South Africa's Northern Cape region's renewable energy potential could serve as the pulse driving the country's economic growth.
The Northern Cape, a region at the forefront of South Africa's clean energy revolution, is experiencing a surge in power projects, particularly solar and green hydrogen. This transformation has not gone unnoticed, with President Cyril Ramaphosa considering the Northern Cape an economic pioneer and a frontier of innovation.
The region's immense potential for renewable energy and green hydrogen production is evident. President Ramaphosa has highlighted the strides made in turning the Northern Cape into an industrial hub, but he has also identified persistent challenges, including an increase in poverty levels, a drop in access to basic services like water, high unemployment, and fiscal constraints affecting project implementation.
Unemployment, especially youth unemployment, remains high in the Northern Cape. To address this issue, aligning clean energy project development strategically to create sustainable jobs targeted at youth and marginalised communities is crucial.
Fiscal constraints are hindering the implementation of projects at a municipal level, including disaster response, asbestos eradication, land restitution, rural electrification, and public housing. These challenges are compounded by problems of fragmented government efforts and top-down developmental projects not aligned with local needs.
However, the Northern Cape has significant potential as a renewable energy hub and an economic growth engine for South Africa, thanks to its favourable climate and infrastructure developments like the Northern Cape Industrial Corridor and special economic zones. The green hydrogen sector is considered part of the “heartbeat” of the emerging economy in the province, offering opportunities for industrial expansion and job creation.
To unlock the region's green hydrogen and clean energy potential as central drivers of economic growth and job creation, several solutions are proposed. These include:
- Integrated and cooperative governance: Strengthening coordination between national, provincial, and local governments, including state-owned enterprises, to reduce siloed operations and ensure projects are grounded in local realities and community needs.
- Innovative and creative funding mechanisms: Exploring alternative financing models beyond constrained municipal budgets to support high-impact infrastructure projects such as the industrial corridor, ports, housing programs, and green hydrogen facilities.
- Reexamining delivery and regulatory models: Streamlining and reforming delivery systems to accelerate regulatory approvals, investment flows, and project implementation, thus enabling quicker realization of clean energy and industrial initiatives.
- Focus on youth employment and poverty reduction: Aligning clean energy project development strategically to create sustainable jobs targeted at youth and marginalised communities, tackling unemployment and poverty simultaneously.
- Leveraging tourism and climate change preparedness: Utilising the Northern Cape’s tourism assets alongside clean energy projects to create diversified economic opportunities, while improving resilience to climate risks which can impact long-term sustainability.
President Ramaphosa has also expressed interest in discussing the province's approach to addressing climate change and its readiness to respond to natural disasters. The Boegoebaai Port and Rail Development has been named one of the top seven infrastructure priorities for 2025/26, and the President has proposed supporting high-impact projects such as the Northern Cape Industrial Corridor, the province's R1 billion housing programme, and the Kimberley Big Hole precinct.
The African Green Hydrogen Alliance (AGHA) estimates the green hydrogen industry could add between $66 billion and $126 billion to the GDP of member countries over the next 25 years. If harnessed effectively, the Northern Cape's Green Hydrogen Masterplan, ambitious in scope and potential, could impact not just the Northern Cape but the national economy as a whole.
- The Northern Cape's potential for becoming a significant player in the green hydrogen industry is clear, as the President has recognized its progress in transforming into an industrial hub and its favorable climate for renewable energy.
- Despite the region's economic potential, persistent challenges such as poverty, limited access to services, high unemployment, and fiscal constraints need to be addressed for effective implementation of projects.
- Creating sustainable jobs targeted at youth and marginalized communities through aligned clean energy project development is crucial to reducing unemployment in the Northern Cape.
- Innovative funding mechanisms, integrated governance, regulatory reform, and a focus on youth employment and poverty reduction could unlock the region's green hydrogen and clean energy potential as drivers of economic growth and job creation.
