Namibia’s green hydrogen ambitions moved a step closer to fruition after Cabinet this week approved an agreement with Hyphen Hydrogen Energy.
The agreement will give Hyphen the go-ahead to govern the development, implementation and operation of sub-Saharan Africa’s largest and only fully vertically integrated green hydrogen project.
Hyphen Hydrogen Energy is a joint venture between Nicholas Holdings and Enertrag South Africa. As the preferred bidder, Hyphen was selected for a 40-year deal to develop Namibia’s US$10 billion green hydrogen project in the Tsau //Khaeb National Park.
A joint statement issued on Wednesday by Hyphen and the government states that Namibia has managed to mobilise donor and concessional funding from Invest International and the European Investment Bank of more than EUR540 million (N$11.167 billion) to finance the development of the green hydrogen industry, and to fund government’s equity participation in the project.
Ursula von der Leyen, the president of the EU Commission, said “the agreement is a major step for the production of green hydrogen in Namibia. Together, we will fight climate change, make Namibia energy-independent, and create jobs and prosperity.”
On his part, President Hage Geingob said “the agreement between the Government of the Republic of Namibia and Hyphen signifies an exciting chapter for Namibia’s growth trajectory. We wish to thank all of our development partners, including the EU Commission, for the unwavering support that Namibia has enjoyed so far!”
It is estimated that the project will create up to 15 000 new jobs during the construction phase, 3 000 permanent jobs during its operation, with the target for 90% of these jobs to be filled by Namibians and 20% by the youth. The project is further targeting 30% local procurement of goods, services and materials during the construction and operational phases.
Namibia took the first step to position itself at the forefront of world-wide aspirations for green hydrogen production in 2021 by setting in motion plans to develop the country’s first vertically integrated green hydrogen project in the Southern Corridor Development Initiative.
According to the statement, government and Hyphen are scheduled to sign the feasibility and implementation agreement (FIA) at State House today.
“The FIA governs the process under which Namibia’s first green hydrogen project will be realised, as a first step in the implementation of government’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,” the joint statement reads.
The FIA will set a new global benchmark in creating a template for the sustainable and equitable development of other green hydrogen projects.
Namibia’s green hydrogen aspiration is premised on the second Harambee Prosperity Plan (HPP2), which is a fast-tracked action plan towards economic recovery and inclusive growth, in which Namibia aspires to provide growth stimuli to various economic sectors.
Under the FIA, Hyphen is responsible for the technical, financial, environmental, social and commercial delivery of the project. Government, on the other hand, 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.
Economic impact
The project is expected to pump a substantial amount of revenue into government coffers through the payment of land rentals and royalties on all project income and taxes.
At full-scale development, anticipated before the end of the decade, the project should produce two million tonnes of green ammonia annually for regional and global markets.
Co-investor
Namibia is expected to inject substantial capital into the project in order to maximise the returns. As a co-investor, government has an opportunity to take up to 24% equity interest at a reasonable and market-related cost.
Over the past year, Hyphen has signed a number of off-take agreements with potential European customers, targeting the annual supply of up to 750 000 tonnes of green ammonia.
In addition, Hyphen earlier this month stated that it secured an agreement with Koole Terminals to use its infrastructure to import green ammonia for the European market. Hyphen has since signed a Letter of Intent (LoI) with Koole Terminals.
“This covers the proposed import of green ammonia into north-western Europe, with Hyphen planning to supply its customers using the import terminal being developed by Koole Terminals, located in the Port of Rotterdam, Netherlands,” Hyphen stated at the time.
Koole Terminals is a leading and independent storage, processing and logistics company. It has 21 strategically- located terminals in Europe, which can handle a total volume of 5.4 million cubic metres.
Hyphen is likewise targeting annual production of one million tonnes of green ammonia to come on line by the end of 2027, expanding to two million tonnes of green ammonia by 2029.
Caption: Big deal… An architect’s impression of Hyphen Hydrogen Energy’s Namibian operation.
Photo: Contributed