Morocco is one of the world’s most promising locations for exporting green hydrogen. As the world’s major economies move toward a net zero future, green hydrogen can play an important role in various use cases, from fertilizer production (e.g., green ammonia) to heavy industry (e.g., steel). Morocco has three major advantages: excellent renewable resources for producing green hydrogen, domestic fertilizer production for local demand, and proximity to the European Union. Morocco has already announced an investment offer for investors that lays the foundation for a green hydrogen supply chain.
Morocco’s green hydrogen opportunity holds promise, but the country also faces two key challenges. First, the transportation of green hydrogen remains a major uncertainty. Second, Morocco faces immediate competition from Tunisia and later possibly from Algeria.
For Morocco to capitalize on green hydrogen, its government should keep in mind two policy principles. First, expansion in production capacity should not speed ahead of transportation. Morocco’s geographic proximity to Europe gives it an upper hand over many competitors, but hydrogen transportation remains an uncertain proposition. Second, Morocco should prepare for growing competition from Tunisia and other potential competitors. Striking the right balance between beating the competition and avoiding costly overcapacity is key to success over the coming decades for Morocco.
- Green Hydrogen in Morocco
Green hydrogen is produced with electrolyzers that split water into hydrogen and oxygen. It is green because the electrolyzers are powered by renewables, such as wind and solar power. The result is a gas that can be stored, transported, and used in a variety of applications. Possible end uses include green steel and chemicals, fertilizer, transportation fuel, and electricity storage.
Key to profitable green hydrogen production is the ability to generate renewable power continuously. Morocco has a number of exceptional sites for green hydrogen production because it has complementary solar and wind resources. On average, Morocco has irradiance levels of 5 kWh/m2 per day, and wind speeds that average between 5-10 m/s. Studies have indicated that regions in Morocco that produce the highest levels of renewable electricity from these sources also correlate to higher potential for hydrogen production.
Multiple studies show that the southern regions surrounding Dakhla have the highest levels of irradiance and wind speeds in the country, averaging 6.1 kWh/m2 per day and 8.3 m/s per day. The regions of Nador and Laayoune along the southern Atlantic coastline have tremendous potential for green hydrogen production. Additionally, Morocco has a large and cheap availability for land, especially in the regions within the Moroccan Sahara. The Moroccan government has already earmarked over 1 million hectares of land dedicated to the commencement of projects in areas that show promise for green hydrogen production.
Morocco also has strong domestic demand for green ammonia, the liquid version of green hydrogen. The country has invested more than $10 billion into building ammonia plants throughout the Moroccan Sahara and plans to produce 3 million tonnes of ammonia a year by 2032, as the renewable liquid fuel holds immense promise in decarbonizing the agricultural sector. This is because green ammonia acts as an alternative to traditional fertilizer, which is one of Morocco’s primary export commodities. 70% of the world’s phosphate rock reserves are in Morocco, in which phosphorus is a primary component in the production of fertilizer. In 2022, Morocco exported $7.7 billion in phosphatic fertilizer, making the country the one of the highest exporters of that commodity in the world. Currently, domestic production stands at 12 million tonnes with plans to produce an additional 8 million tonnes by 2026.
Finally, Morocco is geographically close to the European Union (EU). Being located in Africa’s northernmost border, Morocco’s closeness to Spain opens up potential for its green hydrogen industry to enter Europe. The EU has set a target to import ten million tonnes of green hydrogen a year by 2030, and among other countries like Australia and Chile, the EU sees Morocco as a potential hub from which they will receive this product. Additionally, Morocco and the EU have already signed agreements on regulatory frameworks and the infrastructure needs to make this venture possible. Though the levelized cost of hydrogen production is quite complex due to a number of different parameters, the levelised cost of producing hydrogen in the EU stands at nearly $4.29-5.37 USD/kgH2, whereas the levelised cost of production in Morocco is approximately $3.44 USD/kgH2.
Recognizing these opportunities, Morocco’s government has already announced a hydrogen offer for international investors. In March 2024, The Kingdom of Morocco released The Morocco Offer, which is a documented framework which outlines the country’s goal of developing its green hydrogen sector. The Offer serves as a guide for various stakeholders who are interested in investing in the expansion of green hydrogen production.
