- Phelan Green Group’s electro sustainable aviation fuel project in Saldanha Bay has reached final investment decision, backed by a US$100 million equity commitment and an off-taker agreement.
- Construction is expected to begin in the first quarter of 2027, with the first exports targeted for the first quarter of 2029.
- The priority portfolio also includes projects focused on green ammonia, low emissions iron and steel, green methanol and domestic hydrogen demand.
In an address delivered on behalf of President Cyril Ramaphosa, Minister of Electricity and Energy, Dr Kgosientsho Ramokgopa announced the first wave of six priority green hydrogen projects under South Africa’s national green hydrogen programme, marking a shift from planning to implementation and investment. Speaking at the African Green Hydrogen Summit in Cape Town, he said the projects had been selected through a rigorous assessment process designed to improve project bankability and strengthen investor confidence.
The Phelan Green Group electro sustainable aviation fuel project in Saldanha Bay is the most advanced project in the portfolio. It has reached final investment decision after securing an off-taker agreement and a US$100 million equity commitment.
Construction is expected to start in the first quarter of 2027, with the first exports of electro sustainable aviation fuel targeted for the first quarter of 2029.
“This is an important milestone. As the World Economic Forum noted earlier this year, the real bottleneck in scaling clean hydrogen is demand, not technology,” Ramaphosa said.
He said the project demonstrated the importance of securing long term off-taker agreements and moving projects from concept to implementation.
“An investment decision has been taken, equity committed, major equipment ordered and a defined route to construction established. What follows is production and off-takers,” he said.
The remaining five projects cover several parts of the green hydrogen value chain.
The Coega Green Ammonia Project in the Eastern Cape has completed early preparatory work but requires further commercial, technical and financial development before reaching final investment decision.
The Saldanha Hydrogen Direct Reduced Iron Project on the West Coast is at pre-feasibility stage and aims to use green hydrogen in lower emissions iron and steel production.
The Prieska Power Reserve in the Northern Cape is a green ammonia project targeting the domestic market and is currently at development stage.
The Green e Fuels Producers Green Methanol Corridor is at pre-feasibility stage and is targeting European demand. The Green Hydrogen Solutions Project, focused mainly on South African demand, has completed front end engineering design.
Ramaphosa said the priority designation would give government and its partners a mechanism to help the remaining projects reach final investment decision, construction and production. A second wave of projects is expected to be added to the portfolio.
Industrial development focus
Ramaphosa said Africa had the potential to become a major global green hydrogen hub, supported by its renewable energy and water resources and reserves of critical minerals.
However, he warned that African countries should not remain suppliers of renewable energy, minerals or hydrogen molecules.
“Africa must participate across the value chain as owner, manufacturer, technology partner, producer and market,” he said.
He said the green hydrogen economy should support African industrialisation through fertiliser production, green iron and steel, sustainable fuels, equipment manufacturing, engineering and related services.
The African Continental Free Trade Area would help create larger markets and support regional value chains, he added.
Ramaphosa also called for greater local procurement, manufacturing, employment and skills development. He urged technology partners to establish manufacturing, training and research capacity on the continent rather than treating Africa solely as a market for imported equipment.
He called on African countries to cooperate on standards, certification, infrastructure corridors and project preparation through initiatives such as the Africa Green Hydrogen Alliance.
African development finance institutions should increase project preparation funding and provide financial instruments suited to the risks associated with first of a kind projects, he said.
Ramaphosa also urged prospective buyers to convert non-binding expressions of interest into credible long term offtake agreements capable of supporting project finance.
Funding and regional cooperation
Trade, Industry and Competition Minister Parks Tau said the government viewed green hydrogen as part of a broader industrialisation strategy.
Speaking at the summit, Tau said hydrogen, sustainable aviation fuel, green chemicals, green shipping fuels, advanced manufacturing and new export industries would help drive South Africa’s reindustrialisation.
“Our ambition is clear. We must export more value and less raw potential. We must move up the value chain. We must become producers, not merely providers of resources,” Tau said.
Through the Just Energy Transition Investment Plan programme management office at the Industrial Development Corporation, the government has identified 24 strategic integrated projects. Several have completed pre-feasibility studies and are supported by €40 million from Germany’s KfW Development Bank.
Tau said Climate Fund Managers had closed the first R3 billion of the South Africa Green Hydrogen Fund in August. The fund is anchored by the European Commission through its Global Gateway commitment with the European Union.
A further R628 million in grants has also been committed through Global Gateway. This includes R490 million to support hydrogen infrastructure investment, with the potential to mobilise a further R10 billion, and R138 million to help Transnet reduce emissions from its operations.
Tau said South Africa’s industrial transition pathways could create tens of thousands of jobs and generate billions of rand in economic activity.
He also announced support for Hive Hydrogen’s Coega Green Ammonia Project through the Critical Infrastructure Programme Fund.
Hive Hydrogen has completed financial due diligence, unlocking R12.5 million of R25 million in project development funding. A further R25 million funding application is expected at financial close.
Tau described the Coega project as South Africa’s flagship green hydrogen development and said it would support the decarbonisation pillar of the country’s industrial development strategy.
He said regional cooperation would be essential because no single African country could build the green hydrogen economy alone. Through the Africa Green Hydrogen Alliance, he said, countries could develop the scale needed to make Africa a competitive global supplier of green products and services.
Author: Bryan Groenendaal
