A small proof-of-concept green hydrogen facility in Vredendal, in the Western Cape, has entered into production and its developers are now seeking to raise finance for a 5 MW commercial project, which they believe could be the precursor to a ‘hydrogen valley’ in the province.

The commercial plant would comprise a 10 MW solar photovoltaic facility and a 5 MW hydrogen plant and is expected to involve an investment of R460-million, depending on the cost of the electrolyser units.

Keren Energy MD George van Rensburg has reported that the proof-of-concept facility, which has been developed together with Sakhumnotho Power, a subsidiary of Sakhumnotho Group Holdings, began producing green hydrogen on February 21.

To the best of Keren Energy’s knowledge, the plant is among the first to produce the carbon-free energy carrier in South Africa.

The facility, which has produced three kilograms to date, uses electricity produced from a 100 kW solar photovoltaic generator to split water into hydrogen and oxygen using an electrolyser.

Speaking during a webinar hosted by the Saldanha Bay Innovation Campus, Van Rensburg reported that the plant had been developed under the aegis of government’s HySA research and development programme and also received support from the University of Cape Town, the North-West University and the University of the Western Cape.

Hydrogen fuel-cell component manufacturer Cape Stack and Namaqua Engineering partnered with Keren on the plant’s design and construction.

Finance is now being sought for the commercial project, which will be located about 20 km from the proof-of-concept facility.

Keren Energy reports that all permits and environmental approvals are in place and that it is aiming to reach financial close before the end of June so that the plant is in a position to enter into production by March 2023.

“We have very good solar resources and an abundance of water in the area, which means that we will not need to invest in desalination,” Van Rensburg said.

The property has various boreholes, one of which already produces more than enough water to support the hydrogen production.

“At full production the water usage will be 11 200 litres per day and we envisage 300 working days, which equates to 3 360 000 litres per annum,” Keren Energy told Engineering News & Mining Weekly in response to questions.

Asked whether such a project could be justified, given water scarcity in the region, the company said: “Yes, we will be using minimal water from an established borehole.”

Based on an 80/20 debt-to-equity finance split, Keren Energy is currently estimating a cost of production of about R70/kg hydrogen, which includes the sale of the oxygen that will be produced during the process.

It is also hoping to secure some grant finance for the project.

Land has also been secured near Saldanha Bay for a 400 MW green hydrogen project and Van Rensburg reports that about 70% of the necessary permits have already been secured. Again, there are water resources available in the area and desalination is, thus, not envisaged.

No capital estimates or timelines were provided for this far larger project, which Van Rensburg argued could be the “start of a hydrogen valley in the Western Cape”.

He said the decision to locate close to the deep-water harbour in Saldanha Bay formed a “crucial piece of the puzzle”, as the location provided both domestic offtake and export opportunities.

Council for Scientific and Industrial Research senior research engineer Thomas Roos said that Saldanha Bay had been identified along with Coega, in the Eastern Cape, and Boegoebaai, in the Northern Cape, as potential green hydrogen export hubs.

Roos said the ability to co-locate various hydrogen-consuming activities into a particular region opened up the prospect for a hydrogen valley in Saldanha Bay that could be similar in concept to the one being proposed from Anglo American Platinum’s Mogalakwena mine in Limpopo, through Pretoria and Johannesburg, down to Durban.

Besides the export potential into hydrogen-hungry European markets, there was also an opportunity to supply green hydrogen for use as a marine bunker fuel in Saldanha, as well as an input to produce green steel at the Saldanha Steel plant, which is currently mothballed.