Green hydrogen and hyperbole seem to go hand in hand. A glance at the headlines around the recent $1bn fund for this environmentally respectable replacement for natural gas shows high hopes. But is the enthusiasm for using SA’s abundant wind and solar resources as well as our industrial capacity to produce green hydrogen realistic?
It is easy to see why hydrogen could be regarded as a boon to the environment. It generates three times more energy per unit than fossil fuels and can power a wide range of sectors, including mining and transport, and heavy industries such as steel, cement, plastics and chemicals.
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The production of green hydrogen through electrolysis makes it environmentally attractive. Water is split into hydrogen and oxygen using renewable electricity, such as solar or wind power, producing no direct greenhouse gas emissions — unlike with “grey” hydrogen, which is produced with fossil fuels.
And the potential profit in meeting demand is mouth-waterin. The global market for green hydrogen is forecast to grow from $444m in 2021 to about $4.4bn by 2026. This surge is propelled by the adoption of global carbon goals, with many countries committing to net-zero carbon emissions by 2050.
Collaboration on a new fund, SA-H2, between the Netherlands, Denmark and SA to promote financing green hydrogen initiatives has attracted much media attention. The $1bn fund has an initial €50m from Invest International. On top of this, SA has already identified nine green hydrogen projects for funding and aims to attract up to $250bn in investment by 2050 for its green hydrogen industry.
Potential economic benefits for SA if it becomes a global leader in green hydrogen production are reported to be immense. One report estimated that establishing a hydrogen economy could contribute between $4bn and $9bn to SA’s GDP by 2050 and create 14,000 to 30,000 jobs a year across the hydrogen value chain.
The domestic market’s value has been estimated to reah $10bn a year, driven by demand from sectors such as mining, steel, transport, minerals and petrochemicals. Export potential could exceed $100bn, with SA perfectly positioned to provide low-priced green hydrogen to European and Asian markets.
According to a study by the National Business Initiative (NBI) in collaboration with Boston Consulting Group and Business Unity SA, developing SA’s green hydrogen sector is also crucial for pulling off our planned just energy transition. By 2045, green hydrogen is expected to be phased in when coal is completely phased out.
Green hydrogen is not a miracle fuel. It has high capital costs, estimated at close to R16,000 per kW ($900/kW) and is more expensive than conventional fuels or grey hydrogen, with the cost of electricity accounting for a significant portion of production costs.
And it may not be as green as it looks. Producing green hydrogen is water-intensive, consuming 9l of water per 1kg of hydrogen produced. Building the infrastrucure for large-scale hydrogen use takes several years. The process of producing hydrogen is not energy-efficient, and burning hydrogen may produce nitrogen oxides and ozone, which are damaging to both the environment and health.
A question mark hovers over whether we can produce all the electricity needed. On the one hand, the Renewable Energy Grid Survey published by Eskom, the SA Wind Energy Association and the SA Photovoltaic Industry Association reveals that approximately 30GW of wind energy projects are in different stages of development over the next 10 years. This would increase the country’s current installed wind energy capacity 10-fold. However, we need at least 190GW of renewables to fully decarbonise the power sector, according to the NBI study — and any electricity for green hydrogen comes on top of that.
Another serious problem lies not only in the source of the electricity needed to make the hydrogen green but in storing and transporting the hydrogen. In its gaseous frm the infrastructure and network needed is enormous — and dangerous as pipelines are susceptible to leaks, which then indirectly adds to greenhouse gas emissions. Work is being done on converting green hydrogen to green ammonia to solve this problem.
Capacity challenges
In our renewables programme for producing electrons, we may be able, with strenuous effort, to put in place the necessary large-scale renewables projects, but capacity is lacking in SA’s high-voltage transmission lines that carry these electrons to where they are needed. This may further stymie decarbonisation in general.
Depleted grid capacity in renewable resource-rich areas is hindering the deployment of renewable energy. Grid capacity in the Northern and Western Cape is fully depleted, and the Eastern Cape has low grid capacity, creating a bottleneck for renewable energy integration. Eskom has a plan to expand the grid, but doubts have been expressed about its timelines.
If the SA-H2 fund is to be more than wshful thinking SA needs to prioritise expanding the grid and must develop infrastructure for large-scale green hydrogen production while increasing efficiency and bringing down the associated cost. As it stands, bottlenecks threaten rapid deployment of renewables and will delay achieving our 2050 decarbonisation goals.
• Tutwa Consulting Group’s Just Energy Transition Programme includes senior associate engineer Reneke, economist Govender and Gordon Institute of Business Studies lecturer Pillay.
