Riyadh-based utility developer Acwa Power has joined forces with the Industrial Development Corporation of South Africa (IDC), a development finance institution, to develop projects on green hydrogen and its derivatives worth $10 billion in Africa’s second-largest economy.
The partnership coincides with the state visit of South Africa’s President Cyril Ramaphosa to Saudi Arabia.
Acwa Power will function as the developer for green hydrogen and its derivatives in South Africa, with the IDC acting as co-developer and equity partner in the proposed projects, a statement from the Saudi-based company said on Monday.
“With tangible renewable energy development commitments in South Africa already contributing to the country’s clean energy goals, the signing of the MoU with the IDC for the development of green hydrogen is a significant step towards further investing in diversifying the country’s energy mix and accelerating its green economy,” said Paddy Padmanathan, vice chairman and chief executive of Acwa Power.
The global hydrogen industry is expected to be worth $183bn by 2023, up from $129bn in 2017, according to Fitch Solutions. French investment bank Natixis estimates that investment in hydrogen will exceed $300bn by 2030.
Hydrogen has the potential to cover 12 per cent of global energy demand and cut 10 per cent of carbon dioxide emissions by 2050, the International Renewable Energy Agency said in a report in March.
Acwa Power and the IDC previously collaborated for equity in a renewable energy plant in South Africa, the statement said.
South Africa has a net-zero target for 2050 and plans to become a significant producer and exporter of green hydrogen and its derivatives. The government has mandated the IDC to lead the development and commercialisation of the green hydrogen economy.
The IDC, in partnership with the Green Hydrogen Panel, is in the process of finalising the South African Green Hydrogen Commercialisation Strategy.
“The IDC recognises the substantial value and benefits that the green hydrogen economy will bring to South Africa,” said Joanne Bate, chief operating officer of IDC.
The IDC is currently supporting the development of projects in the green hydrogen value chain, including green hydrogen and ammonia production.