Exploring the risks associated with renewable energy projects that incorporate green hydrogen production in West Africa

Abstract

This study investigates the risks associated with renewable energy (RE) projects incorporating green hydrogen storage in West Africa, with the aim of identifying the most critical threats to project viability and proposing strategies for their management. Even though there is a wealth of research on RE and green hydrogen projects, the majority of these studies have just identified and categorized risks without estimating their financial implications. Majority of risk assessments are qualitative, which creates a critical knowledge gap about how these risks convert into real additional expenses that may have an impact on the feasibility of the project. Without such quantification, technoeconomic evaluations might ignore cost variations, which could result in poor investment choices. The research combines insights from a comprehensive literature review with primary data gathered through the Delphi method, which included expert interviews and surveys. A risk matrix was applied to evaluate and score identified risks, enabling the prioritization of the three most significant categories: policy/regulatory risk, political instability, and social acceptance risk. To quantify their potential financial impacts, a 10 MW grid-tied solar PV system with integrated green hydrogen production was modelled for a techno-economic analysis. Risk-adjusted capital expenditure (CAPEX), operational expenditure (OPEX), and discount rates were applied across multiple scenarios to estimate their influence on the levelized cost of electricity (LCOE) and the levelized cost of hydrogen (LCOH). The results showed that scenarios that incoporate political risks led to the most severe increamnet in the LCOE and subcequently LCOH, indicating an increase of over 16%. This increase was primarily due to elevated discount rates and CAPEX escalation, consistent with existing literature on energy investments in politically and institutionally fragile contexts. The study proposes targeted mitigation measures, such as early policy engagement, inclusive stakeholder consultations, and geographic diversification of assets, alongside risk transfer mechanisms including political risk insurance, construction all-risk coverage, and robust power purchase agreement structuring. By integrating expert consensus with scenario-based financial modelling, this research offers a decision-oriented framework for policymakers, investors, and developers to enhance project viability and resilience, supporting West Africa’s RE transition and the integration of green hydrogen into its energy mix.