The latest news that the proposed R13.8 billion Boegoebaai Port is moving closer to a final investment decision is being hailed as another step towards South Africa’s green hydrogen future. Perhaps it is. But there is a difference between a compelling vision and a commercially viable project.

The first question is water. The Northern Cape is one of the driest parts of South Africa. Yes, the answer is desalination, not drawing on scarce freshwater supplies. But desalination is expensive, energy intensive and brings its own environmental challenges. It solves one problem while creating others.

Then there is electricity. Green hydrogen only makes sense if abundant renewable electricity can be produced at very low cost. South Africa already struggles with high electricity prices and an ageing grid. Can a project of this scale really produce hydrogen cheaply enough to compete with producers in countries that enjoy lower financing costs and more generous government support?

Demand also deserves closer scrutiny. There is plenty of excitement about green hydrogen, but excitement is not the same as signed purchase agreements. Investors will ultimately want to see long-term customers prepared to buy the product at prices that justify billions of rand in capital expenditure.

None of this means Boegoebaai is destined to fail. It may yet become an important export hub. But big infrastructure projects have a habit of looking irresistible on presentation slides long before they prove themselves in the marketplace.

In the end, markets are less interested in grand ambitions than hard economics. The questions are simple. Who will buy the hydrogen? At what price? And will investors earn an acceptable return? Until those questions are answered, a healthy dose of scepticism seems entirely reasonable.

Editorial Disclosure & Disclaimer

Financial News Daily is an independent business news syndicate and a wholly owned subsidiary of Idea Accelerator. We specialize in producing high-quality financial, environmental, and The corporate news commentary for digital platforms, media outlets, and organizations. Financial News Daily does not provide investment, legal, or financial advice. Opinions expressed represent bona fide media commentary on matters of public and economic interest.