South Africa Hydrogen Generation Maket Research Report, 2030

South Africa is increasingly looking to hydrogen as a vital part of its strategy to reduce reliance on coal and achieve its climate and energy goals. Historically, the country has been heavily dependent on coal for energy generation, which has contributed to high carbon emissions. In recent years, however, there has been a shift toward hydrogen as a cleaner alternative, particularly in sectors such as transportation, power generation, and manufacturing. The South African market for hydrogen has evolved from using traditional production methods, such as steam methane reforming (SMR) and coal gasification, to exploring more sustainable options like green hydrogen produced via electrolysis, using renewable energy resources such as wind and solar power. South Africa’s abundant renewable energy resources place it in an advantageous position to produce hydrogen through these greener methods, supporting the global trend toward low-carbon energy sources. The drivers of this transition include the country’s need to reduce its greenhouse gas emissions, secure its energy future, and capitalize on emerging global markets for clean hydrogen, particularly in Europe and Asia, where demand for hydrogen is increasing. Hydrogen is seen as a solution for decarbonizing industries that are hard to electrify, such as steel and cement manufacturing, while also providing a potential export opportunity for South Africa, which could become a major supplier of green hydrogen to international markets. However, several challenges persist, including the high costs of producing hydrogen, particularly through green methods, and the significant investments required in infrastructure, such as storage, transportation, and distribution systems. The country also faces the ongoing reliance on coal for some forms of hydrogen production, which complicates efforts to fully decarbonize. The South African government has introduced a number of policies, such as the Integrated Resource Plan (IRP) and the Hydrogen Society Roadmap, designed to support the growth of hydrogen as a key component of the national energy strategy. According to the research report "South Africa Hydrogen Generation Research Report, 2030," published by Actual Market Research, the South Africa Hydrogen Generation market is anticipated to grow at more than 6.46 % CAGR from 2025 to 2030. The market growth is driven by the nation’s commitment to clean energy and decarbonization. The market has seen recent expansion, especially with the growing shift toward sustainable hydrogen production methods, such as electrolysis powered by renewable sources like solar and wind. This trend is bolstered by South Africa’s potential to become a key exporter of green hydrogen due to its rich renewable energy resources, as industries such as steel, chemical manufacturing, and power generation increasingly adopt hydrogen for decarbonization. Government initiatives, including the Integrated Resource Plan and the Hydrogen Society Roadmap, are actively supporting the sector, while companies like Sasol continue to lead hydrogen production efforts, both from fossil fuels and cleaner technologies. New entrants, including startups focused on renewable energy, are adding momentum to the market’s growth. In 2024, significant policy shifts and agreements aimed at expanding hydrogen capabilities were announced, with local government incentives and international collaborations encouraging the development of green hydrogen technologies. Hydrogen production in South Africa benefits from both abundant raw materials, such as coal for gasification and renewable energy for electrolysis, and evolving infrastructure. As South Africa positions itself to export hydrogen to global markets, particularly in Europe and Asia, its trade patterns are adjusting to accommodate increasing demand. The COVID-19 pandemic initially disrupted supply chains and delayed some energy projects, but the sector has rebounded, with a renewed focus on clean energy technologies, The hydrogen market in South Africa is poised for rapid growth, driven by technological advancements, increasing international demand, and the need for industrial decarbonization, presenting a wealth of opportunities for both local and global stakeholders.

