2 months ago

South African Business 2023

  • Text
  • Business
  • Investment
  • Transportation
  • Development
  • Mining
  • National
  • Provincial
  • South africa
  • Wwwglobalafricanetworkcom
  • Economy
  • Manufacturing
  • Province
  • Industrial
  • Logistics
  • Sector
  • Cape
  • Infrastructure
  • Economic
  • African
The 2023 Guide to Business and Investment in South Africa.


FOCUS South Africa is on the path to green hydrogen exports Thomas Roos, Principal Research Engineer at the Council for Scientific and Industrial Research (CSIR), reports on cooperation with three German ministries. Thomas Roos, Principal Research Engineer, CSIR Under the Just Energy Transition Partnership announced at COP26 in Glasgow, the governments of UK, France, Germany, the USA and the EU have agreed to provide .5-billion in financing in the form of grants and soft loans, to assist South Africa to decarbonise the electricity sector by early retirement of coal-fired power plants and expansion of renewables, to accelerate the introduction of electric vehicles and to facilitate the adoption of green hydrogen. In February, the Department of Science and Innovation released the Hydrogen Society Roadmap. In November at the South African Green Hydrogen Summit, President Ramaphosa announced that the Just Energy Transition Investment Plan, recently released for public comment, has identified green hydrogen as one of the four “big frontiers” of a just energy transition, indicating that it has huge growth and investment potential. CSIR research is showing ways that South Africa can become a significant exporter of green hydrogen and the body is already involved in projects with several German ministries. It may therefore legitimately be asked: “What is green hydrogen, and why is it important?” While the term green hydrogen is often used to describe hydrogen produced from any non-fossil-fuel-based source (such as biogenic or nuclear), in this context it is more strictly defined as hydrogen produced by splitting water by electrolysis into hydrogen and oxygen, using electricity from renewable sources. Green hydrogen may therefore be regarded as renewable electricity stored in chemical form. Green hydrogen is important for the decarbonisation required by the Paris Agreement (signed and ratified by 193 countries) and the European Green Deal (which commits the EU to be carbon-free by 2050). The most efficient and generally lowest-cost decarbonisation approach is to convert current fossil-driven processes to instead be directly driven by renewable electricity. There are two scenarios, however, where this direct renewable electrification is not always possible or feasible. Geography dictates The first scenario involves geographic locations where energy demand exceeds feasible renewableelectricity supply. This is the case for Japan, the world’s third-largest economy and a signatory to both the Kyoto Protocol and the Paris Agreement. It is also in the top four importers globally of the three major chemical energy vectors (coal, oil and natural gas). Its decarbonisation options are constrained: it has very limited natural energy resources and the Fukushima disaster significantly dampened public appetite for nuclear power. As a result, Japan plans to move its economy towards hydrogen – mobility by fuel cell electric vehicles, homes powered by fuel cells (with the waste heat produced providing domestic water heating) and central power generation from combined-cycle power stations, SOUTH AFRICAN BUSINESS 2023 54

FOCUS Credit: Shutterstock fired by green ammonia. To allow this, from 2030 Japan will import about 300 000 tons of hydrogen per year (at a target price of per kilogram), rising to between five-million and 10-million tons of hydrogen per year by 2050. This presents an opportunity for South Africa: CSIR modelling has shown that the combination of South Africa’s excellent solar and wind resources and the expected cost reductions over time in solar PV, wind and electrolyser equipment allow green ammonia produced in South Africa to be delivered to Japan in 2030, meeting the Japanese cost target. Difficult sectors The second scenario involves two broad categories of hard-to-abate economic sectors. The first category is heavy-duty, long-range transport where the use of batteries is ruled out by range, power density or charging time limitations, such as commercial aviation, maritime shipping and long-distance trucking. The second category is a subset of carbonintensive industrial processes, such as iron and steelmaking, cement manufacture, ammonia production and the manufacture of plastics. Green hydrogen, together with its derivatives such as green ammonia, green methanol and sustainable aviation fuel, provides a pathway to decarbonise these sectors. For Germany to meet its decarbonisation targets, the National Hydrogen Strategy of the German Government states that between 2.7-million and 3.3-million tons per year (90-110 TWh/year) of green hydrogen will be required by 2030, but that only a maximum of 420 000 tons per year (14 TWh/year) can be generated in-country (14% of this amount). By far the bulk of the green hydrogen will have to be imported, some from elsewhere in the EU such as Portugal, Spain and the Ukraine; and the remainder from renewablerich countries in a development relationship with Germany, such as South Africa. Three separate German federal ministries are funding projects to develop the green hydrogen economy in South Africa: BMWK (Ministry for Economic Affairs and Climate Action), BMZ (Economic Cooperation and Development) and BMBF (Research and Education), and CSIR is involved in each of these. In a project funded by BMWK, CSIR and Meridian Economics were contracted by KfW Development Bank to solicit, evaluate and rank applications from hydrogen developers for 200-million euros in concessional financing to fund green hydrogen projects in South Africa. From 55 initial applications, a longlist of 20 projects passed the initial filtration process, leading to a shortlist of between seven and 12 projects, depending on the breakdown of grant versus concessional-loan financing. The oversubscription of the funding shows significant market appetite. CSIR is well positioned to support the energy transition in this way, as the development and implementation of green hydrogen will draw on many of CSIR’s capabilities. ■ 55 SOUTH AFRICAN BUSINESS 2023

Other recent publications by Global Africa Network: