The Africa Green Hydrogen Summit may have seemed like just another business talk shop in Cape Town, hemmed in among many other conferences. Yet it is likely to be remembered for generations as the moment heralding an entirely new industry in South Africa.
Deindustrialisation is often mentioned in the same breath as South Africa these days, given the seemingly endless decline and closure of primary industries such as clothing and textiles, steel, manufacturing, engineering and construction. Even the largest industrial sector, automotive, faces pressure from imports of less expensive vehicles from India and China. Hundreds of thousands of jobs have been lost permanently.
The global energy transition has brought substantial wind and solar investment to South Africa in recent years, but until this week, the hydrogen economy remained a peripheral, largely theoretical discussion within the renewable-energy sector.
That changed this week. Electricity Minister Kgosientsho Ramokgopa, speaking on behalf of President Cyril Ramaphosa, announced the “First Wave” of hydrogen projects: Phelan Green Group’s aviation-fuel project in Saldanha Bay, the Coega Green Ammonia Project, the Saldanha Hydrogen Power Reserve, the Green e-Fuels Producers Green Methanol Corridor and the Green Hydrogen Solutions Project. A second wave will follow, he said.
South Africa has been investing in hydrogen research, innovation and institutional capability for almost two decades. Eskom, for example, has conducted research into co-firing ammonia in coal-fired generation.
Dr Rebecca Maserumule, who heads the Just Energy Transition Investment Plan (JET-IP) programme management office at the Industrial Development Corporation (IDC), noted that after years of strategy development, market engagement and project preparation, South Africa’s green-hydrogen economy is entering a new phase of maturity.
Industry insiders have cautioned that hydrogen projects are technically intensive and require a three- to five-year incubation period. Nevertheless, the planned attendance of the President, Ramokgopa, Minister of Trade, Industry and Competition Parks Tau, and Deputy Minister of Science, Technology and Innovation Dr Nomalungelo Gina indicates strong government support for the sector from now on.
Green hydrogen and Power-to-X projects are capital-intensive. They require risk capital during project preparation, long-term construction finance and customers willing to enter into agreements that support project financing. Power-to-X refers to a family of technologies that convert renewable electricity, usually from solar or wind, into other forms of energy or products such as hydrogen, methane or ammonia.
Ramokgopa said that due to the capital-intensive nature of the sector, South Africa has so far pursued a diversified approach, engaging European, Chinese and other strategic partners.
“We have worked with project developers, renewable-energy and electrolyser manufacturers, development finance institutions, commercial lenders, infrastructure providers and prospective offtakers,” he explained.
The aim is eventually to supply domestic and regional markets. Green ammonia can support fertiliser production and food security, and contribute to lower emissions in iron and steel, mining, chemicals and selected heavy-transport applications. Sustainable fuels can serve aviation and maritime markets.
Tau said plans were under way to leverage up to R10 billion in finance for hydrogen projects, with tens of thousands of additional jobs expected over time. He envisages hydrogen taking its place within the government’s new industrial framework, alongside green chemicals, green shipping fuels, advanced manufacturing and new export industries.
The hydrogen industry will also add substantial value to South Africa’s vast platinum reserves – estimated at 70% of the world’s known total – as platinum is the catalyst that makes hydrogen fuel cells and electrolysers work efficiently, enabling the conversion of hydrogen into electricity and vice versa.
Namibia, meanwhile, opened Africa’s first fully integrated green-hydrogen facility in Walvis Bay last September. The CMB.TECH Namibia facility combines solar-power generation, green-hydrogen production and energy storage in a single operational ecosystem, demonstrating how clean energy can be produced at industrial scale while supporting industrial decarbonisation and long-term energy resilience.
The hydrogen produced there, with Siemens as technology partner, will initially power local industrial applications such as dual-fuel trucks, generators and Namibia’s first hydrogen-powered freight locomotive. In future, the plant will expand and integrate with port infrastructure, transforming maritime decarbonisation by refuelling ships with ammonia derived from green hydrogen.
CMB.TECH’s facility includes a solar-powered, off-grid electrolyser for renewable-hydrogen production, a refuelling station for hydrogen-powered vehicles and industrial applications, and an on-site Hydrogen Academy for local talent development, said Roy Campe, chief technology officer at CMB.TECH.
Ramokgopa said the first six projects had emerged from a rigorous assessment process. Phelan Green Group’s electro-sustainable aviation-fuel project has reached a final investment decision, with Phelan committing $100 million in equity and securing an offtake agreement. Construction is expected to begin in the first quarter of 2027.
The Coega Green Ammonia Project in the Eastern Cape has completed early preparatory work, although further commercial, technical and financing steps are needed before a final investment decision.
The Saldanha Hydrogen Direct Reduced Iron Project on the West Coast is at the pre-feasibility stage and will link green hydrogen to lower-emissions iron and steel production.
The Prieska Power Reserve in the Northern Cape is a green-ammonia project for the domestic market, currently at the development stage.
The Green e-Fuels Producers Green Methanol Corridor targets European demand and is at the pre-feasibility stage.
Finally, the Green Hydrogen Solutions Project is a smaller-scale initiative directed towards South African demand and has completed front-end engineering design.
In a significant boost to South Africa’s green-energy ambitions, investment company Climate Fund Managers last month announced the first close of the SA-H2 Fund, with R3 billion in commitments from leading local and international institutions.
Given the number of local projects requiring funding, Maserumule said the significance of this milestone extended far beyond the amount raised. The importance of the fund lies in its design.
Its blended finance structure directly addresses the challenge of risk. By combining public and private capital, it creates a mechanism for sharing risk while attracting larger pools of institutional investment.
Its development tranche provides early‑stage risk capital and technical assistance, while its equity tranches support projects as they move toward construction and commercial operation.
edward.west@nationalmg.co.za
THE NATIONAL