Over the past 12 months, South Africa has solidified its ambitions to become a global green hydrogen leader. Riding on abundant renewable energy resources and strategic partnerships, the country has advanced from early-stage promise to tangible project groundwork. These are the most significant developments from mid 2024 through mid 2025.
Massive capital mobilisation and blended finance
A crucial shift this year has been the ramp-up of blended finance to de-risk green hydrogen projects. In March 2025, the EU announced a €4,7 billion Global Gateway investment package for South Africa comprising €303 million in grants and €4,4 billion in leveraged loans, explicitly including green hydrogen and proton exchange membrane electrolyser production
Over €35 million in grants from the EU have supported infrastructure enhancements such as Transnet’s rail and port logistics and early value-chain development. However, academic experts caution that breaching the €20 billion funding threshold needed for a one million tpa green hydrogen industry by 2030 will require continual high-level investment.
Furthermore, the SA H2 blended-finance initiative, launched in mid 2023 with contributions from South Africa, the Netherlands and Denmark, recently assigned up to $20 million to Hive’s Coega green ammonia facility. Underwritten by institutions like PIC, IDC, and DBSA, this support is vital as a foundation for scaling green hydrogen output.
From pilot plants to industrial demonstrators
South Africa achieved a major milestone in June 2025 at the African Green Hydrogen Summit. The Sasolburg green hydrogen facility announced its minimum viable plant (MVP), the continent’s first commercial-scale green hydrogen plant, achieved by retrofitting chlor-alkali electrolysers in partnership with the IDC. Although current production costs remain above market rates, the MVP is critical for de-risking both technology and supply chain for commercial roll-out.
This is in line with the broader picture. The Hydrogen South Africa programme has received over R1,5 billion to research electrolysers and fuel cells, with further funding of €3 million for R&D; into the conversion of CO₂ from coal-fired power plants for the circular production of products such as diesel and fertilisers using green ammonia and hydrogen − the CoalCO₂ X programme. Germany’s KfW bank is also investing around €200 million to support new projects. These investments aim to build technical depth in PGM catalyst manufacturing, which is crucial for electrolyser production and unlock export competitiveness
Environmental and regulatory groundwork
To guide site selection and government policy, the Department of Forestry, Fisheries & the Environment, CSIR, and GIZ developed environmental impact EIA guidelines and a geospatial ‘Green Hydrogen Potential Atlas in March 2025. The atlas assists planners in identifying low impact regions for hydrogen facilities by balancing environmental, commercial and infrastructural criteria.
Policy developments have been equally strategic. Hydrogen has been fully integrated into South Africa’s integrated resource planning and Gas Act amendments. Special Economic Zones designated for hydrogen, coupled with Section 12L tax incentives and export-focused regulatory frameworks under the Green Hydrogen Commercialisation Strategy, were further refined in the past year.
Industrial adoption
South Africa’s mining sector is emerging as a leading adopter of hydrogen technology. At Mogalakwena mine, green hydrogen is being piloted to power haul trucks, rail systems and buses as part of the Hydrogen Valley project,
Meanwhile, a landmark collaboration between Anglo American Platinum, BMW South Africa and Sasol launched the country’s first fleet of BMW iX5 hydrogen fuel-cell vehicles in February 2024.
Sasol also developed a mobile refuelling unit to support onsite operations, an important step toward proving fuel cell electric vehicle viability.
Summit and Pan-African leadership
The June 2025 Green Hydrogen Summit in Cape Town was rechristened the African Green Hydrogen Summit, cementing South Africa’s central role in continent-wide hydrogen collaboration. President Ramaphosa emphasised the economic opportunity, coordinating 52 large-scale project announcements across Africa and stressing that the continent could produce 30 to 60 million tons of green hydrogen annually by 2050.
This enthusiasm is backed by bold national pledges. Deputy Minister Zikalala in late 2024 cited over R800 billion of project investments, with 20% at the bankable feasibility stage. Ambitious coastal projects include 5 GW schemes at Boegoebaai and 850 MW at Saldanha Bay.
Risk, costs and community perspectives
Despite the progress, significant obstacles remain. Civil society groups have voiced concerns over stalled pipeline prototypes like the Mogalakwena haul-truck project and the e-methanol development in Humansdorp. They also warn that hydrogen is a water intensive technology and poor consultation could harm local ecosystems unless managed responsibly.
As always, cost can be a killer issue. The numbers show that green hydrogen currently costs $5 to $8/kg, far above fossil-derived hydrogen. This highlights the need for sustained subsidies, carbon pricing and sovereign guarantees.
Additionally, many announced projects lack final investment decisions, offtake agreements or robust infrastructure plans. Around 92% of Africa’s green hydrogen pipeline remains at the announcement stage, with only 2% reaching financial closure.
Outlook and engineering implications
Engineering leaders should note four critical action items:
• Scale electrolyser manufacturing, leveraging PGMs and local industrial capability.
• Invest in supporting infrastructure such as transmission capacity, ports, pipelines and desalination systems.
• Embed ESG and community engagement via Atlas and EIA guidelines to minimise the social and environmental impact.
• Forge firm finance and offtake deals to convert ambitions into bankable projects with sovereign risk guarantees.
Over the past year, South Africa has moved decisively from a hydrogen vision to laying foundations. With new funding mechanisms, pilot plants, mapping tools and industrial adoption, the country is navigating a credible route to scale-up. The challenge now lies in converting economic pledges and policy frameworks into factories and pipelines.
For more information visit www.sanews.gov.za/south-africa/progress-being-made-implementation-sas-green-hydrogen-strategy
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