The Green Gold Rush: Tapping East Africa's Billion-Dollar Hydrogen Potential

What if East Africa’s next leap in prosperity is powered not by what lies beneath the ground, but by the winds, waters, and sun above it? East Africa stands at a pivotal moment where its rich renewable resources position it uniquely for green hydrogen development. Green hydrogen is increasingly recognised as a key driver of global decarbonisation and industrial competitiveness. This article aims to assess the current state of green hydrogen in East Africa, identify structural barriers, showcase emerging opportunities, and propose strategic pathways for scaling the industry. With coordinated policies, investment, and regional cooperation, green hydrogen could unlock inclusive, export-driven, low-carbon industrial growth for East Africa, turning its abundant renewable energy into a global economic advantage.

Mapping East Africa’s Hydrogen Readiness

East Africa’s hydrogen readiness reveals a complex mosaic of ambition, resource strength, and variable institutional maturity. For example, Ethiopia is well-suited for green hydrogen production due to nearly a 100 per cent penetration of renewable electricity. This extensive use of renewable energy provides a crucial foundation for green hydrogen production. Although Ethiopia is not a traditional hydrocarbons exporter, it possesses approximately 112 billion cubic meters (BCM) of shale gas reserves. To facilitate natural gas exports, Ethiopia signed an MoU with Djibouti in February 2019 that envisaged the development of a 767 km long natural gas pipeline connecting the natural gas fields of Hilala and Calub in the Somali region of Ethiopia with Damerjog in Djibouti.

While Kenya, Djibouti, Ethiopia, and Rwanda are often in the spotlight, Uganda and Tanzania are also emerging as important players. Uganda, with its vast hydropower base, biomass reserves, and growing solar capacity, is positioning green hydrogen as a transformative lever for industrial development, especially in agriculture. The country’s abundant hydropower, which accounts for more than 90% of its electricity generation, enables clean electrolysis. Additionally, a planned green-hydrogen fertiliser plant in partnership with IPS/Westgass could produce up to 200,000 tons per year, helping to reduce Uganda’s dependence on imported fertilisers.

Tanzania, on the other hand, has a broad renewable resource base, solar irradiance, hydropower, biomass, and geothermal and is modelling hydrogen and synthetic fuels in its long-term decarbonization plans. Under its 1.5°C energy scenario, hydrogen via electrolysis is envisioned as supplementing industrial and transportation demand and potentially enabling synthetic hydrocarbons for sectors that are hard to electrify.

Economically, both countries offer different but complementary value propositions. Uganda’s economy is still driven by agriculture, but its green hydrogen ambitions align with a broader strategy to industrialise, increase value addition, and boost food security. By producing green hydrogen fertiliser, Uganda could reduce its dependence on imports, create jobs, and generate clean-energy exports. Tanzania’s hydrogen potential is framed less around exporting hydrogen molecules and more around using renewable hydrogen to decarbonise its own industrial and transport systems. Its long-term energy plan suggests that hydrogen-derived synthetic fuels could replace a portion of fossil-based fuels, thus supporting a more sustainable industrial transition.

Institutionally, Uganda has incorporated green hydrogen into its 2023 national energy policy, which acknowledges both opportunities and capacity gaps, particularly in research and development (R&D), technical skills, and legal frameworks.  Meanwhile, Tanzania has yet to formalise dedicated hydrogen legislation or regulation, though its decarbonization roadmap reflects a serious interest in hydrogen’s role post-2030.

Challenges and Structural Barriers

Despite East Africa’s strong renewable resource base, the region faces significant structural hurdles that complicate the scale-up of green hydrogen. Energy system constraints remain a primary bottleneck: national grids are characterised by instability, limited transmission capacity, and insufficient redundancy to support the renewable overbuild required for competitive electrolysis. At the same time, utility-scale solar, wind, and geothermal projects face high capital costs due to perceived investment risk, currency volatility, and limited long-term financing options.

These challenges are reinforced by governance and regulatory uncertainty. East African countries lack hydrogen-specific standards, safety protocols, and certification regimes that align with emerging global market requirements. The absence of coherent regulatory frameworks for electrolysers, storage systems, transport infrastructure, and ammonia synthesis facilities increases permitting complexity and slows project development.

Even where generation and hydrogen production are planned, the lack of robust infrastructure beyond generation remains a barrier. In Djibouti, the Green Star project envisions large-scale renewables plus hydrogen export. Still, such a hub will require substantial investment in transmission corridors, desalination or water supply systems, port terminals for ammonia or hydrogen derivatives, and associated logistics.

