Governments of South Africa, the Netherlands and Denmark have concluded a Heads of Agreement (HoA) with the intention to launch a new SA-H2 Fund, an innovative blended finance fund that will facilitate and accelerate the development of a green hydrogen sector and circular economy in South Africa.
The fund is supported by Climate Fund Managers (CFM) and Invest International B.V. of the Netherlands, Sanlam Limited of South Africa (Sanlam), the Development Bank of Southern Africa (DBSA) and the Industrial Development Corporation of South Africa (IDC), in collaboration with other strategic partners.
The DBSA said the SA-H2 Fund initiative will aim to secure $1 billion in funding, to be raised directly in South Africa or indirectly via other channels, noting that the initiative’s focus will be to fast-track the mobilization of funding towards the development and construction of large-scale green hydrogen infrastructure assets across South Africa.
Andrew Johnstone, CEO of CFM, commented: “SA-H2, once established, will join the recently announced SDG Namibia One fund (aiming to secure $1 billion in funding to be raised directly in Namibia or indirectly via other channels), as the second-of-its-kind, regional blended finance fund to develop and fund green hydrogen projects.”
“Hydrogen replaces carbon-intensive fuels, reducing emissions and environmental impact. It also enables efficient storage and utilization of energy from renewable sources which can be more intermittent, ensuring a reliable supply. Hydrogen energy production provides a clean, versatile and efficient energy source that can drive the transition to a low-carbon economy, helping end the climate crisis and secure a more sustainable and prosperous future.”
Catherine Koffman, Group Executive: Project Preparation at the DBSA, stated: “We will create and use innovative blended finance architecture and structuring to build a substantial pipeline of green hydrogen projects in South Africa. This will give private sector developers access to risk capital from an early stage of development, throughout construction and into operations. Further, this fund is a significant addition to national efforts to leverage our existing renewable energy infrastructure.”
“With a national target of $250 billion investment in green hydrogen by 2050, this sector is projected to amplify the development impact of the renewable energy industry. It is an exciting development that, in accelerating the development of critical green hydrogen infrastructure, will stimulate the economy, train new skills, create jobs, generate export revenues and facilitate the decarbonization of our economy and industry.”
South Africa’s President Cyril Ramaphosa thanked the companies and institutions from the Netherlands, Denmark and South Africa for the investment announcements and partnerships made, noting: “For South Africa, it is important to develop green hydrogen projects that contribute to the export market while developing local economies.”
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