In this opinion article, Royal HaskoningDHV advisory group for energy transition director Gladys Nabagala writes that South Africa has significant potential to stimulate its economy by building a hydrogen export economy.
As South Africa grapples with ongoing blackouts because power utility Eskom's power station fleet cannot cope with demand or upkeep maintenance, the country is also faced by global pressures to reduce its carbon footprint and embrace renewable energy resources.
This pressure has come with the offer of help, though, with the country securing R131-billion in funding offers at the recent COP26 event to transition towards green energy.
However, even with the recent raising of the threshold for distributed generation to 100 MW, it’s going to take time for projects of any meaningful scale to be commissioned and relieve pressure from the national grid.
In addition to solar and wind energy resources, which South Africa has in abundance, discussions have emerged around hydrogen – particularly green hydrogen – and what this could mean for South Africa’s carbon footprint, and its economy.
South Africa is one of the best positioned countries in the world to produce emissions-free green hydrogen, in which renewable energy is used to power the water electrolysis process through which hydrogen is harvested. This is thanks to the country’s extensive solar and wind resources, and the fact that we have a long coastline with access to water that could be used in the process. These factors position South Africa well to supply countries seeking green hydrogen, but that don’t have the natural and renewable resources to produce them, such as Japan and countries in the European Union.
Currently, green hydrogen accounts for just 0.1% of global hydrogen production, but the declining costs of harvesting renewable energy and the falling costs of electrolysis technology are clear indications that green hydrogen could be a strong investment in a clean energy future. Indeed, the United Nations’ ‘Green Hydrogen Catapult Initiative’ is setting out to increase the production of green hydrogen 50-fold in the next six years, with the intention of cutting production costs to less than two dollars per kilogram.
The country is not ready to use hydrogen-based energy itself though – our tax regimen renders any vehicles other than internal combustion rides too expensive for most people, and there is little political will to move away from coal-based power generation. Hydrogen is also an expensive energy resource, which local individuals and organisations are unlikely to be able to afford.
However, there is significant potential for South Africa to stimulate its economy by building and growing a hydrogen export economy. In addition to stimulating job creation and work opportunities at hydrogen harvesting plants, it could lead to massive infrastructure development and improvement.
We have seen the potential of this in our work with the NorthH2 project in the Netherlands, which comprises the entire green hydrogen value chain, from wind farms to create energy, to the pipelines that will deliver hydrogen to industries in Northwest Europe, and the underground storage facilities in underground salt caverns.
A project of this nature at South Africa-size scale could lead to improvements in the country’s ports infrastructure, in turn stimulating other sectors to make use of these facilities, and bring even more trade to the country.
There is already a study underway in KwaZulu-Natal, surveying public opinion on how the hydrogen industry would be received in the area, and examining potential opportunities. This local approach to a global opportunity is vitally important – as it simply won’t work for local operations to copy and paste what’s already been done in Europe and the United States of America.
South Africa needs to carefully examine the opportunities that hydrogen presents, and to engage with experienced experts that can support government, the Department of Minerals and Energy, local government and investors navigate a successful path towards the economic benefits of investing in this alternative energy source.