Endeva, a German non-profit initiative, recently hosted a webinar to showcase the findings of an exploratory initiative to understand South Africa’s green hydrogen ecosystem. Freeport Saldanha, along with supporting partner RIIS, was invited to share vital information on the development zone’s work as an ecosystem stakeholder committed to strengthening the green hydrogen economy.
Endeva has a mission to help create economic systems that serve people and the planet. It meets this mission through support and collaboration with diverse actors across multiple sectors.
A project, known as Inclusive Innovation 2030 (ii2030), has sought to explore and map out South Africa’s green hydrogen ecosystem. Currently the domain of large corporations with significant RD&I budgets, the green hydrogen economy is a crowded space in which smaller players struggle to gain a foothold. The ii2030 seeks to focus particularly on the role that start-ups and local innovators can play.
Freeport Saldanha as a green hydrogen hub
There are compelling reasons why Freeport Saldanha has been put forward as the strategic key point for the production, export and industrial application of green hydrogen in South Africa. As one of the deepest natural ports in the southern hemisphere, the development zone’s mandate is to attract investment and to create jobs in the manufacturing space of the marine and energy sectors.
Freeport Saldanha has attracted a great deal of attention from local and global corporations looking to establish their green hydrogen initiatives in Saldanha Bay and adjacent areas, particularly as it offers incentives and subsidies to produce green hydrogen. Along with the availability of renewable energies such as wind and solar, Freeport Saldanha also has vast tracts of land on which engineering plants can be built without infringing on existing agricultural or industrial spaces. Furthermore, Freeport Saldanha has plans to develop a green hydrogen corridor from Saldanha Bay up to the mines in the Northern Cape.
However, Saldanha Bay has struggled with a significant skills deficit. As a primarily steel producing region, the decline in South Africa’s steel production has had a severe socio-economic impact on the local community. Today the region struggles with high levels of unemployment, particularly among the youth, and significant job losses. Low-income households in the area have in recent years seen a 1.8% decrease in their average income.
While none of this may seem particularly conducive to developing Saldanha Bay into a world-leading green hydrogen economy, the just energy transition reveals opportunities to enhance and remediate the socio-economic climate in the area. South Africa’s national policy and strategic objectives of a just energy transition require interventions that will ensure people and communities are able to meaningfully participate in the emerging low-emission economy. Freeport Saldanha places human capital development front and centre in all its endeavours.
Transitioning towards a green hydrogen economy comes with certain barriers. These include the high costs associated with advancing technology in the green hydrogen space, limited access for market entrants to networks and relationship-building opportunities, and limited coordination and management of the innovation process – where often divergent interests result in a duplication of efforts.
For green hydrogen start-ups lack there is a real challenge in being able to access funds – at the national level – that are fit-for-purpose in that de-risk or reduce the cost of R&D. Furthermore, securing venture capital is a challenge given that the funding model requires longer timespans compared to typical venture capital funding.
One solution for overcoming challenges is the establishment of an organising body that can coordinate and bring together green hydrogen actors at a national level, help develop and connect a robust green hydrogen ecosystem, and share important information. It would be critical to include diverse actors; not only from research institutions but also from the public and private sectors. Importantly, it should be inclusive for market entrants such as green hydrogen start-ups so as to ensure an expansive green hydrogen innovation ecosystem.