Saudi developer, investor and operator of power generation, water desalination and green hydrogen plants ACWA Power and South Africa’s State-owned development finance institution the Industrial Development Corporation (IDC) have signed an extensive memorandum of understanding (MoU) exploring a partnership in the development of green hydrogen production and its derivatives in South Africa.

This partnership coincides with the State visit of President Cyril Ramaphosa to the Kingdom of Saudi Arabia.

The agreement was digitally signed by ACWA Power CEO and vice-chairperson Paddy Padmanathan; ACWA Power chief investment officer Clive Turton; IDC industry planning and project development head Rian Coetzee; and IDC legal services manager Russell Wallace, with agreement copies exchanged at a gathering attended by executive dignitaries.

This is the first agreement of its kind between ACWA Power and the IDC, but the parties have previously collaborated for equity in a renewable energy plant in South Africa.

The potential value of this MoU is estimated at $10-billion. ACWA Power will function as the developer for green hydrogen and its derivatives in South Africa, with the IDC acting as co-developer and equity partner in the proposed projects.

South Africa has set a 2050 net-zero target and plans to become a significant producer and exporter of green hydrogen and its derivatives.

Accordingly, the South African government has mandated the IDC to lead the development and commercialisation of the green hydrogen economy. The IDC, in partnership with the Green Hydrogen Panel, is in the process of finalising the South African Green Hydrogen Commercialisation Strategy (GHCS).

“The IDC recognises the substantial value and benefits that the green hydrogen economy will bring to South Africa. The green hydrogen economy presents new economic, skills, employment and community opportunities for the country. We are pleased to explore potential partnership opportunities with ACWA Power, given its pedigree and expertise in this industry,” says IDC COO Joanne Bate.

Given ACWA Power’s experience in the South African renewable energy industry and in green hydrogen projects abroad, the company posits that it can play a meaningful role in supporting the objectives of the GHCS.

The parties will carry out a feasibility study, potentially cooperate, jointly develop and co-invest in projects in the green hydrogen value chain in South Africa. This MoU with ACWA Power will support the implementation of the GHCS and is expected to contribute towards the country’s green hydrogen production targets.

ACWA Power has had a footprint in South Africa since 2016 and currently has two solar energy plants – Bokpoort and Redstone – in the country. Both projects use concentrated solar power technology.