Green hydrogen on the horizon?

There have been recent moves to promote the move towards green hydrogen as a fuel replacement in this country. Significant investment from overseas has been announced, although the South African government is emphasising that the shift to green technologies should not disadvantage poor South Africans.

Following a meeting in November 2024 between South Africa’s Portfolio Committee on Trade, Industry and Competition (PCTIC) and the Portfolio Committee on Science, Technology, and Innovation (PCSTI), PCTIC chairperson Mzwandile Masina acknowledged the market disruption that will result from a move towards a cleaner fuel regime.

“It is just impossible for us to just move to greener energies. Our country is endowed with massive deposits of coal and the reality is that a country like China is building over 100 coal power plants,” he stressed, adding that while it will take a long time to totally remove internal combustion engines in urban centres, the Just Energy Transition needs to be phased in so as not to disrupt the lives of poor South Africans.

“Transitioning from combustion engines must benefit the country and we must not just move for the sake of doing it,” he reiterated. Noting that government departments had not outlined how South Africans will benefit, Masina posed the question: “Can we say with certainty that this is a strategic move that must be done?”

Volvo Trucks is one company committing to the “Green Hydrogen” (GH₂) route, by developing trucks with combustion engines that run on hydrogen. On-road tests with trucks using hydrogen in combustion engines will begin in 2026, and the commercial launch is planned towards the end of this decade.

Masina warned against a situation where the debate around climate change and greener energies is weaponised against South Africa, whose economy largely depends on coal, and whose carbon emissions do not constitute a large percentage compared to other industrialised nations. 

“South Africa cannot just be an assembly point of these technologies, or even a spectator in the bigger debate around the future of energy generation,” he added. “We need to reskill the labour force in the coal sector.”

He further highlighted the need to ensure financial sustainability in moving to greener technologies: “Product developers (need) to look at higher ambitions for South Africans. Future loans should be affordable; we can’t just be going to get money from these institutions as our future generations will not afford these. There has to be thinking about the adaptation of the existing infrastructure so that we do not disrupt the existing industries with new industries.”

Planned Investments

The ongoing collaboration between the European Union (EU) and South Africa regarding the Just Energy Transition and the sustainable development of strategic value chains, including GH₂, is one aspect of ensuring the financial viability of greener fuel.

In September, the EU, along with South Africa’s Ministry of Electricity and Energy (MEE) and Department of Trade, Industry and Competition (DTIC), announced that the EU will support South Africa’s GH₂ ambitions and make R628 million available to promote the sustainable development of the GH₂ value chains in South Africa. This will create new economic opportunities and boost domestic growth.

The money will be provided in two grants, with an initial grant of R490 million expected to leverage R10 billion in private and public sector finance across the hydrogen value chain – covering production, transportation, storage, and downstream industries. 

A second EU grant of R138 million will assist Transnet in its turn-around strategy. This is expected to leverage additional funding for the green transformation of the parastatal’s core operational areas, including ports, rail, pipeline, engineering, and related facilities.

As an integrated transportation and logistics company, Transnet is expected to play a critical role across the hydrogen value chain for its operations, as well as domestic and export markets. The grant will help contribute towards ensuring that Transnet meets its own internal commitments as well as the government’s initiatives relating to the Hydrogen Society Roadmap. 

EU Energy Commissioner Kadri Simson said the announcement marks a significant milestone in the EU’s partnership with South Africa, boosting smart, clean, and secure connections in the energy and transport sections. “Our cooperation in support of South Africa’s green hydrogen agenda aims to accelerate the green transition, drive sustainable development, create new economic opportunities, and build a more sustainable future for the region,” she explained.

Local green hydrogen production

At the end of October, the Export Initiative Environmental Protection (EXI) ‘HyTrA’ project celebrated its closing event in Cape Town. Funded by the German Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection (BMUV) through the EXI programme, the project’s aim was to establish the use of hydrogen technology for decentralised power supply in South Africa.

At the heart of the project is a robust and cost-efficient microgrid for generating GH₂ at a commercial site belonging to local company AluCab. Specially developed for the African market, the microgrid combines an electrolyser for hydrogen production with fuel cells for reconversion. The electricity required for hydrogen production is generated directly on site using a photovoltaic system that converts solar energy into electricity. This creates a self-sufficient on-site energy supply system, which has now been successfully tested under the prevailing operating and climatic conditions in South Africa.

In cooperation with the local partner AluCab and the University of Stellenbosch, the project consortium, consisting of Fraunhofer IWU and Texulting GmbH, already put the microgrid into operation in July 2023 and has been testing it ever since. It has remained in operation since the project has ended, as project partners have agreed to use the system sustainably beyond the project period.

“The EXI project ‘HyTrA’ is a prime example of how innovative technologies from Germany for the production and use of GH₂ can also contribute directly to a sustainable energy supply locally,” says Nilgün Parker, head of the Sustainable Financial Policy, Environment and Foreign Trade Promotion Division at the BMUV. “The experience gained from operating the microgrid provides valuable insights that… illustrate the environmental potential of these energy systems.”

Opportunities for South Africa to take the lead in Green Hydrogen

Further opportunities to use hydrogen for renewable energy are highlighted in the World Economic Forum White Paper on decarbonising South Africa’s shipping and transport sectors. These opportunities include transforming ports into green bunkering hubs for international shipping, developing infrastructure to use GH₂ for domestic commercial road transport, and exporting derivative products of GH₂ (such as e-ammonia and e-methanol) to service increasing global demand.

As the South African government seeks to push ahead with the Just Energy Transition, it appears that Green Hydrogen may have a critical role to play.