Sasol’s big green energy play

Sasol plans to launch a new venture capital fund under their EcoFT business that was established last year. The goal of the fund is to invest in green startups to complement their own research and development (R&D) and advance its Fischer-Tropsch (FT) technology initiatives.

Sasol’s proprietary FT technology converts coal and natural gas into synthetic oil products. The process is unique in the sense that the input energy source can be changed to green hydrogen or biomass to produce more sustainable products with lower or potentially even no carbon footprint.

EcoFT builds on Sasol’s FT experience by exploring new ventures, technology, and partnerships to produce green hydrogen.

It will be used with its own processes to produce sustainable fuels for industries that find the transition to green energy difficult, like aviation and sea transport.

Sasol EcoFT’s first focus area is to supply sustainable aviation fuels (SAF) to the market.

Sasol has expertise in synthetic aviation fuels and supplies planes departing OR Tambo international airport with a blend containing their synthetic jet fuel.

There is significant demand for sustainable aviation fuels, with the International Air Transport Association (IATA) targeting a blend of at least 50% sustainable aviation fuels by 2050.

Sasol has also signed a memorandum of understanding (MoU) with German aircraft manufacturer Deutsche Aircraft to use green hydrogen in aviation.

Another key focus area for Sasol is using renewable energy to produce green hydrogen that can feed into its Fischer-Tropsh process to produce green fuels and chemicals.

Sasol is leading a pre-feasibility study in Boegoebaai, which is rich in wind and solar resources and can be developed into an energy export hub.

Sasol’s EcoFT business unit has attracted a lot of attention, and it established partnerships with the German government, Haldor-Topsoe, Ineratec, Sonatrach Raffineria Italiana, and Sweden’s Uniper.

Sasol CFO Hanré Rossouw announced that Sasol also plans to establish a small venture capital fund aimed at investing in startup and early-stage technology companies in the green economy.

He remained tight-lipped on the details, only saying that they are finalizing the funding and governance aspects for the fund.

There are still many technological and economic challenges to these ventures. However, Sasol seems to be going into this eyes wide open with a phased approach over the next decade.

Their strategy focuses on R&D and pilot ventures to prove the technology and iron out operational challenges.

They will also wait for the cost curves to turn favourable before investing in them at scale.

Currently, the price of wind and solar energy and the electrolyzers used to split water into hydrogen and oxygen are not economically feasible.

However, these costs are expected to decrease over the next decade as more research is done.

Sasol enjoys a first mover advantage because its Secunda facility is among the world’s largest single integrated chemical and fuel plants.

The plant is already based on synthetic fuel value chains and can be modified for these new technologies a lot easier than traditional oil refiners.

Practical challenges

Elon Musk is a big critic of using hydrogen as a means of energy storage. He famously said it is “the dumbest thing I could possibly imagine” and referred to fuel cells as fool cells.

The main reasons for Musk’s criticism are the loss of energy efficiency and the difficulty and dangers of storing hydrogen.

Using renewable energy to generate electricity and then directly charging a battery of an electric vehicle has an overall efficiency of almost 80%.

Comparatively, hydrogen fuel cells for cars have an overall efficiency rate of only 30%.

Hydrogen’s lower efficiency is due to the extra steps of using electricity to produce hydrogen and then spending additional energy to compress and liquefy the hydrogen so it can be effectively stored and transported.

Hydrogen has an advantage over batteries because it can store much larger amounts of energy for longer periods, because the energy is stored in the molecules themselves.

The energy can also be delivered instantly to its intended source through normal refuelling as we are currently used to, eliminating the need to wait long periods of time for batteries to charge.

Hydrogen is also extremely difficult to store. It is the smallest molecule in the universe, allowing it to penetrate between individual molecules of the steel used to store it.

It causes the steel to become brittle and run the risk of rupturing. Hydrogen is also a very volatile substance, leading to easy combustion or even explosions.

A proposed solution to this problem is to convert hydrogen into ammonia for storage and transport.

Ammonia only needs to be pressurized to 10 bar, unlike hydrogen, which needs to be pressurized to 100 bar.

Ammonia is a denser molecule, meaning you can store 50% more hydrogen in the same volume tank.

Ammonia does not react with steel in the same way as hydrogen, and there is already a lot of infrastructure and expertise for storage and transport.

Because it forms the base feedstock for virtually all fertilizers today, green hydrogen and ammonia can kill two birds with one stone – addressing the need for green energy as well as green food security.