Veteran entrepreneur Mashudu Ramano, who committed R4.3bn for a hydrogen fuel cell project at last week's investment conference, says the government has been much too slow to appreciate what a game changer green hydrogen could be for the country.
“Hydrogen is probably the most suitable strategy for South Africa because with hydrogen energy we become energy independent. We've got all the things required to produce enough hydrogen energy to make us energy secure. And the beauty of fuel cells is that they don't require grid capacity to provide energy.”
The former chair of Johnnic Communications and Airports Company South Africa, among others, Ramano became one of the country's earliest champions of hydrogen after a study of global trends convinced him that the future of energy generation lay in hydrogen fuel cells.
In 2012, he started Mitochondria Energy, which formed a partnership with Austrian engineering company AVL to develop hydrogen fuel cell technology.
His plan to have a factory in Mpumalanga producing fuel cells for a burgeoning global market by 2023 came unstuck when the Mpumalanga Economic Growth Agency tied it up in red tape.
“We were coming with our own self-funded project which would create local jobs and economic growth in what is a very depressed area, and they wanted to run a tender process. How do you run a tender process when I'm coming to build a factory?”
He says this is typical of the bureaucratic mindset that has prevented President Cyril Ramaphosa's much-vaunted infrastructure development programme taking off, and deterred potential investors.
“Gauteng province said they were setting up the Vaal Special Economic Zone (SEZ), would we be interested in relocating our project to Gauteng?”
In December 2021, 700ha was allocated in the Vaal SEZ in the industrial heartland of Vereeniging and Vanderbijlpark, and Mitochondria began the compliance processes.
It will spend R1.3bn of the R4.3bn in 2023/2024 on the assembly line and testing facilities, with the rest over the next two years. The goal is to start building the factory in June or July this year and have it producing by January 2025.
Too many politicians don't have the interests of the country at heart but pursue their own personal, vested interests. And this kind of narrow minded thinking is destroying South Africa
The first 50kW commercial hydrogen fuel cell, produced by Mitochondria engineers working with their counterparts at the AVL premises in Graz, Austria, will be on the market by December 2024, he says.
“We are still doing the supply chain verification. When you go into production you don't want to press the button and then find all your components are not available.”
Suppliers will be from Europe and South Africa, where Mitochandria has been working on supplier and skills development. The core manufacturing assembly skills needed are available in the South African automobile industry.
The plant will produce hydrogen components for the local and export markets including fuel cells, electrolysers and inverters.
By 2050, this will be a $200bn (about R3.6-trillion) per annum market, according to a 2020 Boston Consulting Group study. South Africa should aim for 20%, or $40bn, of that market, Ramano says. His company is targeting 25% of that. “So this is not a small thing we're looking at.”
When running at full capacity the plant in the Vaal SEZ will produce 375MW a year in 50kW fuel cells. Although the first of these was tested by AVL in Austria last year, the intellectual property is Mitochondria's, he says.
The construction of the factory will take a year and create 1,500 construction jobs in the Sebokeng/Emfuleni area.
His team has had four sessions with community representatives to forestall disruptions by the construction mafia.
“They have said they will defend this project against the mafia whatever happens. South Africa cannot be held to ransom by these mafias. They must be stopped. We are working with all relevant provincial and national government entities to make sure this project is implemented.”
Ramano says with a different attitude South Africa could have moved much further in the development of hydrogen energy than it has.
“I started on the path of hydrogen fuel cells 15 years ago. The Hydrogen South Africa project of the government was implemented in 2006/2007, but they only developed a hydrogen strategy in 2020, almost 14 years later. So you can see, we were slow.”
Japan, for example, whose engineers he was working closely with at the time, had a hydrogen strategy in 2010, he says. “In 2013, Japan wanted to import hydrogen from South Africa but we were not ready. We didn't even see hydrogen as an economic opportunity.”
He doesn't blame only the government for this.
“The large multinationals who control the fossil fuel industry have friends in government. So it's not just government that has been applying the brakes, it's big, vested interests in this industry that have been pushing them.”
But the fact he's been allocated land in the SEZ and is working with the department of trade, industry & competition, and his financial backers include the Industrial Development Corp and Development Bank of Southern Africa, indicates a change in the government's thinking about the potential of hydrogen to boost the economy, he says.
He sees a big opportunity in Eskom's plan to repurpose 11 coal-fired power stations, creating a 20,000MW energy gap, and in the steel, aviation and mining industries needing to meet decarbonisation targets.
He says electricity minister Kgosientsho Ramokgopa ’s proposal to delay the move to decarbonisation in South Africa confirms his view that “most of our government is not proactive in managing the energy transition”.
“There are a lot of vested interests in maintaining the status quo and so we are very reactive when it comes to policy change in this area of energy.”
He says in spite of resistance from elements within the government to embrace the transition to green energy he's confident they won't be able to buck the worldwide decarbonisation trend.
But the uncertainty created is discouraging critical investment.
“There's no understanding that economic development requires policy certainty. Too many politicians don't have the interests of the country at heart but pursue their own personal, vested interests. And this kind of narrow-minded thinking is destroying South Africa.”
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