South Africa in talks with investors on green hydrogen projects

Germany has identified SA as a primary source of green hydrogen.
Image: Mikael Sjoberg, via Bloomberg

South Africa’s government is in talks with potential investors for green hydrogen projects, with Germany having identified the country as a key source of the fuel, Trade, Industry and Competition Minister Ebrahim Patel said.

President Cyril Ramaphosa on Thursday announced that the government has plans that support the development of a pipeline of green-hydrogen projects worth about 270 billion rand ($17.8 billion) over the next decade.

South Africa is joining as many as 26 other countries, which have come up with plans to harness green hydrogen — made from water and electricity generated from renewable sources– in a bid to meet emissions reduction goals and help consumers and key industries such as steel transition to lower-carbon fuels. The number of countries with a hydrogen strategy doubled last year to 26, and expected plans from the U.S., Brazil, India and China could reshape the global market, according to BloombergNEF.

“Green hydrogen has been recognised by the president as a big win for South Africa,” Patel said in a phone interview. “We are in discussions with a number of private companies about this and also, what is very positive, is that Germany has identified South Africa as a primary source of green hydrogen.”

A panel appointed by Ramaphosa had its recommendations for the world’s 12th-biggest producer of greenhouse gases to adopt more ambitious plans to reduce its emissions of climate warming gases and commit to generating zero emissions on a net basis by 2050 adopted by the government.

The government plans to develop a domestic market for hydrogen, with the excess to be exported, the minister said. “We are hoping that the market for hydrogen will go further than just Germany,” he said.

A key challenge will be to produce it at an affordable cost. Green hydrogen produced by renewables is far from competitive compared to other fuels, costing nearly double the price using coal, South Africa’s main source of electricity generation.

Still, Africa’s most-industrialised nation is a key source of metals that are needed to produce electrolyzers, the kit that produces hydrogen from water and electricity, which may help in reducing costs.

“South Africa has the potential to be a world leader in the production of green hydrogen because we are a major producer of platinum group metals,” Mineral Resources and Energy Minister Gwede Mantashe said by phone from Cape Town.

“We already have some pilot projects on the go and there is a strong possibility that several more significant ones will be launched in the coming year.”

In October, Ramaphosa announced that South Africa will work with Namibia to develop the so-called Boegoebaai export hub for hydrogen and ammonia in the Northern Cape province. South African petrochemicals giant Sasol signed a memorandum of understanding to lead a feasibility study of the project, which has the potential to produce as much as 400 kilotons of hydrogen a year and require 900 gigawatts of renewable energy — about 20% of South Africa’s current installed capacity.

© 2022 Bloomberg L.P.

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