This is according to the PwC South Africa’s Unlocking South Africa’s hydrogen potential report, which highlights that hydrogen development in the country has been largely driven through the initiatives of the mining sector.
The report notes that there have been projects from some of the country’s largest platinum group metals (PGM) miners such as Anglo American Platinum’s fuel cell electric vehicle (FCEV) mining truck at Mogalakwena mine or Impala Platinum’s FCEV forklift fleet at the Springs refinery. These pilot schemes have been heavily focused on the use of PGMs in the catalyst plates of fuel cells.
Although these projects are a good start to bring hydrogen technology into the transportation space, the report says the focus of their application is quite narrow. There exists a far larger opportunity to leverage the unique properties of hydrogen to revolutionise how we think about energy.
When looking at what hydrogen can do, the report breaks it down into the four pillars of the hydrogen economy:
Transportation – Across both the road and rail sectors, fuel cell technology can provide unparalleled performance for vehicles. These FCEVs can outperform their fossil fuels and battery counterparts through better power to weight efficiencies, faster refueling times and significantly longer ranges. Across the aviation and shipping industries, hydrogens ability to produce carbon neutral fuels that can run through existing traditionally carbon intensive technologies such as diesel engine and jet turbines, makes it unmatched in its ability to decarbonise the transport sectors.
Building heat and power – In countries that have existing natural gas networks, hydrogen offers a simple decarbonisation alternative. If green or blue hydrogen is blended into these gas grids, then the largest carbon emission in the household (heating and power) can be entirely offset. Pilot schemes that aim to transition existing natural gas grids over to running on 100% hydrogen are already underway in Northern Europe. In areas where access to power or reliability of power are problematic, hydrogen solutions are already being used to provide an alternative to carbon intensive diesel generators. Fuel cells are already widely used in the Southern Africa telecommunication infrastructure for off-grid power.
Industrial heat and feedstock – Perhaps the most compelling future area for hydrogen is in its use for both industrial heat and in chemical feedstocks. Either combusted on its own, or in combination with oxygen, hydrogen can produce extremely high temperatures. If green hydrogen is utilised for this purpose, then offers perhaps the only plausible decarbonisation alternative for large scale industrial heat users. Hydrogen is already widely used at the feedstock for the production of fertiliser (ammonia) and in the production of liquid fuels. Currently the vast majority of the hydrogen used in these processes is sourced from natural gas or coal. If the hydrogen needed for these processes were to be sourced from renewable energy, via electrolysis, this would fully green these fuels and feedstocks. As it currently stands green hydrogen is the only plausible option to decarbonise industrial feedstock.
Energy sector – One of the key issues facing the renewable energy sector is how best to efficiently store the energy created in order to achieve smooth supply and maximise asset utilisation. Currently, there is limited capacity to hold energy within grid systems and the massive cost involved with battery storage at scale makes it a poor option. Hydrogen can help solve the intermittent supply issues associated with renewable energy by utilising electrolysis to convert excess electricity into hydrogen during times of oversupply. This hydrogen can then be utilised to generate power through either fuel-cell or direct combustion in gas turbines when it is needed.
Investing in hydrogen to diversify the economy
“As part of South Africa’s economic recovery plan, the country needs to develop new competitive industries in the global markets. Hydrogen can fulfil that role and in a complementary manner to other initiatives and sectors,” says James Mackay, Africa South Market Lead for Energy.
Le Riche Burger, Africa South Market SME for hydrogen in PwC’s Strategy& division, adds: “Traditionally, South Africa has been a net importer of energy, especially in the liquid fuels and gaseous sector – development of the hydrogen production sector will be pivotal in cementing South Africa’s position as a net exporter of clean energy and major earner of foreign currency to our economy, but also to secure clean domestic energy supply that is de-risked from supply chain disruptions and currency devaluation.”
The report points one of the key issues for South Africa’s energy sector as being reliant on energy imports, specifically in the liquid fuels and gaseous space. Development of the South African industrial economy has been hamstrung by the slow development of much needed infrastructure development such as the delay on LNG import terminals, says the report.
World energy production is becoming increasingly geographically constrained, necessitating the need for cross-border transportation of storage of energy. Being able to leverage its world-leading renewable power potential, South Africa will be well positioned to secure its own domestic supply of energy that will anchor economic growth, according to the PwC report.
Andries Rossouw, PwC Africa Energy Utilities & Resources Leader, says: “Hydrogen can be a game changer for the South African economy. Opportunities exist for South Africa to partake in the global hydrogen economy but will depend largely on investments in renewable energy generation, as well as the development of a clear hydrogen strategy.”
Regulation is key
Coherent government policy will be necessary to support the pace of hydrogen development and correctly incentivise the move towards fully green hydrogen, states Mackay.
Progress is being made in the South African hydrogen space, with the first government led hydrogen roadmap under development and the Green Hydrogen Atlas-Africa initiative highlighting South Africa’s potential to the global community.
However, in order to fully realise the benefits of the hydrogen economy the PwC report recommends the following steps to be taken:
● Finalise the South Africa Hydrogen strategy and roadmap;
● Clear ministerial direction around which government department will champion hydrogen (e.g. energy or trade and industry);
● Assess the need for regulation in enabling a competitive market (regulatory hurdles need to be minimised and processes streamlined);
● Incentivise early investment and just transition from red, to blue, to green hydrogen (e.g. sector-specific Special Economic Zones, tax credits, policy certainty);
● Fast-tracking of renewable energy licensing used for hydrogen production;
● Review and strategy for local content and local skills development;
● Signing of collaboration agreements between hydrogen producers, off-takers and technology players (similar to the Japan-Australia and Germany-Morocco MoUs signed in recent years).
If South Africa commits to a certain, transparent, stable and accountable policy environment for hydrogen, the country can reap the significant rewards on offer, urges the report.
