Those were among the key talking points during the opening day of the World Power-to-X summit in Marrakech.
Morocco’s strategy strongly advocates a collaborative approach.
Masen, the Moroccan agency for sustainable energy, acts as the primary point of contact for investors, while the ‘Offre Maroc’ (Morocco offer) aims to attract private investors and developers for industrial-scale green hydrogen and derivatives. So far, it is working with firms from the US, Spain, Germany, China, KSA and the UAE.
Christoph Rauh, Director of Africa at Germany’s Federal Ministry for Economic Cooperation and Development, said Morocco is “probably its most crucial partner in Africa right now.”
Germany’s PtX development fund offers grants and can combine financing with loans and guarantees for industrial-scale projects.
“But it must be a win-win solution,” he said. “If we look at what’s happening today, we can see some very interesting projects being implemented now. But more needs to be done, and German companies are interested in being part of the next round [of investments].”
He said it sees Morocco as a frontrunner in Africa, but we are in a learning phase. “Building those bridges and exchanging experiences are important issues. It’s about building the whole ecosystem in hydrogen, research, capacity building and training for the ramp up for hydrogen to succeed. The private sector must be in the central position in whatever we do.”
Susana Moreira, Executive Director at Dubai-based H2Global, which is developing a large-scale green hydrogen and ammonia production facility in southern Morocco, said once the Power-to-X sector reaches a threshold of 5% share, the market will take care of itself. “That will definitely need collaboration between the private sector,” she said.
Frank Wouters, Director General at MED-GEM, which seeks to support green electrons and molecules growth in the southern Mediterranean, said five years ago (at the first Summit), hydrogen had no limits, but now it’s “more complex and realistic”.
He returned to the central role of governments and policymakers in establishing growth frameworks.
“The really interesting discussion right now is the development of the regulatory framework in Europe. This will determine success in the next 12 to 24 months,” he said.
Financing the revolution of green hydrogen
Meriem Laraichi, Head of Development and Advisory, CDG Capital, said the sector is moving from pilot to first-wave industrial scale.
“Globally the market is quite dynamic,” she said. “But it’s still facing many challenges. Each region has its own structure and policy frameworks which drives different dynamics – in Europe it is driven by RePowerEU and Green Deal.”
Amine Iba, Founder and Managing Director of Veridion Capital, said offtake agreements at the level of intents and MOUs might look good on paper but they don’t give price certainty that’s required by investors.
“Frankly, you can’t mobilise long-term capital on the back of aspirational contracts. So it becomes very difficult if we don’t have clear offtake agreements,” he said.
“The second element is the mismatch between capital needs and available capital. We are talking about projects that require billions of euros and dollars, and structured over 20 or 25 years. In our region at least, commercial banks can rarely lend for these type of agreements, especially for a nascent industry with technology risk.”
“Also some developers don’t have the balance sheet to close the gap, and local capital markets are still shallow about these risks, nor can they take the size and scale.”
Audrey Givone, Country Lead Morocco, Public Sector MENA, at the European Investment Bank, has been involved with projects in Morocco for eight years.
“What’s needed is large-scale reference projects backed by EU support, which will create confidence,” she said. “There is no time for competition, only cooperation.”
“Demand is two sided, we need to promote internal demand – for instance Europe provides a strong signal with CBAM. Extenally, it has committed to import more than 10 million tonnes of green hydrogen – which is good news for Morocco – so that’s a certainty.”
Achraf Tarsim, Country Manager, African Development Bank, said aggregated demand works for some sectors. “This will allow to bring economies of scale and improve bankability of projects and reduce counter-parties risk,” he said.