Currently, the world is immersed in an energy transition. The fight against climate change has led humanity to seek the generation of clean and sustainable energy, but it was not until the Russian invasion of Ukraine that society and its leaders truly became aware of the necessity for substantial change. Within this framework, green hydrogen has emerged as a key player. Not only is it the most abundant element in the universe, but it is also a source of clean and sustainable energy. Its uses are multiple, so it is no wonder it has captivated the attention of all authorities and public entities.

The production of green hydrogen can be costly. This can vary depending on location and available energy sources. To be competitive and produce clean energy at a lower price, industries dependent on green hydrogen are beginning to migrate to regions where they can produce or acquire hydrogen more economically.

Some of the factors industries consider when selecting a location include electricity cost, water availability, and the existence of policies favorable to hydrogen production. Regions with abundant and cheap renewable energy sources, like wind or solar power, are particularly attractive, as they can produce “green” hydrogen through electrolysis using renewable electricity.

Global regions with the highest potential for green hydrogen

According to a study conducted in 2022, the region with the greatest potential to produce green hydrogen cost-effectively is Sub-Saharan Africa. Depending on future technological development and capacity building in the region, it is estimated that Sub-Saharan Africa could produce between 671 and 1,923 exajoules of green hydrogen at a cost below 2 US dollars per kilogram. In comparison, Europe, which has a large number of green hydrogen plants, could produce up to 343 exajoules per year in an optimistic scenario.

In the medium to long term, around the year 2050, the African region could lead the green hydrogen market, but not far behind would be Latin America. The potential of this region is already being glimpsed, with Chile as the main proponent of green hydrogen generation not only in LATAM but worldwide. Specifically, if we talk about the muscle in the green hydrogen industry at a global level by countries, the following should be highlighted, according to an analysis by the International Renewable Energy Agency:

China: It is likely to be the cheapest place to produce green hydrogen in the long term, with a levelized cost of hydrogen (LCOH) of just over $0.65 per kg for 2050 in an optimistic scenario.

Chile: It currently has the lowest green hydrogen production costs in the world, with its current renewable infrastructure allowing the generation of green hydrogen ranging between 3.5 and 3.75 euros per kilogram. In an optimistic scenario, it is expected to be only marginally behind China with an LCOH of around $1.20/kg by 2050.

Morocco: It has the potential to produce hydrogen at levelized costs comparable to Chinese production. However, there is a significant level of uncertainty regarding Morocco’s access to water, which could potentially restrict production by 63%.

Colombia: It is expected to produce green hydrogen at an LCOH of around $1.15/kg in the most pessimistic scenario by mid-century. .

Namibia: Despite promoting its hydrogen export potential to Europeans, it is likely to be relatively expensive compared to other African nations, with costs of $1.20-1.90/kg.

The relocation of the industry to these new regions

The migration of a green hydrogen industry to a new region, like Sub-Saharan Africa, involves several steps. Here is an example of what this process might look like:

Initial Assessment: Detailed analysis of the opportunities and challenges presented by the new location. This would include studying the availability of resources (such as solar and wind energy), existing infrastructure, workforce, local regulations, political and economic climate, and market opportunities.

Feasibility Analysis and Planning: Technical studies to determine the best location for production facilities, necessary infrastructure, associated costs, and potential environmental and social impacts. Based on this analysis, a detailed migration plan is developed.

Financing and Government Support: In some cases, governments may offer incentives to attract renewable energy industries.

Infrastructure Construction: Hydrogen production plants, hydrogen transport and storage networks, as well as improvements to local infrastructure such as roads and power grids.

Workforce Training: Creation of training and capacity-building programs in collaboration with local educational institutions.

Integration with the Local Community: Throughout this process, it is crucial for the company to integrate with the local community. This may involve hiring local staff, supporting community projects, and collaborating with local authorities to address any social or environmental impacts.

Benefits of green hydrogen for the local community

As expected, the arrival of an industry as powerful and promising as green hydrogen generates multiple benefits for the regions in which it establishes its activity. In addition, the company must also take solidarity initiatives and responsibilities with the local community to ensure that its arrival in a certain region does not produce any counterproductive results for its fellow citizens.

Areas that host green hydrogen projects, ultimately, obtain great advantages. These are some of them:

Job Creation: The construction and operation of green hydrogen production plants can generate a significant amount of local employment, contributing to the economic growth of the region.

Infrastructure Development: To facilitate the production of green hydrogen, new infrastructures may be needed, such as production facilities, hydrogen transport and storage networks. These infrastructures can have additional benefits for the region, such as improved transport networks and the creation of new business opportunities.

Economic Diversification: Hydrogen production can diversify the region’s economy and reduce dependence on certain industries, such as fossil fuels.

Technological Development: The adoption of hydrogen production can foster the development of renewable energy technologies in the region.

Energy Self-sufficiency: Local production of hydrogen can reduce dependence on energy imports and improve the region’s energy security.

Sustainable Development: In many regions, especially in developing ones, the green hydrogen industry can be an important part of a sustainable development strategy. It can provide clean and affordable energy, foster economic development, and contribute to mitigating climate change, all without depleting the region’s natural resources.

Emissions Reduction: Countries or regions with high greenhouse gas emissions could benefit from the transition to clean energies in terms of emissions reduction and meeting climate targets.

The impact of the green hydrogen industry will be felt even more, considering the above points, in developing regions. This push for renewable energies can represent a turning point for these local communities. In this way, thanks to green hydrogen, regions that have not enjoyed as much historical or economic importance can turn the situation around and generate significant business muscle that improves the quality of life of all its inhabitants.