Techno-Economic Analysis of Green Hydrogen Production Through Solar in South Africa

Abstract

Green hydrogen is set to become a part of South Africa’s energy mix within the next decade, with multiple case studies already in place, and a planned adoption as early as 2030. The question is whether green hydrogen can financially compete with the likes of diesel, natural gas and alternative forms of energy. This research investigates the financial feasibility of green hydrogen production in South Africa using solar energy. Three scenarios are considered: utilising only solar power source; a grid tied solar system with clean energy wheeled through the grid; and a standalone solar system coupled with battery storage. Each scenario is evaluated for three electrolyser sizes (2.4 kW, 120 kW and 500 kW) using a levelized Cost-of-Hydrogen (LCOH) analysis. The study reveals that a grid tied system, with clean energy being wheeled through the grid, offers the most cost competitive pathway for green hydrogen production. This scenario can achieve an LCOH of 140.00 ZAR/kg at 100% electrolyser utilisation, approaching the cost of blue hydrogen (131.00 ZAR/kg). However, standalone solar-battery systems face challenges to the high cost of battery energy storage. The lowest LCOH achieved is 328.00 ZAR/kg for a 500 kW electrolyser. A sensitivity analysis identifies electrolyser efficiency, solar and electrolyser CAPEX, and the cost of capital as the three primary factors influencing the LCOH. This study underscores the need for further technological advances in green hydrogen production, as well as supportive policies aimed at reducing the cost of green hydrogen production in South Africa, to enhance its competitiveness against existing sources of energy.