German Firms Target Green Hydrogen Investment in Algeria
Germany is particularly focused on developing its energy cooperation with Algeria, identifying it as one of the most attractive investment destinations in the Mediterranean region for European companies involved in the energy transition. A recent German agency GIZ report on green hydrogen investment in Algeria positions the Algerian market as one of the most promising in the Euro-Mediterranean area. The document also notes Algeria's role as an essential raw material supplier for Germany, given its status as a major producer of oil and gas with significant chemical production.
The green hydrogen sector presents a substantial opportunity for foreign investment, supported by Algeria's natural advantages, modern basic infrastructure, and a legal framework that has been adapted to favor foreign investment. Algeria is projected to be among the most important future suppliers to the European hydrogen market. Currently, some German companies are exploring the conditions for establishing electrolyzer manufacturing in Algeria, with other entities, such as the VNG Group, interested in producing green hydrogen within the Algerian market. This aligns with Algeria's strategy to achieve 40 TWh of green hydrogen production by 2040, with short-term objectives including pilot electrolyzer installations (2 to 4 MW) and a reference 50 MW installation by 2030, supported by KfW.
Germany's keen interest in developing strong hydrogen cooperation is based on Algeria's substantial potential in this domain. Algeria benefits from a significant cost advantage in transport, notably through SoutH2, compared to other hydrogen-producing countries that would need to convert hydrogen into ammonia and methanol for long-distance transport. Proximity is deemed crucial for positioning in future energy markets. A German document estimates that the industrial complex in Arzew could produce up to 15,000 tons per year of ammonia using green hydrogen. Additionally, a pilot facility for e-SAF (sustainable aviation fuel) production is planned for Algiers airport, based on a pilot project conducted by the German group VNG since 2024, fully funded by the German government.
By leveraging its most favorable sites, Algeria could produce 18 million tons per year of hydrogen at a full cost ranging between $2.5 and $3.0 per kilogram. Expanding production to other zones, including those with less sun or wind or requiring longer distances, could unlock a potential of 151 million tons per year at a full cost between $3.5 and $4.0 USD per kilogram of H₂.
