THE Industrial Development Corporation (IDC) signed a €17-million Memorandum of Understanding (MOU) with Germany’s KfW Development Bank to mitigate potential funding gaps that may arise from the increasing demand for green hydrogen-related projects.
The MOU formalises a framework for cooperation between the development funders that will enable them to continue to strengthen cooperation when it comes to ramping up a local green hydrogen economy.
KfW Development Bank Teams with IDC to Address Funding Gaps
The MOU was signed by KfW directors, Stefan Hediger, Conny Tittman and Rian Coetzee, the IDC’s acting divisional executive for industry planning and project development, at the Africa Green Hydrogen Summit, which took place from 12-13 June 2025 in Cape Town.
The signing of the MOU followed KfW agreeing to provide €23,1-million for a promotional programme to build a sustainable hydrogen economy in partnership with the IDC in 2023.
KfW Bank’s €23.1m Promotional Programme Drives Hydrogen Economy
Speaking at the summit, Trade, Industry and Competitions Minister Parks Tau said the latest agreement between the IDC and KfW laid a solid base for the development of a green hydrogen sector in the country.
“Through the Industrial Development Corporation, we have also secured €23-million in grant funding from the German government via KfW Development Bank. These funds will be used to de-risk and fast-track key catalytic green hydrogen projects. Of the 24 projects identified as Strategic Integrated Projects (SIPs), several have already completed their pre-feasibility study phase. We have also established the Just Energy Transition Green Hydrogen Programme Management Office, hosted by the IDC, to coordinate the implementation of the green hydrogen chapter of the JET-IP implementation plan,” said Tau.
He added that the scale of funding required to develop a green hydrogen ecosystem is immense; therefore, collaboration is not just a recommendation, but a necessity.
“We will explore a range of mechanisms, including project feasibility and development funding, tools to de-risk investments, support for green premiums during the early stages of cost curve reduction such as contracts for difference, investment in supporting infrastructure, and funding that facilitates ecosystem development, including policy support, capacity building, technology transfer, sustainability, and inclusion,” Tau said.
Development Bank’s Role in Strengthening Green Hydrogen Ecosystem
This agreement was not the only one concluded between the parties at the summit, as they also agreed to fund the Prieska Power Reserve, a green hydrogen and ammonia production facility located in the Northern Cape.
KfW highlights green hydrogen global export potential
Stretching across 1,900 hectares within the Siyathemba Local Municipality’s industrial zone. It aims to produce 80,000 tons of green ammonia annually by 2027 and scale up to 500,000 tons by 2030.
The Prieska Power Reserve is expected to create about 400 direct jobs and support more than 300 small businesses.
“Prieska is the first green ammonia and hydrogen project to receive funding approval from the KfW grant. This marks a significant milestone for the project,” stated Meta Mhlarhi, Director of Prieska Power Reserve.
Martin Walzer, also a director at Prieska Power Reserve, said: “With KfW’s support and our ongoing partnership with the IDC, we are well positioned to reach financial close and move into project execution.”
Also speaking at the summit, Minister of Electricity and Energy, Dr Kgosientsho Ramokgopa, said the green hydrogen economy is a new frontier for clean energy as it emits low carbon emissions, coupled with a global potential of at least $300-billion in global exports over the next three decades.
