Experts proffer suggestions for South Africa's green hydrogen projects to secure financing

15th April 2024 By: Tasneem Bulbulia - Senior Contributing Editor Online

There is sufficient funding available for South Africa to progress its green hydrogen objectives, however, certain elements need to be addressed for this to materialise.

This was outlined by speakers during the ‘Investment opportunities in green hydrogen’ session, during the 2024 Hydrogen Economy Discussion event, held in Johannesburg last week, where stumbling blocks were identified and various suggestions proffered.

Nedbank Corporate and Investment Banking infrastructure, energy and telecommunications head Mike Peo pointed out that the country was pursuing 20 green hydrogen projects, which were gazetted in 2022.

Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) senior adviser: financing Christoph Michel said that, while there was funding available globally, the projects were expensive, and given that there were so many, each would only get a small portion of this.

Therefore, he advocated focusing on the most promising projects and consolidating the funds and stakeholders bringing projects to fruition, which would act as a breakthrough for more projects to follow – “ a lighthouse project”.

African Hydrogen Ventures MD David Sekgororwana said South Africa had positioned itself well, as a key player in the green hydrogen space in Africa, to secure available funding. Therefore, it was now a question of how to allocate funds, he said.

He pointed out that the 20 gazetted projects were large-scale, megawatt projects, which therefore came with inherent complexities.

Sekgororwana also noted that other countries on the continent had flagship projects which were being advanced by stakeholders and government, compared to the fragmented approach South Africa was taking.

He therefore called for the country to prioritise one or two projects, and rally behind these, as Michel had called for.

Moreover, he said these should be scaled down – while the concepts could remain the same, the projects should be smaller, and then scaled up.

Norwegian Investment Fund (Norfund) investment manager Rivhatshinyi Mandavha said that while South Africa’s projects offered better potential in terms of technology, service and future outlook, East Africa presented a better destination for funding.

She explained that this was because East Africa had the regulations and “political will in action” to back projects.

In contrast, South Africa had “announcements that look like political backing” but that do not translate into action, Mandavha averred.

Moreover, she said East African countries also presented their offtake cases to the world, with a roadmap showcasing what this looked like, whereas the majority of the 20 projects in South Africa did not even have this as yet.

Mandavha also advocated for a blended financing model, noting that it had worked very well in the infrastructure space and could be replicated for green hydrogen.

Peo, in contrast, said it would be difficult to collaborate as the other speakers had suggested, given that companies had their own ways of doing things.

Instead, he advocated for collaboration in the form of a green hydrogen valley, which would consolidate infrastructure in a particular region, and engender lower costs.

This, he added, was ideally suited to Mandavha’s blending financing model. 

European Investment Bank regional representation head Nadège Hopman, however, said it was too early to make firm decisions about certain projects, given that the timing was very similar on many of them.

Instead, she said, the market would decide where the funds would go.