EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
Recent Searches
Hydrogen a possible sustainable energy source for the future.
- Is South Africa equipped to be a real player in the Hydrogen economy?
- Can Hydrogen be a sustainable energy source for the future?
Giacomo Chiavari, EY-Parthenon Italy Strategy Leader and Paul O’Flaherty EY-Parthenon Africa Leader, both presented at the 2021 Joburg Indaba Hydrogen Economy Discussion. O’Flaherty gives his take on the role of hydrogen in our drive to zero emission.
Can improvements in the costs of hydrogen production and distribution be realised to enable South Africa to become a key player in the Hydrogen Economy?
Should improvements in the costs of hydrogen production and distribution be realised, South Africa could become a key player in the Hydrogen Economy. The transition to renewable energy has the potential to boost the South African economy in the same way that coal carried it for the past hundred years. We have already begun to unlock the potential of the abundant access we have to solar and wind resources, imagine the opportunities that await with Hydrogen.
Hydrogen – An Overview
Hydrogen is classified as grey, blue or green, depending on its carbon status. Grey hydrogen produces carbon waste during production. Blue hydrogen is a cleaner version of grey, where the emissions of carbon are captured and stored, or reused. And finally, green hydrogen uses renewable energy to power electrolysis, which separates water into hydrogen and oxygen.
Green hydrogen is the goal, but at the moment, its production costs are far too high to make it viable in the short term. The only way to bring down these production costs, will be to scale up the production and consumption significantly.
Such an undertaking would be on the scale of creating Sasol 60 years ago, and this will require a massive private public partnership and significant subsidies, tax incentives and CAPEX support.
The South African Hydrogen Environment
Apart from the aforementioned solar and wind dividend, we already have much of the infrastructure and skills to produce and handle hydrogen and associated products. Sasol, for example, produces two percent of the world’s hydrogen at the moment, so they know how to make and store it. Impala platinum not only produces the metals are used in the value chain of hydrogen production, but also uses hydrogen for its base metal refinery.
Eskom would be a key in our transition to hydrogen. Its Hendrina, Komati and Grootvlei power stations are nearing the end of their life, but they have the infrastructure to produce and export hydrogen. They have switch connectivity of 4 000 megawatts, water licenses of 65 000 million litres and onsite storage of 900 million litres. Another benefit is their licence for bulk chemical handling – the lack of which caused some European hydrogen projects to fall short.
We can use this infrastructure to fast track our hydrogen programme. We have the technology there to shift the production of hydrogen using coal from grey to blue and even green by scrubbing the flue gases of SOx, heavy metals and CO2 and convert these into industrial chemicals.
Once this hydrogen infrastructure exists, it will be easier to scale up with renewables.
Hydrogen Economy
Could be added to the South African economy with just 5 – 10% hydrogen economy market share.
If we do this right, South Africa can become a strong industrialised country with new and existing industries built around the beneficiation of our solar and wind inventory. We can become a competitive producer of green hydrogen products, which will generate massive export income and could create hundreds of thousands or even millions of new jobs.
There will be a number of sectors that use hydrogen straight in its pure form, including as energy storage. But there are a large number of tradable products derived from hydrogen that are not hydrogen themselves. These include aviation and shipping fuel, green steel and fertiliser, all highly exportable because of the value added in the form of green hydrogen.
If South Africa can take 5 – 10% of the global market share in these products, this could add €160 billion to our economy, effectively increasing it by 50%.
First Mover Advantage
Hydrogen technology adoption has endless possibilities however the financial investment required for the integration & production of this renewable energy are high. With a call to respond to the global warning and climate change disaster, governments globally are rallying behind a quicker more deliberate adoption of renewable cleaner energy source by imposing fines, offering taxation rebates etc. But is this enough? Do governments need to offer more incentives in the form of subsidies to mitigate costs to motivate adoption?
The infrastructural investment for the adoption of Hydrogen technology offers economic growth opportunities in the form job creation and industry expansion, this in itself offers many positive implications for South Africa, but how will our government move to unlock these possibilities. The world is moving towards carbon neutrality. Our solar and wind advantage, coupled with our industrial capacity, gives us a unique first mover advantage in this. But the first mover advantage is only an advantage if you move.
Summary
It was remarked that in 100 years SA has the potential to adopt renewable energy at the rate we currently use coal. With the world moving towards leveraging clean energy sources, SA is uniquely placed to tap into the economic opportunities that can be unlocked in Hydrogen, namely job creation and export opportunities.
