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Namibia Green Hydrogen Project: Transforming Energy Landscape in Africa

Namibia Green Hydrogen Project: Transforming Energy Landscape in Africa
Source : https://african.business/

n mid-2021, the Namibian government explored the potential for a green hydrogen project, signaling a significant commitment to its country's future. Later that year, Hyphen Hydrogen Energy, a company partly owned by German renewables firm Enertrag, was selected as the preferred bidder to develop Namibia's first large-scale green hydrogen project in the Tsau Khaeb national park, with an estimated total investment of $9.4 billion upon full development. This endeavor is poised to revolutionize both the country's energy landscape and the region's.

Namibia, known for its sparse population and political stability since gaining independence from South Africa in 1990, has a diverse economy primarily reliant on agriculture, fishing, and mining, with a GDP of approximately $12.7 billion. The nation possesses abundant renewable energy resources, particularly in solar and wind energy, making it a prime candidate for green hydrogen production.

Despite some delays in project development, Namibia has gained international recognition as a leading future green hydrogen exporter, with memoranda of understanding signed with Germany, the Netherlands, and the EU. President Ursula von der Leyen of the EU Commission highlighted Namibia's prominence in the green hydrogen space.

Namibia's success hinges on its comprehensive vision, strategic planning, the establishment of a green hydrogen council, collaboration with international partners, and government equity in the multi-billion-dollar hydrogen project.

Green hydrogen production, powered by wind and solar energy, enables countries like Namibia to build their renewable capacity without overloading their national grids. In Africa, other countries, such as Egypt, Morocco, and Mauritania, have also embarked on large-scale green hydrogen production initiatives.

Namibia's strong legal system, financial stability, and favorable risk profile make it an attractive destination for large-scale hydrogen projects. The country's sovereign credit ratings from Moody's and Fitch are among the highest in sub-Saharan Africa.

One key factor contributing to the confidence in Hyphen's project is its innovative financing structure, which leverages a blend of grants and institutional capital through the government's SDG Namibia One fund and NH2 Fund Managers, a partnership between Namibia's Environment Investment Fund and Dutch organizations. The Namibian government also holds up to 24% equity in the project.

As the global green hydrogen market matures, concerns arise regarding the balance between proposed production and actual demand from industrial users. However, from a technical perspective, Namibia appears promising, and negotiations for offtake agreements are expected to commence once the feasibility study determines the production cost. The green hydrogen future in Namibia is unfolding, with the potential to become a significant player in the global hydrogen market.