Boasting significant renewable energy potential as well as over 200 trillion cubic feet of proven natural gas reserves, Nigeria has all the ingredients to produce low-carbon hydrogen at scale.
A new report, entitled ‘Making Hydrogen Happen in Nigeria: Opportunities, Levers and Barriers’ suggests that in order to unlock the full potential of these resources and create a competitive hydrogen market in the west African country, several measures need to be adopted.
Development of a Comprehensive Hydrogen Strategy
The development of a comprehensive hydrogen strategy would provide Nigeria with the regulatory certainty that investors and project developers require to make informed decisions on the market. While burgeoning hydrogen markets such as Namibia, South Africa, Mauritania and Egypt have begun putting in place hydrogen strategies and policies, Nigeria lags behind that of its resource-rich neighbors. To be able to position itself as global supplier, Nigeria needs to develop a rigorous strategy comprising the country’s production targets, infrastructure development roadmap, monetization plans as well measures to incorporate the industry into the local economy and energy market. The strategy should outline issues such as licensing and stakeholder participation across the entire value chain while outlining relevant laws and fiscal terms. At a time when the energy transition is taking center stage and the demand for low-carbon energy is increasing, a Nigerian hydrogen strategy would serve to accelerate the growth of the domestic low-carbon market.
Prioritize and Fast-track Infrastructure Build-up
Notwithstanding resource wealth, focusing investment towards the construction of relevant infrastructure will not only advance the domestic hydrogen market in Nigeria but allow the country to connect to both regional and global supply chains. Nigeria has the opportunity to become a major supplier by fast-tracking the construction of renewable energy systems, electrolyzer production, storage and transportation assets and related infrastructure. To address its current infrastructure deficit, it is key for Nigeria to incentivize foreign investment, establish attractive fiscal terms for private investors, and boost collaboration with global parties and local energy players to establish local hydrogen chains. While the country has existing natural gas and oil transmission pipelines and storage networks, repurposing these assets will improve value addition throughout the energy transition while consolidating the country’s position as a global hotspot for low-carbon hydrogen.
Create and Support Local Demand
Currently, the demand for low-carbon hydrogen in Africa remains low owing to lack of infrastructure, cost considerations, and lack of awareness and capacity. However, this can all be addressed by diversifying the energy mix, integrating hydrogen with current power systems, and creating hydrogen-powered industrial clusters, power generation assets, and mobility and residential consumers. By establishing an energy mix that incorporates hydrogen into the value chain, Nigeria can increase local demand while advancing energy affordability and reliability. In this regard, it is vital for the government to create incentives and initiatives aimed at stimulating low-carbon hydrogen production and consumption.
Establish Globally Competitive Low-Carbon Hydrogen Standards
Implementing global hydrogen standards is crucial step to attracting global investors into a market and ensuring the production of quality and globally competitive low-carbon hydrogen. To date, Nigeria does not have local certification schemes or technical standards defining the production, storage, distribution and monetization of low-carbon hydrogen. As such, the creation of transparent and internationally recognizable certification schemes for low-carbon hydrogen is essential to establish a resilient hydrogen industry in the West African country.
Workforce Development and Technology Innovation
Boosting investments in local workforce training and enhancing the research and development of low-carbon hydrogen technologies in partnership with global tertiary institutions and project developers will help advance Nigeria’s low-carbon hydrogen market. According to the African Energy Council, local content funding mechanisms such as the Petroleum Technology Development Fund and the Tertiary Education Training Fund could be useful in advancing partnerships between local institutions and key industry players across the globe, thereby enhancing Nigeria’s workforce development while strengthening innovation across the low-carbon hydrogen market.