South Africa Positions Itself To Be A Global Green Hydrogen Leader

By Wallace Mawire

In a significant step to accelerate South Africa’s just energy transition (JET) and establish the country as a global green hydrogen leader, the Public Investment Corporation (PIC), South Africa’s state-owned asset manager, the Industrial Development Corporation of South Africa (IDC), and the Development Bank of Southern Africa (DBSA) have committed ZAR 656mn (~USD 37mn) to the SA-H2 Fund (SA-H2 also known as CI3 South Africa).

 Designed as a pioneering blended finance facility, SA-H2 will stimulate the energy transition with a core focus on the green hydrogen value chain, support inclusive economic growth, and drive job creation. The Fund is managed by a partnership between leading climate finance investor, Climate Fund Managers B.V. (CFM), and a Dutch development finance institution, Invest International (II).

The announcement was made on the first day of South Africa’s Green Hydrogen Summit in Cape Town, at which SA-H2 also announced its first investment: USD 20 million in development funding for the Hive Hydrogen Coega Green Ammonia Project (Hive) in the Eastern Cape. Hive will become South Africa’s first large-scale green ammonia production plant, producing ~1 million tonnes of green ammonia annually for export, avoiding ~2.6 million tCO₂e each year and creating over 20,000 jobs during construction and operations. The Development Funding Agreement will cover: engineering, procurement, and construction selection; front-end engineering and design; and the completion of advanced stage permitting, environmental and social impact assessments; leading to offtake finalisation and financial close preparation. It also secures SA-H2’s right to invest up to USD 200 million in construction funding. Financial close is targeted for H2 2026, with commercial operations expected in 2029.

SA-H2 blends public and private capital within a single platform. It comprises a Development Tranche, providing early-stage risk capital and technical assistance to prepare projects for financial close. SA-H2 secured its initial commitments in 2024, raising ZAR 1.4 billion (~USD 80 million) from Invest International and the European Commission.

Blended Equity Tranches, to finance construction of projects through a tiered capital structure Tier 1: First loss tranche designed to absorb construction-stage risk,Tier 2: Junior Equity tranche offering enhanced returns, supported by the other Tiers and Tier 3: Senior Equity tranche, supported by risk mitigation instruments offering moderate risk-adjusted returns.

Accordingly, the IDC and DBSA have each committed ~ZAR 178 million (USD 10 million) to the second close of the Development Tranche, enabling it to achieve its fundraising target. The PIC, on behalf of the Government Employees Pension Fund (GEPF), has committed an initial ZAR 300 million (~USD 17 million) to the Equity Tranche as the anchor commercial investor in Tier 2. An additional allocation may be considered for the second close, subject to the PIC’s approval processes.

Andrew Johnstone, CEO of CFM, said: "We are honoured to welcome the PIC, DBSA, and IDC as investors in SA-H2. Their commitments signal strong market confidence in South Africa’s energy transition and green hydrogen potential. These institutions are backing a new generation of infrastructure - such as the Hive Green Ammonia Plant, that will decarbonise the economy, create green jobs, and enhance long-term competitiveness. SA-H2's blended finance model unites local and international partners across public and private sectors to deliver the energy transition at scale."

 Kabelo Rikhotso, Chief Investment Officer of PIC, said: “As a long-term investor, the PIC is committed to supporting infrastructure that generates attractive commercial returns while delivering inclusive, broad-based economic impact; in line with our client mandates. SA-H2 offers a compelling, well-structured opportunity to participate in a high-impact sector that advances job creation, green industrial development, and a just transition. These priorities align with our mandate to advance inclusive, sustainable growth and long-term national resilience.”

Rian Coetzee, Divisional Executive: Industry Planning & Project Development, of the IDC, said: “The IDC is proud to invest in SA-H2 to support the development of energy transition and green hydrogen infrastructure in our country. This commitment aligns with our strategic focus on building industrial capacity in emerging sectors, advancing localisation, and unlocking South Africa’s potential to compete globally in the clean energy economy.”

Lebogang Seperepere, Acting Group Executive Project Preparation Division, of the DBSA, said: “Our investment in SA-H2 reflects DBSA’s mission to advance a just energy transition by unlocking infrastructure that enables sustainable, inclusive growth. The facility’s blended finance model allows us to deploy our capital in a way that catalyses private sector investment at scale. This is a strategic opportunity to drive development in a critical new sector while supporting South Africa’s long-term infrastructure goals.”

Thulani Gcabashe, Executive Chairman of Hive Hydrogen South Africa, said: “South Africa has the infrastructure, resources, engineering and industrial capabilities to become a global leader in green ammonia production. The Hive Coega Green Ammonia Project will not only accelerate the just energy transition but also revitalise the Eastern Cape economy through job creation, infrastructure investment and skills development. SA-H2's investment strengthens our ability to deliver this Lighthouse project to world-class technical, operational, environmental, and social standards, while attracting long-term international investors and partners."

SA-H2 builds on the track record of CFM’s Climate Investor One and Climate Investor Two Funds, which have together mobilised over USD 2 billion in clean energy, water, and climate-resilient infrastructure across emerging markets.