March 21, 2023


Moving Forward

South Africa must make green hydrogen investment decision in next 12 months

For South Africa to acquire full edge of the options presented by the growing international demand from customers for inexperienced hydrogen, administration consulting firm McKinsey handling spouse of South Africa Kannan Lakmeeharan believes swift action is essential to go from feasibility to expenditure selections.

Speaking to Engineering News on March 7 at a McKinsey-hosted event focusing on eco-friendly hydrogen, which ran together with the African Strength Indaba, in Cape City, he reported that derisking inexperienced hydrogen tasks by securing some form of uptake was important.

Furthermore, govt assist in constructing interactions with offtakers such as Europe and Asia would also be necessary for the achievements of these jobs.

McKinsey is element of the complex advisory group to the Hydrogen Council, a world initiative comprising significant gamers in the electrical power, transportation and industrial sectors that aims to speed up the enhancement and deployment of hydrogen alternatives globally.

Lakmeeharan discussed that consortiums necessary to discover the right partnerships immediately to avoid other countries from “overtaking South Africa in the queue”. When some tasks have by now started out to cater to domestic demands, concrete conclusions need to be manufactured to capitalise on the export potential, he added.

He thinks public–private partnerships are the essential to relocating ahead, and that, whilst development has been created, choice-creating in the next six to twelve months will be vital for the accomplishment of the hydrogen economy in Africa.

McKinsey, like lots of other folks, has identified green hydrogen as a crucial participant in reaching internet-zero emissions targets around the globe. In individual, the company believes Africa has the potential to play a considerable part in the eco-friendly hydrogen economic climate owing to its ample renewable electricity assets – which are an necessary element for producing hydrogen sustainably.

To realise this potential, Lakmeeharan proposed that it would be critical to enter into agreements with associates and possible investors, meticulously control threats and not delay decisive entry into the current market any additional.

He claimed the possible for cumulative expense in the hydrogen sector in Africa would amount of money to among $500-billion and $1-trillion by 2050. This expense could lead to significant task chances and international direct investment in the location, delivered that Africa carefully navigates the uncertainties and difficulties of the hydrogen overall economy.

Though the possible gains of hydrogen are great, Lakmeeharan spelled out, there have been still uncertainties and troubles that needed to be addressed. Reducing the cost of developing hydrogen is vital, he observed, as is making certain safety and minimising emissions.

“Technical feasibility is also a crucial consideration, specially for industries that could possibly use hydrogen as a gas supply, such as electrical power technology and inexperienced metal output,” he reported.

Lakmeeharan stated Africa experienced created significant strides in latest several years in adopting renewable power sources and promoting sustainable growth. By leveraging its renewable electrical power methods and strategic partnerships with field players, Africa’s position in supplying eco-friendly hydrogen would present a substantially-required raise to the continent’s economies.

“As the entire world proceeds to grapple with the issues of cutting down greenhouse-gas emissions and acquiring a sustainable long term, the purpose of hydrogen will come to be significantly important.

“By meticulously navigating the uncertainties and problems of the hydrogen economic system and capitalising on its possible, Africa could place itself as a worldwide chief in this important area,” Lakmeeharan stated, noting that South Africa experienced a crucial position to enjoy between vital nations these as Egypt, Morocco, Namibia and Mauritania.

He reported it was crucial, nonetheless, to obviously delineate the position that inexperienced hydrogen would perform in meeting nearby electricity necessities and decide how to support the ecosystem that would enable its expansion, prior to exporting it abroad.

“Forming partnerships to build and negotiate offtake agreements with opportunity prospective buyers is also significant, specially in Europe and Asia, exactly where demand from customers for green hydrogen is envisioned to be superior. Governments will have to set the appropriate insurance policies and restrictions to incentivise investment and help the setting up of technical and local potential assets to assist facilitate the ramping up of green hydrogen production,” he mentioned.

South Africa’s Northern Cape is rich in renewable strength methods, notably in phrases of wind and solar strength. Having said that, the region’s energy grid is at the moment constrained, earning it hard for these resources to be absolutely utilized to meet local vitality requires.

“As a final result, there is an chance to investigate the likely of working with these stranded renewable electricity resources for green hydrogen and ammonia exports,” Lakmeeharan defined.

This would not only attract foreign direct financial investment but also make revenue for the location. When green hydrogen may well not yet be cost-successful adequate to substitute regular strength resources, Lakmeeharan mentioned it could nevertheless be applied in offtake conditions to enable lessen expenditures right until it finally performed a much more sizeable position in electric power source.

“It is really significant to initial figure out how to aid your very own vitality needs, but we shouldn’t disregard the likely added benefits of making use of stranded renewable sources. There’s a good deal of possibility listed here, beginning with the precedence of meeting present electrical energy desires with renewables.

“Then we can explore the probability of leveraging stranded assets to deliver environmentally friendly hydrogen to a price-productive degree, building it an vital part of our electricity provide,” he explained.

According to Lakmeeharan, Africa could provide amongst 30-million and 60-million tonnes of hydrogen or hydrogen derivatives, these kinds of as ammonia and methanol, by 2050. This would include sustainable aviation gasoline, between other items.

South Africa was not presently the most price-productive or lowest-emission likely environmentally friendly hydrogen provider to Europe or Asia – supplied its length from individuals areas when compared with Egypt or Morocco – but it was even now within the prime 10, Lakmeeharan claimed, noting that geopolitics may perhaps also engage in a role in identifying who becomes a major provider to which area.

“If you want to secure your offer chain, you have to have to have a diversified provider foundation. This is where Africa can perform an essential part. Direct eco-friendly hydrogen is needed, and international locations like South Africa and Namibia have the renewable energy sources to make hydrogen derivatives like ammonia in a very productive way,” Lakmeeharan mentioned.

Whilst North Africa and the Middle East may well be closer to Europe for immediate hydrogen pipelines, Southern Africa continue to has competitive strengths in developing hydrogen derivatives for export to Europe and Asia.

Chile and Australia are among the the other countries that Southern Africa may well compete in opposition to to offer hydrogen to Asia, which further more highlights the need to transfer quickly.