Electricity and Control November 2022

WRITE @ THE BACK

Green hydrogen: now is the time to act

T he world’s steadily growing demand for green hydrogen is expected to exceed supply by 2030, making now an ideal time to invest. Speaking at the Hydrogen Africa Conference, which took place on 28 and 29 September, Prashaen Reddy, Partner at Kearney, highlighted that green hydrogen’s ability to store renewable energy holds one especially attractive possibility:

speed and direction of the energy transition, and they cre ate the regulatory environment that supports the develop ment of production facilities and the attractiveness of the location for investors. - Establish public and private partnerships to de-risk projects In this nascent market, any new development will have a number of project and operational risks which could make it more difficult to secure funding for the project and any off-takers. To be successful, market entrants will need to establish partners in different spheres to attract funders and off-takers: public partners (state enterprises, state agencies, and governments), off-takers, and technology partners. - Overcome infrastructure barriers and capitalise on the opportunities As with any major project, significant amenities are re quired. Sizable green hydrogen projects, such as some announced giga-scale projects, also require vast areas of land to produce renewable power. - Secure funding For any mega project, and more so for projects working with nascent technologies that carry inherent risk, securing adequate funding is complex. Often, funding from multiple sources is required. Kearney’s market sensing study of the southern African renewable’s ecosystem identified the main options for investors interested in financing renewable en ergy projects, each with their respective value proposition, risk appetite, and expectations for return on investment. - Drive the just energy transition Southern Africa’s energy mix is currently predominantly carbon-based. South Africa, for example, gets the bulk of its electricity from coal fired power stations. The coal value chain directly employs about 150 000 people – and those jobs are at risk in the transition to a low-carbon economy. The production of green hydrogen will become a funda mental aspect of the region’s just energy transition, and will need to play a part in creating new jobs. (The International Labour Organisation defines the just energy transition as occurring “in a way that is as fair and inclusive as possible to everyone concerned, creating decent work opportunities and leaving no one behind.”) Success for early entrants “The development of green hydrogen – as a nascent indus try in an underdeveloped region – will need to overcome several obstacles to gain the full benefits that the glob al market offers. The five success factors mentioned will need to be carefully considered along with strategies for enabling success. This new energy sector presents many potential benefits and opportunities, promising profitable enterprise, new jobs, and more environmental sustainability in the region,” Reddy says.

Prashaen Reddy, Partner at Kearney.

it can be transported. This is achieved by transforming it into a portable product such as ammonia, methanol, or an e-fuel, and work is under way to develop a method to transport liquefied green hydrogen over long distances, without having to transform or reprocess it. A recent study by the global management consultancy Kearney, has noted that southern Africa, which has favour able conditions for renewable energy production, will be able to store renewable energy and export it to areas where renewable energy production is technically or economically limited. Reddy says, “Although southern Africa has a signifi cant opportunity to produce green hydrogen, the region’s demand is projected to be lower than that in the demand centres in Europe and Asia. For example, South Africa, the region’s most industrialised country, is projected to reach a demand of only 238 kt by 2030. “Hence, with the region’s relatively low demand, favour able production climate, and the limited impact of transport costs, southern Africa could become a green hydrogen ex port hub.” Moving ahead Looking beyond the theoretical merits of green hydrogen to the tangible strategies to meet global demand, Reddy believes five key steps can put market entrants on the path to success as they seek to establish green hydrogen pro duction facilities in southern Africa. - Gain government support in establishing a support ive regulatory environment Government has a central role to play in the energy transi tion as the success of market entrants will be impacted by the level of government buy-in and a clearly defined green hydrogen strategy. Governments set policies that affect the

Southern Africa is an attractive region for new entrants in the green hydrogen sector.

For more information visit: www.kearney.com

32 Electricity + Control NOVEMBER 2022