South Africa’s flagship green hydrogen scheme took a step forward in late July as state logistics firm Transnet shortlisted three consortiums to develop a new port at Boegoebaai on the northwest coast—the location of a proposed hub for the production and export of the renewables-based fuel.

Days later, the strong northern European support helping underpin Pretoria’s ambitious hydrogen strategy was reaffirmed by an agreement for two German firms to collaborate on establishing a plant for hydrogen-based e-fuels.

Despite competing for attention with more-urgent economic priorities, the government’s plans both to become a major global exporter of green hydrogen and its derivatives, and to use it to decarbonise the domestic industrial base, are gradually taking shape—bolstered by local and international investor interest in exploiting the country’s natural potential. South Africa’s Hydrogen Society Roadmap published in February 2022 set a target to capture 4% of the world market by mid-century.

4% – Target share of world market

The plan to create a green hydrogen hub at Boegoebaai, a greenfield site close to the Namibian border, was first unveiled in October 2021, when local energy and chemicals giant Sasol signed a memorandum of understanding (MOU) with the Northern Cape Development Agency to lead a feasibility study on the project, with a view to becoming its anchor investor.

An initial outline indicates its enormous scale—envisaging the installation of at least 80GW of captive wind and solar power feeding 40GW of electrolyser capacity by 2050, with an interim goal to deploy 5GW to produce 400,000t/yr of green hydrogen by 2035. The proposed complex would also include an electrolyser-manufacturing facility—reflecting one of South Africa’s unique advantages in owning about 70% and more than 80% respectively of the world’s reserves of the platinum and iridium required for proton-exchange-membrane electrolysers.

The Sasol study is scheduled for delivery by year-end, but development of the supporting infrastructure, in the form of the standalone Boegoebaai deepwater port and rail project, advanced on 25 July  with Transnet’s announcement that three of the eight consortiums applying to prequalify to design, build, finance and operate the facilities under a long-term concession had been shortlisted. No indication was provided as to when the request for proposals would be issued. Officials have previously talked of a project completion date around 2028.

The three prequalified companies were identified only by their unrevealing consortium names: Boegoebaai Port & Rail Consortium, Boegoebaai Development Consortium, and Project Elephant Consortium. However, Dutch firms Port of Rotterdam (POR) and Vopak are understood to be involved in the project. POR’s involvement is unsurprising: the operator of Europe’s largest port is in the forefront of EU efforts to develop supply chains and infrastructure for green hydrogen imports and signed a memorandum of agreement with the provincial government in late 2021 to act as demand aggregator for exports of the product from the Northern Cape into Europe.

In late June, Dutch investment companies Climate Fund Managers and Invest International signed an agreement with Development Bank of South Africa, Industrial Development Corporation of South Africa and Cape Town-based insurer Sanlam to create a $1b blended finance fund to invest in local green hydrogen-related projects.

German interest

Germany has been heavily involved in Pretoria’s green hydrogen planning from the outset. German state development bank KfW allocated €200m ($219m) in May 2021 to finance selected initiatives supportive of the industry’s development. German industrial gases company Linde teamed up later that year with the UK’s Hive Hydrogen and local company BuiltAfrica for the development of a proposed 780 000t/yr, $4.6b green ammonia complex at Coega on the southern coast—another of the government’s cornerstone projects.

Berlin’s interest has been galvanised over the past 18 months by the dash to replace Russian gas supplies following the latter’s invasion of Ukraine. In late June, German Economic Affairs and Climate Action Minister Robert Habeck and South African Electricity Minister Kgosientsho Ramokgopa signed a declaration of intent to expand cooperation in the “production, processing, use and transport of green hydrogen and the related synthetic fuels and ammonia”—accompanied by a German pledge to provide another €30m of funding.

Mindful of local and continental sensitivities, the announcement of the agreement emphasised that meeting domestic needs—both for renewable power to alleviate crippling electricity shortages and for green hydrogen to decarbonise heavy industry—would be prioritised over exports. A month later, wind power specialist PNE and energy trader Select Energy signed an MOU to develop a 1GW green hydrogen plant at an unspecified location on the west coast producing 500,000t/yr of e-fuels.

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Author: Clare Dunkley