Thursday, 24 April, 2025
South Africa is situated at the southernmost point of the African continent. According to the World Bank, South Africa's population has seen substantial growth, increasing from 16.5 million to around 60 million in 2023. In 2023, South Africa became the second-largest economy in Africa, following Egypt, and contributed 13.2 percent to the continent's GDP. The Industrial sector, particularly mining and manufacturing, has historically been the backbone of the economy, driven by the country’s rich mineral resources and industrial investments.
Coal is the backbone of South Africa's energy system, accounting for about 70 per cent of the country's installed power generation capacity. The 2019 Integrated Resource Plan outlines a strategy to diversify the energy mix by 2030, aiming to reduce the carbon footprint of the energy sector while addressing growing energy demands and ensuring a socio-economically just transition.[1]
Coal generates 85% of South Africa's electricity and provides 60 per cent of its heat. The country has significant coal resources and numerous coal-based power plants, which explains its heavy reliance on coal. Approximately two-thirds of the coal produced is used domestically, while the remaining one-third is exported. Coal dominates the total energy supply in South Africa. For oil and natural gas, the country is almost entirely dependent on imports.
In 2022, renewable energy accounted for 7 per cent of South Africa's final energy consumption, with about half of this coming from biomass. Biomass is primarily used for heat production in both residential and industrial sectors. The share of renewable energy in electricity was 7.9 per cent in 2022, increasing to 8.8 per cent in 2023. This renewable electricity is mainly generated from wind and solar sources, with biomass contributing minimally.[2]
South Africa boasts excellent weather conditions for solar and wind energy generation, which are key renewable energy sources used in green hydrogen production. The high availability of solar and wind resources enhances the efficiency of hydrogen electrolysers, reducing the cost of green hydrogen production and making it an attractive investment opportunity.
South Africa recognizes green hydrogen as a crucial element in its energy transition strategy and its commitment to global decarbonization efforts, as outlined in the Hydrogen Society Roadmap of 2021.[1]
The country has a competitive edge in producing and exporting green hydrogen. It plans to leverage existing opportunities to replace hydrogen derived from natural gas with green hydrogen. Implementing the hydrogen roadmap aims to address electricity supply challenges, promote inclusive growth, and help the government reduce unemployment, poverty, and inequality.
South Africa's vision for green hydrogen is outlined in its Hydrogen Society Roadmap (HSRM), released in February. The roadmap sets ambitious targets for 2050, including deploying 10 gigawatts (GW) of electrolysis capacity in the Northern Cape by 2030 and producing approximately 500 kilotons of hydrogen annually by the same year. This growth is expected to create 20,000 jobs annually by 2030 and 30,000 by 2040. The government's near-term strategy focuses on creating local demand for green hydrogen and related products.
The HSRM identifies four key projects to scale up hydrogen use across various sectors and for export:[1]
Numerous funding programs support renewable energy, including hydrogen. The ZAR 800 million green fund under the Department of Environmental Affairs supports green initiatives. Public-private partnerships also play a crucial role, with significant investments from entities like the Public Investment Corporation and Anglo American Platinum.
Global partnerships and foreign investments are vital for kick-starting hydrogen production. South Africa is developing its first Country Investment Strategy (CIS) to attract more foreign and domestic investment. Collaborations with international entities, such as the German Ministry of Economic Cooperation and Development (BMZ) and the KfW Development Bank, provide substantial funding and support for green hydrogen projects.
South Africa aims to become a net exporter of green hydrogen, targeting markets in Asia, particularly Japan, and Europe. President Cyril Ramaphosa announced a Green Hydrogen Export Economic Zone near the deep-water port of Boegoebaai, which will serve as a future export hub. A Memorandum of Agreement with the Port of Rotterdam (PoR) aims to position PoR as a demand aggregator for green hydrogen in Europe.
Still evolving.
Hydropower contributes only a minor portion to South Africa's overall electricity capacity and generation. Despite being a relatively dry country, South Africa utilizes rivers in its eastern regions for hydroelectric power. The majority of this power is generated by four hydroelectric pumped storage plants. These plants operate by pumping water to a dam, which is then released to produce electricity.
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Proof-of-Concept (POC) Project: Sakhumnotho Power, in collaboration with Keren Energy Investments, is pioneering the production of green hydrogen at a site provided by Namaqua Engineering in Vredendal, Western Cape. This project marks South Africa's first attempt to demonstrate the feasibility of generating green hydrogen using solar energy. The hydrogen produced will be utilized in hydrogen fuel cell vehicles.[1]
Hydrogen Valley: This initiative aims to create an industrial cluster that integrates various hydrogen applications across the country, forming a cohesive hydrogen ecosystem. The South African government, in partnership with Anglo-American Platinum and ENGIE, is spearheading this program. The Hydrogen Valley will extend from Mokopane in Limpopo, through the industrial and commercial corridor to Johannesburg, and finally to Durba.