Netherlands, Denmark Launch $1 Billion South Africa Green Hydrogen Fund

• SA-H2 is 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 will give private sector developers access to risk capital from an early stage of development, throughout construction and into operations
• “Succeeding in a just transition to cleaner energy rests on our ability to create a viable marketplace that attracts and mobilizes public and private capital.”

During the visit of Prime Minister Mark Rutte from the Netherlands and Prime Minister Mette Frederiksen from Denmark to President Cyril Ramaphosa, a Heads of Agreement has been concluded with the intention to launch a new ‘SA-H2 Fund’ (SA-H2). SA-H2 is 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. (II) 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 SA-H2 Fund initiative will aim to secure US$1 billion in funding, to be raised directly in South Africa or indirectly via other channels. A partnership of private and public enterprises and international and domestic institutions, SAH2 reflects the immense potential of blended finance in tackling the climate crisis. Its 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.

Green hydrogen is the solution Andrew Johnstone, CEO of Climate Fund Managers, said: “To achieve Net Zero by 2050, urgent and unprecedented action is needed. We believe that green hydrogen is both the pathway and the solution to the global energy transition. South Africa combines deep technical and capital markets with world-class conditions for generating renewable electricity through solar and wind power, key drivers in the production of green hydrogen. Fitting within the framework of the Just Energy Transition, SA-H2 will help empower South Africa to claim its rightful place as a world leader in this exciting and necessary sector. SA-H2, once established, will join the recently announced SDG Namibia One fund (aiming to secure US$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,” said Johnstone.

How SA-H2 Fund will work and its anticipated impact in South Africa
“Succeeding in a just transition to cleaner energy rests on our ability to create a viable marketplace that attracts and mobilizes public and private capital, and this fund will do just that. 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,” says Catherine Koffman, Group Executive: Project Preparation at the DBSA. “Further, this fund is a significant addition to national efforts to leverage our existing renewable energy infrastructure. With a national target of US$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 decarbonisation of our economy and industry.”

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