SA's green hydrogen initiatives gain momentum with R650 million development funding
Minister for Electricity and Energy, Kgosientso Ramokgopa, acknowledged the capital-intensive nature and commercially untested at scale of this emerging sector, particularly at early stages.
Image: GCIS
South Africa's plans to accelerate the development of green hydrogen have received a major boost with several initiatives announced on Thurdsay, highlighting the country's commitment to renewable energy.
The Public Investment Corporation (PIC), the Industrial Development Corporation of South Africa (IDC), and the Development Bank of Southern Africa (DBSA) have collectively invested R656 million into the South African Hydrogen Fund (SA-H2), also known as CI3 South Africa.
This fund is pivotal in advancing the country's just energy transition (JET) and reinforcing its status as a global leader in green hydrogen.
As part of this intensification of green energy initiatives, the IDC has joined forces with Germany's KfW Development Bank to provide grant funding for Mahlako, a 100% women-owned firm focused on developmental infrastructure projects, and CENEC (Central Energy Corporation), based in Bloemfontein.
This partnership aims to expedite the development of the Prieska Power Reserve (PPR), a project that has successfully navigated a rigorous due diligence process this year.
To date, the IDC has received a significant number of funding applications for green hydrogen projects and the PPR was among the first to have undergone a rigorous due diligence process.
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The announcements coincide with the inaugural Africa Green Hydrogen Summit in Cape Town where President Cyril Ramaphosa and Minister for Electricity and Energy, Kgosientso Ramokgopa, outlined the government's efforts to mobilise blended finance within the hydrogen sector.
Ramaphosa said green hydrogen was a way to marry Africa's mineral riches with renewable energy endowment to decarbonise heavy industries, to create jobs, to stimulate investment and to unlock inclusive growth across borders.
"The growing global demand for clean hydrogen as countries decarbonise their industries, transport, and energy systems presents unlimited opportunities for our continent," he said.
"As demand for green hydrogen grows, so does demand for platinum group metals, sustaining and expanding our continent's mining and refining industries."
Ramokgopa acknowledged the capital-intensive nature and commercially untested at scale of this emerging sector, particularly at early stages.
"The Department of Electricity and Energy, working with National Treasury, the IDC and the DBSA, is advancing instruments to de-risk early projects through concessional capital, credit enhancements instruments, and project preparation facilities," Ramokgopa said.
In a significant showcase of its ambitions, SA-H2 announced its first investment of $20m for the Hive Hydrogen Coega Green Ammonia Project in the Eastern Cape, which is set to revolutionise green ammonia production in the country.
The plant aims to generate approximately 1 million tons of green ammonia annually, facilitating the avoidance of 2.6 million tons of carbon emissions each year and creating more than 20 000 jobs during its construction and operational phases.
The IDC's recent statement elaborated on the scope of the Development Funding Agreement, detailing support for engineering, procurement, construction selection, front-end engineering and design, and environmental and social impact assessments. This crucial investment paves the way for financial close by mid-2026, with commercial operations anticipated to commence by 2029.
'Green hydrogen economy will not only create jobs but help boost South Africa's energy security in the long-term,' said Rian Coetzee, the IDC's acting divisional executive for industry development and planning.
'To this effect, there has been a significant ramp-up of greenhydrogen projects in the country over the past three years and these have attracted the attention of international funding entities that are keen to accelerate development of the local Green Hydrogen economy.'
SA-H2 will be managed through a partnership that includes Climate Fund Managers B.V. (CFM) and Invest International (II), a Dutch development finance institution.
The project sites for PPR, which encompass around 1 900 hectares, are strategically located to facilitate renewable energy generation and green ammonia chemical processing in collaboration with the Siyathemba Local Municipality.
The Department of Electricity and Energy also used the event to formally launch the South African Renewable Energy Masterplan (SAREM), a Cabinet-approved, sector-wide industrial strategy that anchors energy transition in local manufacturing, value addition, and job creation.
'SAREM is not just a roadmap for expanding renewable energy generation; it is a blueprint for how to industrialise through energy,' Ramokgopa said.
'Developed through a rigorous social compacting process between government, industry, labour, and civil society, it sets clear targets for localisation, supplier development, skills transfer, and green economy investment attraction.'
The Masterplan aims to leverage South Africa's growing renewable energy demand, including for green hydrogen, to stimulate upstream and downstream industrial development across solar PV, wind, battery storage, electrolysers, and fuel cell technologies.
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