Green Hydrogen expected to be produced by 2026…first phase requires capital cost of N$66 billion

When finance minister Iipumbu Shiimi presented the mid-term budget last week Wednesday, he was wearing a special green tie in anticipation of the announcement to be made by President Hage Geingob for the preferred bidder to develop the country’s first large-scale vertically integrated green hydrogen project in the Tsau //Khaeb national park.

The first phase, which is expected to enter production in 2026, will see the creation of 2 gigawatts of renewable electricity generation capacity to produce green hydrogen for conversion into green ammonia, at an estimated capital cost of US$4.4 billion (N$66.4 billion at current exchange rates).

Shiimi’s green tie was to promote the theme of “Green energy, green hydrogen”, and also to endorse the project estimated to be worth about the same as Namibia’s entire GDP, in the region of US$9.4 billion.

This massive investment is expected to ultimately produce 300 000 tonnes of green hydrogen per year for regional and global markets. The plant will produce an off-take product of either pure green hydrogen, or in its derivative form of green ammonia.

While attending the UN climate change conference in Glasgow, Geingob announced Hyphen Hydrogen Energy as the preferred bidder after what was deemed a competitive tender process, and following the conclusion of mandatory legislative processes. Now, entering into relevant contractual agreements will afford Hyphen the right to construct and operate the project for a 40-year period following the conclusion of the feasibility study and sign-off from government.

“We’re humbled by the enormity of the responsibility that comes with this award, but are confident that we can not only live up to but exceed the expectations placed on us. We look forward to working with the Government of Namibia and all other stakeholders in delivering Southern Africa’s first gigawatt scale green hydrogen project,” said Hyphen CEO Marco Raffinetti via a media statement.

Once fully developed, the project is expected to provide a major boost to Namibia in terms of foreign direct investment and job creation. The multi-billion investment is expected to provide nearly 15 000 direct jobs during the four-year construction of both phases, with a further 3 000 jobs created permanently during the operational phase. More than 90% of all these jobs created are expected to be filled by Namibians. In addition to taxes, Hyphen will pay concession fees, royalties, a sovereign wealth fund contribution and an environmental levy to the government.

“Further expansion phases in the late 2020s will expand combined renewable generation capacity to 5 gigawatts and 3 gigawatts of electrolyser capacity, increasing the combined total investment to US$9.4 billion”, said Raffinetti.

“The Tsau //Khaeb national park is among the top five locations in the world for low-cost hydrogen production, benefiting from a combination of co-located onshore wind and solar resources near the sea and land export routes to market,” Raffinetti observed. He added that Namibia’s world-class natural resources, combined with a progressive, pro-investment and visionary leadership, has enabled the country to move with incredible speed to position itself at the leading edge of Africa’s ambitions to enter the green hydrogen production space.

According to Nangula Uaandja, CEO of the Namibian Investment Promotion and Development Board, this is exactly the type of investment the board aims to attract.

“This is a milestone project that will enable the country to create on average 15 000 direct jobs over the four years of combined construction, and 3 000 permanent direct jobs over the 40-year operational period, while contributing to other efforts to stimulate economic recovery.  We look forward to welcoming HYPHEN as an investor in Namibia, and reiterate the Board’s commitment to creating a conducive environment for investment, provide the necessary support to all investors, and ensure continued ease of doing business in Namibia”, she stated.

Meanwhile, Hyphen director Tobias Bischof-Niemz said the consortium comprises shareholders and technical partners who are world leaders in their respective fields. “This collective deep technical expertise across the entire green hydrogen value chain, combined with our financial strength and experience in developing, fundraising and implementing infrastructure projects in Africa, will be crucial in successfully delivering a project of this magnitude and complexity,” he noted.

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