Green Hydrogen in Morocco: Why Dakhla Could Have a Major Cost Advantage

Morocco’s green hydrogen ambitions are attracting growing international attention, but one question could prove just as important as technology selection: where should green hydrogen projects actually be located?

A 2026 academic study published in the Journal of Power Sources offers an interesting answer.

Researchers compared the economics of green hydrogen production in Dakhla, Tangier, Benguerir and El Jadida, using autonomous energy systems combining solar photovoltaic generation, wind power, battery storage and alkaline water electrolysis.

The results reveal a substantial geographical difference.

Under the specific technical and financial assumptions used by the researchers, the modeled Levelized Cost of Hydrogen (LCOH) reached:

• Dakhla: $10.62/kg H₂

• Tangier: $15.63/kg H₂

That means the modeled cost in Dakhla was approximately 32% lower than in Tangier.

The important conclusion, however, is not that hydrogen will necessarily cost $10.62/kg in Dakhla.

The bigger lesson for investors is that location can fundamentally change the economics of a green hydrogen project in Morocco.

Why Could Green Hydrogen Be More Competitive in Dakhla?

The answer starts with energy.

Producing green hydrogen through electrolysis requires large quantities of electricity. Consequently, both the cost and availability of renewable electricity have a direct impact on hydrogen economics.

Dakhla benefits from a particularly attractive combination of solar and wind resources.

Solar generation provides renewable electricity during daylight hours, while strong wind resources can complement photovoltaic production during other periods.

This complementarity matters.

A renewable energy system capable of generating electricity across a broader portion of the day can potentially achieve better utilization of its electrolyzer and supporting infrastructure.

In simple terms, two projects could use similar electrolyzers but achieve very different economics if one location provides substantially better renewable-energy conditions.

The equipment itself is therefore only part of the equation.

How effectively that equipment can be used throughout the year matters enormously.

This is one reason why site selection for green hydrogen cannot be approached in the same way as conventional industrial real estate.

The Lowest Land Price Does Not Necessarily Mean the Lowest Project Cost

Industrial investors traditionally evaluate locations according to criteria such as land price, logistics, workforce availability and proximity to customers.

Green hydrogen adds another layer of complexity.

For a hydrogen or renewable-powered industrial project in Morocco, investors may need to simultaneously evaluate:

Renewable resources: What are the actual solar irradiation and wind profiles of the site?

Water: Is sufficient water available, and if desalination is required, what infrastructure and additional investment will be necessary?

Electricity infrastructure: Will the project operate autonomously, connect to the national grid or use a hybrid configuration?

Port access: If hydrogen derivatives such as green ammonia are intended for export, logistics infrastructure becomes strategically important.

Industrial land: Is sufficient land available not only for the initial project but also for future expansion?

Environmental requirements: What environmental studies, permits and mitigation measures will be required?

Financing: What is the project's cost of capital and how does it affect the final LCOH?

Infrastructure readiness: Roads, transmission infrastructure, water systems and other supporting infrastructure can materially affect both CAPEX and project timelines.

The cheapest plot of industrial land can therefore become a very expensive location if substantial supporting infrastructure needs to be developed.

Conversely, paying more for a strategically located site may reduce the total cost of the project over its lifetime.

Financing Could Be Almost as Important as Energy Resources

One of the particularly useful findings of the study concerns financing.

The researchers' sensitivity analysis identified the discount rate as one of the important variables influencing the economics of green hydrogen.

This matters because green hydrogen projects are highly capital-intensive.

A large proportion of their economics is determined upfront through investments in renewable generation, electrolyzers, storage and supporting infrastructure.

As a result, two technically identical projects could potentially produce hydrogen at different levelized costs simply because they have different financing conditions.

The study also highlights the importance of battery characteristics, including capacity, cost and lifetime.

This leads to an important conclusion for investors:

The competitiveness of green hydrogen is not determined by the electrolyzer alone. It is the result of an entire system.

Technology, renewable resources, financing, storage, infrastructure and location interact with one another.

Why Dakhla Is Strategically Interesting for Morocco's Green Hydrogen Ambitions

Dakhla's attractiveness goes beyond a single academic cost comparison.

Its combination of renewable resources makes the region particularly interesting when considering the long-term development of green hydrogen and renewable-powered industrial activities in Morocco.

But hydrogen itself may only be the beginning.

Hydrogen can potentially become an input for downstream products such as green ammonia and other low-carbon industrial products.

That changes the investment question.

Instead of asking only:

“Where can Morocco produce hydrogen competitively?”

investors should increasingly ask:

“Which industrial value chains could be built around Morocco's most competitive renewable-energy locations?”

That distinction is important.

The greatest economic value may ultimately come not simply from producing hydrogen, but from using competitive renewable energy and hydrogen to support higher-value industrial production.

Dakhla vs Tangier: Different Locations for Different Industrial Strategies

The study should also not be interpreted as evidence that Dakhla is simply a “better” industrial location than Tangier.

They offer very different advantages.

Tangier benefits from an established industrial ecosystem, significant automotive manufacturing activity, developed logistics infrastructure and proximity to the Tanger Med port complex.

Dakhla, by contrast, can offer particularly attractive renewable-energy conditions.

This illustrates why industrial site selection should always start with the requirements of the project, rather than a predetermined city.

An export-oriented automotive supplier and a large renewable-energy-intensive project do not necessarily need the same location.

The correct question is therefore not:

“What is the best industrial location in Morocco?”

It is:

“What is the best Moroccan location for this specific industrial project?”

A Critical Caveat About the $10.62/kg Figure

The numbers from the study need to be interpreted carefully.

The $10.62/kg LCOH calculated for Dakhla is not the current market price of green hydrogen in the region, nor should it be considered a forecast for a future commercial-scale hydrogen project.

The research evaluates a specific autonomous configuration using solar PV, wind generation, batteries and a 20 kW alkaline electrolyzer, subject to particular technical, reliability and financial assumptions.

This distinction is particularly important because other academic studies examining green hydrogen production in Morocco have obtained substantially different LCOH results.

The source material cites previous estimates ranging from approximately $2.54/kg for another modeled PV-wind system in Dakhla to considerably higher figures depending on technology, location and methodology.

Comparing individual LCOH figures without understanding their underlying assumptions can therefore be misleading.

For investors, the relative lesson is arguably more valuable than the absolute number.

Under comparable assumptions within this particular study, geography produced a major difference in project economics.

What Green Hydrogen Investors Should Take From This

Morocco's emerging green hydrogen industry should not be viewed simply as a race to install electrolyzers.

Successful projects will require optimization across an entire investment ecosystem:

renewable resources + technology + water + infrastructure + logistics + financing + regulation + industrial demand.

And that has an important consequence for international investors evaluating Morocco.

Site selection needs to happen early and needs to be strategic.

Selecting land before fully understanding energy availability, water requirements, logistics constraints and future industrial needs can create costs that remain with a project for decades.

As Morocco advances its green hydrogen strategy and broader energy transition, regions such as Dakhla could therefore become important not simply because they have available land, but because their underlying renewable resources may support new forms of competitive green industry.

The investment conversation is consequently evolving.

It is no longer only:

“Why invest in green hydrogen in Morocco?”

Increasingly, it is:

“Where in Morocco should we invest — and what should we produce there?”

That may ultimately be one of the most important questions determining the competitiveness of Morocco's future green hydrogen industry.

Source: Techno-economic and environmental analysis of green hydrogen production in Morocco, Journal of Power Sources (2026). The study compares Dakhla, Tangier, Benguerir and El Jadida using hybrid renewable-energy and alkaline electrolysis configurations.