Last week was a big week for SA’s nascent green hydrogen (GH2) industry, with Cape Town playing host to the SA Green Hydrogen Summit, where co-operation agreements were signed between representatives of the Western, Northern and Eastern Cape provincial governments to support “the development of shared logistics, infrastructure and manufacturing facilities to promote green hydrogen initiatives”.
This was followed by the surprisingly inconspicuous announcement by the cabinet on Thursday of the approval of the Green Hydrogen Commercialisation Strategy.
These developments build on the announcement in June that President Cyril Ramaphosa had reached an agreement with the prime ministers of the Netherlands and Denmark to launch an expected $1bn “SA-H2” green hydrogen development fund, which is poised to play a central role in funding the 19 projects worth about R300bn that were announced under the green hydrogen national programme by the department of public works in November.
These developments are not only promising for investors but also portend positive steps towards export revenue, local job creation and well-timed decarbonisation of a number of hard-to-abate, carbon-intensive sectors, including steel, petrochemicals, fertilisers, cement and long-haul transport.
While I hate to cast aspersions on a promising green economy sector, the relative lightning speed with which the state has moved to promote this sector has awakened some concerns in me. Evidently the state has drunk the Kool-Aid on the GH2 agenda, but the role of green hydrogen has clearly not been considered as part of an integrated plan as required by the National Energy Act.
Hydrogen is unlikely to be incorporated into SA’s updated Integrated Resources Plan (IRP), scheduled for release by year end, according to a statement by electricity minister Kgosientsho Ramokgopa at the summit.
This is particularly concerning as the GH2 sector is fundamentally dependent on an abundant supply of renewable energy, which needs to be both generated and transmitted to sites such as Saldanha Bay, Atlantis, Coega, Sasolburg and Boegoebaai in the Northern Cape.
Given that the SA Renewable Energy Masterplan has still not been finalised and grid transmission capacity for distributed renewable energy sources has already been maxed out, two things can be surmised: the sizeable renewable energy equipment requirements will be met almost exclusively by imported components, and renewable energy supply to GH2 facilities will come at the cost of resource mobilisation for current grid supply requirements.
In a recent statement Eskom transmission head Segomoco Scheppers pointed out that Eskom plans to invest R70bn over the next five years in new power lines and transformer capacity. Unfortunately, it is estimated that R250bn will be required if Eskom is going to add the 14,000km of new power lines required by 2032 to meet the required 53GW of new generation capacity over the period. That’s five times the current installation tempo.
And this is all before we have added any new GH2 energy demand, which is not to be sniffed at. According to Sasol executive vice-president for its energy business, Priscillah Mabelane, the Boegoebaai programme alone will require 9GW of renewable energy.
The second major point of concern is the ever-present spectre of corruption. Whereas the state has persisted in dragging its heels on rolling out the relatively corruption-proof renewable energy components of the IRP, nine of the 19 Green Hydrogen National Programme projects have already received strategic integrated project status.
These projects will benefit from schedule 2 of the Infrastructure Development Act, which fast-tracks planning approvals, authorisations, licences, regulatory exemptions and consultation requirements.
Given that the presidency has recently announced that pledges of concessional funding for our just energy transition have now increased to $11.9bn, with sizeable state “shared logistics, infrastructure and manufacturing” investments required to support the GH2 sector, that is a very big pot of money to be spent with few checks and balances.
• Maguire is carbon project manager at Climate Neutral Group SA. He writes in his personal capacity.
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