Namibia anticipates development of the largest green hydrogen project in SSA

The Government of the Republic of Namibia (GRN) has entered into an agreement for the development, implementation and operation of sub-Saharan Africa’s largest and only fully vertically integrated green hydrogen project.

At full-scale development, anticipated before the end of the decade, the project will produce 2 million tonnes of green ammonia per year on average for regional and global markets.

The impact of this project on Namibia and its economy will be considerable. The total project capital investment of $10 billion is roughly equivalent to the country’s annual GDP.

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Setting a global benchmark for green hydrogen projects

The pioneering Feasibility and Implementation Agreement (FIA) planned to be signed on 26 May 2023 governs the process under which Namibia’s first green hydrogen project will be realised, as a first step in the implementation of GRN’s broader green hydrogen strategy.

With limited existing international precedent to draw upon, GRN and the inter-ministerial Green Hydrogen Council assembled a negotiations team which was supported by international advisors, to develop the FIA.

GRN and Hyphen Hydrogen Energy believe that the FIA will set a new global benchmark, creating a template for the sustainable and equitable development of other green hydrogen projects.

Hage Geingob, President of the Republic of Namibia, said: “The Harambee Prosperity Plan II noted that the Namibian Government would investigate the feasibility of incubating a synthetic fuels industry in Namibia, as a key transforming agent of our economy. On Friday the 26th of May 2023, we earnestly embark on that journey, as we kickstart a process that has the potential to transform the lives of many in our country, the region and indeed the world.”

Ursula Von Der Leyen, President of the European Commission, said: “Namibia has the potential to become one of the main renewable energy hubs on the African continent and even worldwide. [The] agreement is a major step for the production of green hydrogen in the country.”

Economic stimulation for Namibia through hydrogen

At the heart of the FIA is the commitment to the socio-economic development of Namibia, through job creation and local procurement. It is estimated that the project will create up to 15,000 new jobs during the construction phase and 3,000 permanent jobs during its operation.

The target is for 90% of these jobs to be filled by Namibians and 20% by youth. The project is further targeting 30% local procurement of goods, services and materials during the construction and operational phases.

Obeth Mbui Kandjoze, Chairman of the Namibian Green Hydrogen Council and Director General of the National Planning Commission, said: “This project is strategic in its potential to create employment in Namibia, reduce regional energy insecurity and help combat climate change by decarbonising hard to abate sectors globally. The Government of the Republic of Namibia is resolute in its unwavering commitment to realise the potential of this transformative strategic bet.”

The project will generate significant income to the Namibian fiscus through the payment of land rentals, royalties on all project revenues and taxes. GRN also has an opportunity to be a co-investor in the project with the right to take up to a 24% equity interest at cost.

De-risked funding to finance green hydrogen development

Through its partnership with the European Union and the Global Gateway Initiative, Namibia has mobilised donor and concessional funding from Invest International and the European Investment Bank of more than €540 million (Nearly $580 million) to finance the development of the green hydrogen industry and to fund its equity participation in the project, with additional support expected to be announced post the execution of the FIA.

GRN has mobilised more than €40 million to date to de-risk its equity investment in the project, associated infrastructure and future green hydrogen projects. Additional support is expected to be announced after the execution of the FIA.

Namibia is also working closely with its development partners to establish a dedicated programme that will provide the requisite resources to coordinate the implementation of the Hyphen Hydrogen Energy Project and Namibia’s broader green hydrogen strategy. This programme illustrates the multinational nature of this industry and the important role Namibia will play in decarbonising global hard-to-abate sectors while industrialising its own economy.

The approval of the FIA marks the commencement of Namibia’s transformative journey towards a thriving and sustainable future, putting Namibia on the map as a global hub for clean energy innovation and hopefully empowering the country to build a greener, more resilient future for generations to come.

Under the FIA, Hyphen Hydrogen Energy is responsible for the technical, financial, environmental, social and commercial delivery of the project. GRN is responsible for providing the land on which the project will be established and developing and implementing the required legal, fiscal and regulatory environment necessary for the establishment and sustainable operation of Namibia’s green hydrogen industry.

This article was originally published on ESI-Africa.com