Additionally, the Offer identifies a number of incentives that gives investors visibility on how these projects and initiatives will commence. These include information on the allocation of land (1 million hectares) in areas with high production potential for developers, the availability of new infrastructure, information regarding the investor selection and contracting process, as well as provisions to provide tax incentives for international developers to be exempt from import duties and value-added taxes. The Moroccan government has stated that their goal from this Offer is to attract investors for both the export and domestic market, and has caught the attention of nearly one hundred entities, both domestic and international, who are interested in green hydrogen production.
- Morocco’s Challenges
Morocco faces two primary challenges with green hydrogen.
First, the transportation of green hydrogen is still an open question. While progress is being made on the production side, the question is whether there are viable, cost effective ways for Morocco to export green hydrogen to its purchasers. When green hydrogen is produced for the purpose of exporting to another country, there are a number of different ways by which it is transported.
Currently, tanker ship transport does not seem viable because of the high cost, and new or repurposed pipelines are a more promising solution. Heavy investment and a lot of capital are necessary to repurpose existing gas pipelines or build new ones specifically for hydrogen. Typically, the transportation method depends on the distance and scale of demand, which affects transportation costs. Data shows that Morocco’s levelized transportation costs by 2030 to the EU would be between $1.77-2.20 USD, and its total delivery costs (LCH2) would be between $2.95-5.48 USD. Thus, transportation is an important component of the total delivery cost. Although the country is benefitting from increased domestic green hydrogen production, its export mechanisms remain uncertain, with plans yet to be announced.
Second, Morocco faces intense competition from Tunisia – another North African country with excellent resources – and possibly later from Algeria. The resources for both solar and wind in Tunisia are promising. Solar Irradiance levels between 4.93 kWh/m² per day and 7.12 kWh/m² per day, and dry southern regions like Feriana and Kasserine Sud have been identified as optimal locations for capturing photovoltaic energy. Areas like Bizerte in the northern region have wind speeds reaching up to 7 m/s and are popular sites for wind energy development projects. This is indicative of Tunisia’s plans to heavily ramp up growth of its green hydrogen sector, with goals to produce nearly 8.3 million tonnes by 2050. Additionally, with the country’s close proximity to Europe, Tunisia announced its national strategy to export more than 6 million tonnes of green hydrogen to Europe by 2050.
Algeria, a major oil and gas producer, is farther behind on green hydrogen. However, it has the same excellent resources that Morocco and Tunisia have. Algeria’s solar potential is particularly of interest because of its location in the Sahara Desert. Data shows that the country has daily irradiance levels between 5.48 to 5.75 kWh/m² per day, particularly in the southernmost regions of the country. Wind potential is also strong – both Tunisia and Algeria share a Mediterranean coastline that provides high speed winds as strong as 8 m/s.
Perhaps surprisingly, water scarcity is likely not a major obstacle for Morocco’s success. Desalination plants can generate the water needed for green hydrogen at a cost of only $0.005-0.02 per kilogram of hydrogen, which is insignificant compared to Morocco’s massive advantages. Although Morocco is a semi-arid country, it can easily deal with the water problem through desalination investments.
- The Way Forward for Morocco
Morocco is among the most promising green hydrogen exporters in the world. Its renewable resource is almost as good as Chile’s, a global green hydrogen leader, but it is geographically much closer to key export markets. It has strong domestic demand from the fertilizer industry and its government has already taken significant steps toward investing in the relevant production facilities and infrastructure.
However, Morocco must prepare for possible challenges. First, investments in green hydrogen production capacity should follow demonstrated progress in transportation capacity. Without clarity on transportation costs, Morocco risks an overcapacity problem. Morocco’s green hydrogen expansion plans should be based on accurate, up-to-date estimates and timelines for exporting to the European Union. Without the European market, green hydrogen will play at best a small role in Morocco’s future.
Second, Morocco should closely observe developments elsewhere around the European Union to gauge competition. If Morocco can establish itself as a leader early and deter capacity investments by other countries, it could capture a significant share of the European Union’s projected import demand for green hydrogen. But this requires moving forward ahead of the competition, yet avoiding excessive investments without adequate transportation capacity.
These concerns notwithstanding, the green hydrogen opportunity in Morocco is real. The country has already shown success in building competitive export industries, from automobiles to aeronautics. Hydrogen could be next.