Green hydrogen, as an energy source, has tremendous potential for reducing greenhouse gas emissions and tackling climate change.
Ninety percent of Kenya’s electricity is generated from renewable energy, placing the country as a top investment destination for green hydrogen projects. Electricity is passed through water to separate hydrogen from oxygen molecules.
Some similarities lie between the large-scale production of green hydrogen and crude oil exploration. It’s therefore worth reviewing the challenges encountered in Kenya’s crude oil exploration to navigate them.
In both sub-sectors high initial costs, limited or lack of infrastructure is a barrier. Just like crude oil, green hydrogen production requires liquefaction plants, storage facilities, dispensers involved in the process of delivery to an industrial facility, power generator or a storage facility.
Transport maybe by rail, road or pipeline. The main feature of pipelines for instance, is large upfront capital investments which are treated as sunk costs, high fixed costs but relatively low operational costs and a long payback period. Investors must recover such costs regardless of pipeline operation.
In addition, the high cost of electrolysers increases the total cost of production and ultimately the product price. Similar infrastructure challenges amongst other bottlenecks were encountered for Kenya’s crude oil that saw the abandonment of a pipeline construction in favour of trucking.
Instructively, government and corporate initiatives supported by policies and funding will boost development of such infrastructure. This is in addition to administrative and financial incentives outlined in the Kenya’s guidelines for green hydrogen and its derivatives.
Another similarity is the need for an enabling legislation for local content. Crude oil exploratory operations would often be disrupted by locals decrying denial of opportunities.
Optimising project value chain should see local companies providing services and goods. Further, through employment, training and technology transfer. While semi-skilled and unskilled cadre of labour is in plenty, there is a dearth of expert knowledge and skills in green hydrogen as was the case for crude oil.
Crude oil requires specialised training in petrophysics, reservoir engineering amongst other specialisations. Hydrogen is a multi-physics domain intersecting electricity, gas, liquids and metals. It needs expert engineers, projects managers trained in hydrogen among other experts.
Some skills may and are in the interim being attained by upskilling or reskilling through apprenticeship of short and long trainings of existing work force.
The guidelines make mention of local content, but a distinct law would provide specific thresholds and parameters for local content and participation. It’s worth lauding the robustness of the Local Content Bill developed under the Petroleum Act of 2019 for development of petroleum resources. It’s however yet to be passed six years after it was introduced in Parliament.
Informed by this trend, time will be of essence for development of a focused green hydrogen local content law.
Lessons from the crude oil exploration experience will be a crucial guide for accelerated growth of green hydrogen sub-sector.
By Charity W. Maina, An Energy Lawyer and a Director in an Energy & Climate Policy Firm
