Fuel Cell Electric Vehicles in South Africa the Development of a Hydrogen Society and the Case for Local Electric Vehicle Production
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Fuel Cell Electric Vehicles in South Africa The development of a Hydrogen Society and the case for local electric vehicle production [email protected] Guy Bowden +27 31 7675202 www.twimsafrica.com June 2021 © 2021 Toyota Wessels Institute for Manufacturing Studies 74 Everton Road 3610 South Africa Established by the Toyota Wessels Trust, TWIMS is a not-for-profit initiative dedicated to the development of manufacturing executives in Africa. Our Vision An industrialised Africa built on world class management capabilities. Our Mission A prosperous Africa empowered by sustainable industrialisation. Our Objective Develop world-class management capabilities to drive African industrialisation. Disclaimer Whilst every care has been taken to ensure the accuracy and integrity of the information and analysis presented in this report, TWIMS, its staff members, and associates, take no responsibility whatsoever for decisions derived from its content. About the Author Guy Bowden is a Research Assistant at TWIMS. He is currently completing his master’s in Development Economics via the School of Economics at the University of Cape Town. His research interests are focussed on the intersection of industrialisation, trade, green energy, and future technology. Contents Contents .................................................................................................................................................. 1 Abbreviations .......................................................................................................................................... 2 Executive Summary ................................................................................................................................. 3 Introduction ............................................................................................................................................ 4 1 - Progress of South Africa’s Hydrogen Society and Platinum Valley .................................................... 6 Government’s Hydrogen Strategy ...................................................................................................... 6 Hydrogen Production in South Africa ................................................................................................. 7 Platinum Valley Project ....................................................................................................................... 8 2 - BEVs versus FCEVs ............................................................................................................................ 10 Infrastructure .................................................................................................................................... 10 Total cost of ownership .................................................................................................................... 10 Performance ..................................................................................................................................... 12 FCEVs and BEVs as complimentary technologies ............................................................................. 14 3 - FCEV strategies of major automotive manufacturers ..................................................................... 15 4 - Potential Viability of FCEV demand and production in SA .............................................................. 18 Ownership and Operating Costs ....................................................................................................... 18 Domestic Demand ............................................................................................................................. 20 Local Production of FCEVs and BEVs ................................................................................................. 21 Conclusion ............................................................................................................................................. 24 References ............................................................................................................................................ 26 1 Abbreviations BEV – Battery Electric Vehicle EV – Electric Vehicle FCEV – Fuel Cell Electric Vehicle FCT – Fuel Cell Technology HFCT – Hydrogen Fuel Cell Technology ICE – Internal Combustion Engine LNG – Liquid Natural Gas OEM – Original Equipment Manufacturer PGM – Platinum Group Metals 2 Executive Summary This report was compiled to (1) discuss the progress of South Africa’s proposed Hydrogen Society and Platinum Valley Project, (2) elaborate on the ongoing debate between Battery Electric Vehicles (BEV) and Fuel Cell Electric Vehicles (FCEV), and (3) to explore the potential viability for Fuel Cell Electric Vehicle (FCEV) production and demand in South Africa. Key findings of this report are that South Africa’s Hydrogen Economy is still in its infancy. While FCEVs are proposed as a source of demand for platinum group metals (PGM) beneficiation, national government policy and industry research seems primarily focussed on developing cost-effective Hydrogen Fuel Cell Technology (HFCT) for export as well as building capabilities for the domestic manufacture of Fuel Cell Technology (FCT). South Africa has been widely regarded as a major potential generator of renewable electricity through solar and wind energy, this would create a significant advantage to locally produce green hydrogen. While clear opportunities for the export of South African green hydrogen and HFCT have been identified, it appears that the local economy will be slower in its uptake of green hydrogen and HFCT for domestic use. Globally, it seems that BEVs are the preferred replacement for Internal Combustion Engine (ICE) passenger vehicles primarily operating in urban areas, while FCEVs are shown to be more effective in heavy and long-range modes of transport. In particular, FCEVs have competitiveness potential in the large passenger vehicle segment as well as light commercial, medium commercial, heavy commercial and extra-heavy commercial vehicle markets. 3 Introduction Hydrogen has been identified as a compelling form of energy transportation and storage that could unlock greater potential for other forms of renewable electricity generation. Hydrogen provides a crucial solution to intermittent supply and demand peaks associated with wind, solar and hydro electricity generation. To this effect, hydrogen offers a viable means of storing energy over long periods of time – a capability that battery technology does not yet have (Simolka, Kubler, & Voller, 2020). Hydrogen will play a significant role in the future of global electricity generation and energy storage as the world increasingly moves away from fossil fuels. Provided that hydrogen is produced with renewable energy, or if carbon capture storage is used alongside fossil fuels, hydrogen offers an environmentally friendly source of electricity. This is because, the by-products of using pure hydrogen are simply heat and water. Table 1 shows several advantages for HFCT, making FCEVs a viable alternative to ICE vehicles. Table 1: Advantages of hydrogen fuel cell technology Advantages of FCEV Explanation Safety Hydrogen is as safe as petrol and diesel. Reliability Less moving parts than an ICE. Energy density Hydrogen is more energy dense than lithium and LNG. Range Comparable range to existing ICE vehicles. Refuelling time Comparable to ICE (5 minutes). Weight H2 is significantly lighter than a battery pack and gasoline. Lowest carbon footprint (Green H2) Mining of lithium gives off pollution. Price In the long-term price of green H2 will be cheaper than LNG. Source: BloombergNEF (2020); Hydrogen Council (2020); Roos and Wright (2021) Hydrogen offers a viable alternative to current national and global energy complexes without completely having to overhaul some existing infrastructure and systems. Since hydrogen can be stored as a liquid or gas it can be transported and stored in similar methods to existing non-renewable liquid and gas fuels. For example, existing pipelines, storage containers, and ships can be adapted to transport hydrogen. However, maximising the cost effectiveness of hydrogen transport and efficient hydrogen storage remain key challenges that will require enormous investment. Over three times more hydrogen storage capacity will be needed than what is presently available, if hydrogen is to replace natural gas as expected (BloombergNEF, 2020). 4 South Africa is not the only region to have recognised the potential for a hydrogen- based economy. Australia, Chile, Germany, the European Union, Japan, New Zealand, Portugal, Spain, and South Korea already have strong national/regional strategies for the introduction of hydrogen as an integral means for electricity generation and energy storage. The EU and Japan have made it clear that green hydrogen will be an important component of their energy complexes. Due to their limited renewable energy potential, specifically limited solar resources, they will be large importers of green hydrogen creating new economic opportunities for countries that can capitalise on their renewable resource endowments. Therefore, the opportunities for South Africa surrounding hydrogen are twofold. Firstly, the country has the potential to export hydrogen to markets that are transitioning to green economies. This would create valuable export earnings for the country and stimulate wider investment, economic growth, and job creation. Secondly, South Africa has an opportunity to transform its own energy infrastructure