Is South Africa the Next Green Hydrogen Hub?

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For Africa – a continent that is aggressively pursuing a gas-focused agenda – recognizing natural gas as a transitional energy source and positioning hydrogen as a long-term energy solution could bring about the energy security and industrialization that it needs. 

Is South Africa the Hydrogen Hub of the Future?

South Africa, for its part, has emerged as the destination of choice for green hydrogen developers, with the country’s significant renewable resources and high demand for reliable power already attracting a suite of private sector players. South Africa is home to 220 watts per㎡ of annual solar radiation and 6,700 GW of wind potential, uniquely positioning the country as a strategic green hydrogen hub and key leader in the African energy transition. 

During an address last November, South African President Cyril Ramaphosa stated, “Green hydrogen is identified as one of the four ‘big frontiers’ of a just energy transition, indicating that it has huge growth and investment potential. Globally, the demand for green hydrogen and green hydrogen-based products, such as ammonia and synthetic jet fuels, is rising significantly. This presents a huge opportunity for South Africa to link its mineral endowment with its renewable energy endowment to drive industrialization.”

Stepping into this picture, the government has introduced a R300-billion investment pipeline, designated as a Strategic Integrated Project for accelerated development. The country’s potential to produce up to 13 million tons of green hydrogen and derivatives per year by 2050 – which would require between 140 and 300 GW of renewable energy – has attracted a slate of deals. This comprises 19 projects identified for accelerated development by the government, including the 400-kt-per-annum Boegoebaai Green Hydrogen Project; 780,000 ton-per-annum HIVE Ammonia Project; and 185-kt Hydrogen Valley Project, among other developments.

With these projects on the horizon, a wave of socioeconomic opportunities is expected to emerge. Specifically, up to 3.7 million jobs could be created, South Africa’s GDP could see a $60-billion boost, while a suite of economic sectors stand to see accelerated development, including education – driven by the need to improve capacity building – transportation, infrastructure and manufacturing. Echoing this sentiment, President Ramaphosa stated that green hydrogen will “create jobs, attract investment, bring development to rural provinces and support a just transition from fossil fuels. South Africa is an investment destination of choice. The country has proven itself as a gateway to a dynamic continent with great prospects.”

How Can Policy Incentivize Hydrogen Development?

Recognizing the value that becoming a green hydrogen hub could bring, the South African Government is “driving regulatory and legislative reforms to make our economy more competitive, to attract more investment and to create more jobs,” said President Ramaphosa. As such, the government has announced ambitious plans to create a more enabling environment for investment, introducing various policies and supportive regulatory frameworks to incentivize the R4.3-trillion investment needed to create a domestic hydrogen economy.

The country’s overarching hydrogen framework, the Hydrogen Society Roadmap (HSR), serves as a national coordinating mechanism to facilitate the integration of hydrogen-related technologies in various sectors of the economy. Launched last February, the HSR was developed by the Ministry of Higher Education, Science and Innovation, in collaboration with the Department of Science and Innovation, and has brought about much-needed clarity and transparency for regional and international hydrogen players.

H.E. Dr. B.E. Nzimande, Minister of Higher Education, Science and Innovation, stated during the launch, “The HSR identifies the production, storage, and distribution of hydrogen; research, development, and innovation; as well as promoting gender equality and social inclusion, as important benefits of the hydrogen economy. If South Africa fully implements this HSR, within a few years, at least 20,000 new jobs [per annum] will be created in South Africa as part of the adoption of the hydrogen economy.”

Through this initiative, the country’s promising green hydrogen potential and unique position as an energy transition leader means that South Africa is taking steps towards revolutionizing its own economy, along with the wider SADC landscape.

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Energy Capital & Power

Energy Capital & Power is the African continent’s leading investment platform for the energy sector. Through a series of events, online content and investment reports, we unite the entire energy value chain – from oil and gas exploration to renewable power – and facilitate global and intra-African investment and collaboration.