Morocco and Egypt have been among north Africa's most prominent countries for renewable hydrogen and derivatives production, but with the majority of announced projects at early development stages market participants say stronger demand signals will be required for plans to move forward.
High capital costs are often cited as a constraint for project developers setting their sights on emerging markets. But a lack of demand — rather than financing availability — is the primary barrier to project development in Morocco and Egypt, according to a report from the Green Hydrogen Organisation (GH2).
While financial institutions have shown interest in funding projects, the "absence of revenue certainty remains the central issue" to make projects bankable, GH2 programme officer Simran Sinha said during an event on the sidelines of the World Hydrogen Summit in Rotterdam this week. GH2 spoke with 23 industry stakeholders in the two countries and "demand uncertainty always came first" when they listed their challenges, Sinha said.
Morocco has taken steps to support developers. The government and the Moroccan Agency for Sustainable Energy (Masen) are facilitating access to land, infrastructure, governance frameworks and contracting pathways under its Moroccan offer launched in 2024 targeting large-scale hydrogen projects. Six projects are currently included, five of which remain at pre-FEED stage — but missing demand is stalling development, said Masen executive director Nawfal El Fadil.
Clear and stable standards are also required, El Fadil said. Certification systems must be internationally aligned and remain consistent over a project's lifetime to support bankability. If conditions need to be adapted during the lifecycle of a project, it will not be bankable, he said.
Egypt faces similar constraints. The country has established a regulatory framework, industry strategy, incentives and international agreements to support hydrogen development, according to Egyptian Petrochemicals Holding Company chairman Alaa El-Din Abdel Fattah. A contract awarded in 2024 under the H2Global programme to Fertiglobe for renewable ammonia exports from Egypt demonstrates the country's competitiveness, he said. But further demand signals are needed to move additional projects forward. Alongside demand uncertainty, gaps remain in financing tools and certification clarity, Fattah said.
Stakeholders have proposed some measures to address these barriers. Because many projects in Egypt and Morocco target exports to Europe, bankability depends not only on domestic policy frameworks, but also on clear demand through mandates, subsidies or mechanisms such as carbon pricing in importing centres, GH2 said.
Concessional and blended finance — special types of financing available for projects in developing countries — can help improve financing terms as project mature towards bankability; but these mechanisms alone are not enough to make projects bankable in early development stages when developers need to do feasibility studies and asses risk, GH2 said.
Risk-sharing mechanisms could also support project progress. Developers currently bear a disproportionate share of early-stage project risk, which delays financing.
"Financing is available, but it tends to enter too late, as no actor is willing or mandated to take the first risk," GH2 said.
Further measures such as foreign exchange risk mitigation tools, contracts for difference (CfD) and more investments in common user infrastructure could also support investment, OECD's industry programme lead Deger Saygin said.