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In the South African hydrogen generation market, pure hydrogen (H2) refers to hydrogen that is produced with minimal impurities and is typically used for high-purity applications. This form of hydrogen is crucial in industries such as petroleum refining, chemicals, and steel production, where specific hydrogen qualities are required for processes like hydrocracking and ammonia synthesis. Pure H2 is generated through methods like steam methane reforming (SMR) and electrolysis, and it is particularly significant for South Africa's energy transition and industrial applications. The market for pure hydrogen is growing in South Africa, driven by the need to decarbonize heavy industries and produce cleaner fuels. Hydrogen mixed with other gases typically refers to hydrogen produced alongside other gases like carbon dioxide or carbon monoxide, which can occur during processes like coal gasification. This form of hydrogen is often used as an intermediate feedstock in various chemical processes or as a fuel in industrial furnaces. In South Africa, the use of mixed hydrogen is relevant due to the country’s historical reliance on coal for energy generation. The gas mixtures can be used in both power generation and industrial sectors. The South African government is exploring the potential of hydrogen blends to reduce emissions and increase the use of renewable energy. Steam Methane Reforming (SMR) is the dominant method of hydrogen production in South Africa and globally. In SMR, natural gas is reacted with steam to produce hydrogen and carbon dioxide. This method is economically viable due to the availability of natural gas in South Africa, and it is used in various industries, including refining and ammonia production. SMR contributes significantly to South Africa’s hydrogen production, although it does release carbon emissions, which poses challenges for decarbonization goals. Coal Gasification is another method for producing hydrogen, especially pertinent to South Africa’s coal-rich energy landscape. Coal is converted into a gas mixture through partial oxidation or steam gasification, and hydrogen is separated from the other gases. This method is widely used in South Africa, given the country's large coal reserves. Coal gasification is seen as a way to utilize local resources for hydrogen production, though it faces sustainability and environmental concerns due to CO2 emissions. Other technologies such as electrolysis are gaining traction in South Africa's push toward green hydrogen. Electrolysis splits water into hydrogen and oxygen using electricity, and if powered by renewable energy, it produces green hydrogen with no carbon emissions. This method is still emerging in South Africa but holds promise for future energy diversification. Additionally, technologies like oil refining and auto-thermal reforming play roles in niche applications for hydrogen production but are less prevalent. The system types of hydrogen production in South Africa are categorized as captive and merchant. Captive systems are those where hydrogen is produced for use within a specific facility or industry, such as a refinery or chemical plant, and are typically integrated into existing industrial operations. These systems are used to meet the internal demand for hydrogen, reducing transportation costs and ensuring a stable supply. Captive hydrogen production is common in South Africa’s energy and industrial sectors, where industries like steel manufacturing and refining rely on dedicated hydrogen supplies. Merchant systems, on the other hand, involve the production of hydrogen for sale to external customers, typically through centralized facilities. This form is gaining importance as South Africa moves towards a hydrogen economy, with merchant hydrogen expected to serve sectors like transportation, power generation, and other industries that require hydrogen for fuel or as a feedstock. The energy sources for hydrogen production in South Africa are varied, with natural gas (N.GAS), coal, and others such as oil and renewable energy playing significant roles. Natural gas is the primary feedstock in South Africa for hydrogen production through steam methane reforming (SMR), a cost-effective process due to the country's relatively accessible natural gas supplies. N.GAS-based hydrogen is used extensively in refining and chemical production, with a focus on meeting the growing demand for low-carbon solutions. Coal, abundant in South Africa, is another major energy source for hydrogen production through coal gasification, a method suited to the country's energy landscape but with challenges regarding carbon emissions. Coal-based hydrogen is primarily used in heavy industries, including power generation and chemical manufacturing. Other energy sources, such as oil and renewable energy, are emerging in South Africa's hydrogen production market. Oil can be used for hydrogen through processes such as oil refining, while renewable energy, particularly wind and solar, is being explored for green hydrogen production via electrolysis. This method holds significant promise for South Africa's future hydrogen sector as it aligns with the country's goals to decarbonize its economy and transition towards sustainable energy. The choice of energy source depends on factors like cost, resource availability, and environmental goals, with each source offering different benefits and trade-offs in terms of sustainability and emissions. In the South African hydrogen generation market, hydrogen is utilized across several key applications, including methanol production, ammonia production, petroleum refining, transportation, power generation, and other commercial uses. In methanol production, hydrogen is combined with carbon dioxide to produce methanol, a vital chemical used in plastics, pharmaceuticals, and solvents. This is relevant in South Africa as the chemical industry continues to grow, relying on hydrogen for cleaner production. For ammonia production, hydrogen is a critical component in the Haber-Bosch process, which synthesizes ammonia for use in fertilizers. This application is especially significant for South Africa's agricultural sector, where ammonia is essential for crop production. In petroleum refining, hydrogen is used for processes like hydrocracking and desulfurization, which are critical for producing cleaner fuels. South Africa's refineries, such as those run by Sasol, rely heavily on hydrogen to meet both domestic and international fuel quality standards. Hydrogen is also emerging as a fuel for transportation in South Africa, especially for fuel cell vehicles and public transport systems, as part of the nation’s drive to reduce emissions and diversify its energy sources. The country's potential for green hydrogen is especially promising for transportation in both urban and inter-city settings, as part of its energy transition goals. In power generation, hydrogen is being explored as a clean energy source for both conventional and renewable-based power plants, offering a means to decarbonize the energy sector and support grid stability, especially with renewable energy integration. Hydrogen's role in power generation is gaining traction as South Africa seeks solutions to its energy challenges, including power shortages and emissions. Other applications for hydrogen in South Africa include steel and iron production, where hydrogen can replace coal as a reducing agent, leading to lower carbon emissions. Hydrogen is also used in the electronics industry, including in the production of semiconductors, LEDs, displays, photovoltaic cells, and other electronic components, where it plays a crucial role in various manufacturing processes. These applications reflect a growing demand for hydrogen across multiple sectors in South Africa, driven by the need for cleaner, more efficient technologies and a shift towards sustainable industrial practices.

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Nikita Jabrela

Business Development Manager

Considered in this report • Historic Year: 2019 • Base year: 2024 • Estimated year: 2025 • Forecast year: 2030 Aspects covered in this report • Hydrogen Generation Market with its value and forecast along with its segments • Region & country wise Hydrogen Generation market analysis • Application wise Hydrogen Generation distribution • Various drivers and challenges • On-going trends and developments • Top profiled companies • Strategic recommendation By Applications • Methanol Production • Ammonia Production • Petroleum Refinery • Transportation • Power Generation • Others (Steel+Iron+commercial uses+semiconductors, LEDs, displays, photovoltaic segments, and other electronics etc)

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By Technology • SMR =steam methane reforming • Coal gasification • Others (Electrolysis, oil/refining or auto-thermal reformation ) By Energy Source • N.GAS • COAL • Others (oil, Renewable Energy, etc.) The approach of the report: This report consists of a combined approach of primary as well as secondary research. Initially, secondary research was used to get an understanding of the market and listing out the companies that are present in the market. The secondary research consists of third-party sources such as press releases, annual report of companies, analyzing the government generated reports and databases. After gathering the data from secondary sources primary research was conducted by making telephonic interviews with the leading players about how the market is functioning and then conducted trade calls with dealers and distributors of the market. Post this we have started doing primary calls to consumers by equally segmenting consumers in regional aspects, tier aspects, age group, and gender. Once we have primary data with us we have started verifying the details obtained from secondary sources. Intended audience This report can be useful to industry consultants, manufacturers, suppliers, associations & organizations related to chemical industry, government bodies and other stakeholders to align their market-centric strategies. In addition to marketing & presentations, it will also increase competitive knowledge about the industry.