UK, South Africa discuss hydrogen collaboration but no mention of imports

Gary Hornby

24-Nov-2022

  • Collaboration in energy research and innovation
  • Hydrogen economy specifically mentioned
  • Southern Africa’s renewable hydrogen potential large

LONDON (ICIS)–

The UK government announced on 23 November that it had signed a Memorandum of Understanding (MoU) with South Africa focused on collaboration and innovation sharing between the two countries, with specific mention of the hydrogen economy. The agreement falls short of discussion on supply, however.

The announcement came during the state visit of the South African president Cyril Ramaphosa to the UK.

The MoU between the two countries surrounded cooperation in science, technology, research and innovation.

However, although the agreement notes collaboration on the hydrogen economy, it did not disclose discussion on hydrogen supply. ICIS analysis of key geographical partnerships indicates that the UK has so far not followed down the same path as several other European countries (Belgium, the Netherlands, Germany) in seeking vast quantities of green (renewable) ammonia to speed up the energy transition.

Nonetheless, energy innovation was marked as a priority in the UK-South Africa MoU, specifically the development of a hydrogen economy in the country, which is seen to have large renewable hydrogen potential.

The European Commission’s REPowerEU package states that 20 million tonnes (mt)/year of renewable hydrogen will be available in the block by 2030, 50% of which will be from domestic renewable sources and the remainder as imports from other global regions.

SOUTH AFRICA HYDROGEN POTENTIAL

South Africa has ambitions to decarbonize by 2050, and is set on becoming a major producer and exporter of renewable hydrogen, aiming for a 4% global market share by 2050 according to the country’s hydrogen roadmap.

According to the International Renewable Energy Agency (IRENA), Sub-Saharan Africa has the most potential for producing renewable hydrogen for below $1.50/kg (€1.44/kg) with renewable energy generation potential of 754,770TWh, compared with the Middle East and North Africa at 562,394TWh and Europe at 24,464TWh.

South Africa aims to deploy 10GW of electrolysis capacity in Northern Cap by 2030 to produce 0.5mt/year of renewable hydrogen by 2030, and seeks a production cost of $1.60/kg (€1.54/kg) over the same time frame.

ICIS data shows that renewable hydrogen production costs based on a 10-year power purchase agreement starting in 2026 for offshore wind would amount to €6.10/kg on a project breakeven basis.

Ramaphosa announced in late 2021 that there would be a Green Hydrogen Export Economic Zone near the deep-water port of Boegoebaai, and has signed an MoU with the Port of Rotterdam. South Africa is also seeking MoUs with the Asian market.

UK SET FOR SUPPORTING ROLE

With the UK set to see domestic hydrogen production capacity reach 10GW by 2030, ICIS data shows that total hydrogen supply under the capacity target could reach 59TWh/year under the assumption that 50% of supply comes via low-carbon hydrogen from natural gas and 50% is based on offshore wind.

However, ICIS data also shows that production potential from proposed low-carbon hydrogen projects within the HyNet and East Coast Cluster regions could surpass 100TWh by 2030.

By 2035 the UK government expects hydrogen demand to range between 80-140TWh/year, however some of this is likely dependent on whether hydrogen is blended into the transmission system.

Further, Scotland aims to actively export renewable hydrogen to northwest Europe.

Overall, due to the large potential for hydrogen production in the UK it is unlikely that the hydrogen produced in South Africa would end up arriving at UK shores as a means of meeting domestic demand.

READ MORE

ICIS Premium news service

The subscription platform provides access to our full range of breaking news and analysis

Contact us now to find out more

Speak with ICIS

Now, more than ever, dynamic insights are key to navigating complex, volatile commodity markets. Access to expert insights on the latest industry developments and tracking market changes are vital in making sustainable business decisions.

Want to learn about how we can work together to bring you actionable insight and support your business decisions?

Need Help?

Need Help?