A 258MW solar project in Upingon, Northern Cape, which was completed in April 2020. Renewable energy will power green hydrogen technology. Photo: Scatec website
South Africa’s ambition to become a global exporter of green hydrogen could be a game-changer in the fight to cut emissions, but drawbacks remain when it comes to costs.
Fresh off the Green Hydrogen Summit that took place in Cape Town earlier this week, and just after the 27th annual United Nations Climate Change Conference (COP27), plans to make green hydrogen (GH) a reality will likely form a significant part of the country’s Just Energy Transition (JET).
The JET Investment Plan (JET-IP) identifies green hydrogen as one of the four “big frontiers”, requiring R319 billion to get started.
But with a GH commercialisation strategy under Cabinet consideration, many are still uncertain about what it actually is, the costs involved in its establishment, and the important role it could play.
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The “green” in green hydrogen refers to the clean way in which it produces energy.
It is produced through a process called electrolysis, powered using renewable energy such as wind or solar. These energy sources split the water molecule into hydrogen and oxygen using electrolyser technology.
The process has no direct carbon dioxide emissions in its production, Hydregen Energy CEO Mike Levington explained.
In a water-scarce country such as South Africa, green hydrogen plants would typically be located on the coast, using desalinated water.
10 litres of water yields 1kg of green hydrogen.
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GH could cut South Africa’s carbon emissions by up to 15%, and could boost our GDP by 3.7%.
Levington explained that GH will also decarbonise “hard to abate” industries synonymous with heavy emissions, such as the steelmaking, transport and aviation sectors.
In order for our GH economy to become a globally competitive industry, however, it must be established by 2030.
Luckily, South Africa has all the ingredients to make this a reality, according to Levington.
“South Africa contains all of the ingredients for a successful green hydrogen economy; we’ll need to see if we can make the soufflé rise.
“We have a world class solar and wind resource and lots of available land for the renewable energy required for production.
“In addition, many of the engineering and equipment manufacturers involved in the production of green hydrogen components already have had a long-established presence in the country,” he explained.
When it comes to costs, renewable energy accounts for up to 75%. Another factor is the electrolyser industry, which Levington said was still in its infancy.
Another feather in South Africa’s GH cap is Sasol, positioned as a global leader in the production of industrial-scale chemical and energy products, using the “Fischer-Tropsch process”.
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Potential obstacles to GH come in the form of building infrastructure to enable the sector to thrive.
“There are signs that many of these blockages are being removed”, Levington added.
Climate change engagement director at Just Share, Robyn Hugo, said another challenge is government specifying that green hydrogen “will actually contribute to the just transition in a meaningful, measurable way.”
“A time-bound strategy with specific milestones is important to concretise plans beyond claims of ‘job creation’ and ‘industrialisation opportunities’.”
Although costs are expected to drop significantly over the next few years as GH continues to play a role in more countries’ just energy transition plans, Wits Business School senior lecturer Dr Bruce Young remains sceptical.
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“The term “green hydrogen economy” is vague, but given there is no market for green hydrogen today in South Africa, there will not be a significant “green hydrogen economy” by 2030,” he cautioned.
Significant, he explained, means multi-gigawatt (GW) capacity.
“There may be some small production, but it will not be significant.
“The market needs to be developed from scratch and very significant infrastructure would need to be built in addition to the green hydrogen production.
“Decisions would need to be made now regarding this infrastructure. It’s not happening.”
During the South African National Energy Association conference last month, Young listed significant challenges when it comes to electrolyser technology involves “efficiency, durability and cost”.
Currently, the largest commercially available electrolyser stack is 2 to 5 megawatts (MW), with plans for 20MW.
The world’s largest green hydrogen facility is being built in Neom, Saudi Arabia, with an expected capacity of 4GW.
The project is on track for completion in 2026, and will produce 600 tonnes of GH per day, and up to 1.2 million tonnes of green ammonia annually, mitigating five million metric tonnes of carbon emissions per year, according to Acwa Power.
In Africa, the first phase of a green hydrogen plant was commissioned last month in Ain Sokhna, Egypt.
When fully developed, it will consist of 100MW of electrolysers, powered by 260MW of solar and wind power, project partner renewable energy solutions provider Scatec said.
This will allow Egypt to deliver up to 15 000 tonnes of green hydrogen, and 90 000 tonnes of green ammonia by 2023.
But Young warned it would take “decades” to optimise GW-scale electrolyser technology.
Another concern is the costly process of exporting hydrogen.
Young explained this would involve converting hydrogen to ammonia, shipping it and “cracking” the ammonia back to hydrogen.
“This is costly and causes efficiency losses,” with “dramatic reductions” in costs needed for the export of GH to be viable.
“Pioneering GW scale green hydrogen projects in southern Africa are virtually guaranteed to have significant cost and schedule overruns,” Young said.
Hydrogen prices at the factory gate are priced at ±$5/kg. Transporting the hydrogen to the customer equates to ±$3/kg. The total delivered cost to the customer is ±$8/kg, Young explained.
“The cost of generation of renewable energy has indeed come down a lot, but the capital cost of a green hydrogen plant is very high.”
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