Uganda faces significant energy-system constraints that challenge green-hydrogen development, beginning with its fragile transmission network and inconsistent grid reliability, characterised by vandalism, substation bottlenecks and limited electrification, as documented in UETCL’s system reports and IEA electrification data.

Addressing climate and environmental sensitivities is equally essential. Environmental considerations present both challenges and opportunities for Green Hydrogen development in Africa. Desalination is set to play a strategic role in water resource mobilisation, with seawater desalination coupled with renewables representing a key nexus for national low-carbon development. However, water vulnerability remains a concern, as many potential hydrogen hubs rely on scarce water resources and must consider recycling or trucking alternatives to ensure a reliable supply for hydrogen production.

Ethiopia's landlocked position may present short-term challenges such as water vulnerability. Hence, it will need to rely on the ports of neighbouring countries, such as Djibouti. Therefore, long-term collaboration in this area will be necessary to expand its footprint in the green hydrogen sector.

Emerging Hydrogen Initiatives & Regional Momentum

East Africa is witnessing emerging momentum in hydrogen initiatives characterised by flagship projects, technological innovation, dynamic financing, and growing regional cooperation.

Flagship projects include Kenya’s proposed 500 MW electrolysis plants in the renewable-rich Naivasha and Lamu corridors, positioning these areas as hydrogen production hubs. Djibouti has secured large-scale hydrogen–ammonia memoranda of understanding with global developers aimed at an export-oriented hydrogen economy, leveraging its strategic port access. Ethiopia is advancing early-stage concepts that integrate renewable energy with industrial parks to pioneer renewable-industrial hydrogen clusters.

On the technology front, pilot deployments of proton exchange membrane (PEM) and alkaline electrolysers are underway in East Africa, particularly in Kenya, which leads globally notable geothermal–hydrogen hybrid experiments. KenGen (Kenya Electricity Generating Company) is spearheading projects in the Olkaria geothermal field, where geothermal steam is harnessed to power electrolysers extracting hydrogen from water. For example, a 5 MW demonstration plant set for commissioning in 2025 is planned to scale to 100 MW electrolyser capacity by 2028, attracting investments of around $120 million.

Blended financing and innovative financial instruments will play a crucial role in spurring green hydrogen investments in Kenya. Development finance institutions (DFIs), with their wealth of experience in successfully scaling up investments in renewable energy development, can play a vital role in deploying effective financing strategies and instruments to enable initial commercial projects and drive the growth of the green hydrogen industry in Kenya. Sovereign green bonds and transition finance models are also emerging to mobilise capital.

Regionally, the Intergovernmental Authority on Development (IGAD) is engaging in dialogue on transboundary energy corridors, facilitating cross-border hydrogen trade and infrastructure. The East African Centre of Excellence for Renewable Energy and Efficiency (EACREEE), together with GIZ-Kenya, is exploring the potential harmonisation of green hydrogen standards and certification to standardise and facilitate market development. Strategic port-based hydrogen hubs in Lamu, Mombasa, and Djibouti are being envisioned as multi-country gateways for export and industrial use, amplifying regional integration.

Together, these initiatives demonstrate the increasing political will, technological progress, and collaborative finance shaping East Africa’s nascent hydrogen economy, though substantial work remains to scale projects and build enabling ecosystems.​In conclusion, despite strong resource endowments, countries face persistent barriers: limited project-preparation capacity, underdeveloped hydrogen markets, unclear offtake and tariff regimes, and infrastructure challenges. If regional coordination through the EAC can overcome these obstacles by aligning policies, streamlining permitting, and building shared infrastructure corridors, East Africa could mature into a globally competitive green-hydrogen hub.

Conclusion

Revisiting the opening question, East Africa’s next chapter of energy prosperity may lie not in extractive resources, but in transforming its abundant wind, solar, geothermal, and hydropower into green molecules that power a new industrial future. The region’s green hydrogen transition is beginning to take shape, driven by vast renewable potential, emerging policy frameworks, and rising global demand for low-carbon industrial inputs. Yet this pathway remains fragile, reliant on closing infrastructure gaps, establishing credible certification systems, and strengthening institutional capacity.

Green hydrogen will only realise its full value if integrated into broader system reforms, including grid expansion, industrial policy alignment, water–energy planning, and targeted skills development. East Africa must guide this transition deliberately, ensuring hydrogen becomes more than an export commodity. If strategically deployed, it can anchor local industry, enhance climate resilience, and generate shared and sustainable prosperity across the region.