 17 binding agreements with an investment volume of USD 83 bn and a production capacity of 3 mn tons of green hydrogen.

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