Namibia plans to produce and export 10–15mn t/yr of green hydrogen equivalent by 2050, according to a recently published government strategy document. The country aims to ramp up to this mid-century target with interim goals of 1–2mn t/yr in 2030 and 5–7mn t/yr in 2040.

Namibia plans to establish three initial production clusters in its southern, central and northern regions, with an ambition to meet demand in Europe, Japan, South Korea and China. The southern African country also plans to put in place its Synthetic Fuels Act as a regulatory framework for domestic hydrogen projects, with the aim of complying with international standards for the fuel, before March 2025.

In November, Namibia announced Windhoek-based developer Hyphen Hydrogen Energy as the preferred bidder for a $9.4bn green hydrogen project in the southern cluster, which targets 300,000t/yr of production.

Levelised cost

The government estimates Namibia’s wind and solar resource could enable projects in the country to produce green hydrogen at $1.2–1.3/kg, assuming no specified firmness in electricity supply. As the production of derivatives such as ammonia and methanol requires up to 95pc firmness in power supplies, the government estimates a 25pc increase in the levelised cost of hydrogen (LCOH) to $1.5–1.6/kg by 2030.

2023 – Planned startup of green ammonia plant at Walvis Bay

“This still outperforms expected green hydrogen production costs in Morocco and Saudi Arabia, each with an estimated LCOH of $1.7/kg by 2030 at this level of firmness,” according to the strategy document.

Assuming the country “can retain its competitive advantage in LCOH through low shipping costs”, Namibia plans to focus on the export of hydrogen derivatives including ammonia, methanol, synthetic kerosene and hot-briquetted iron, which are less expensive than hydrogen to ship. The government estimates Namibia’s ammonia production costs will fall to $420–460/t by 2030 and $320–360/t by 2050, assuming volumes increase and equipment costs fall over time.

The country aims to start up an $18mn pilot green hydrogen and ammonia production plant at the port of Walvis Bay by 2023 to supply heavy-duty and maritime transport, with the ambition to take FID on a larger €2.5bn ($2.6bn) liquid ammonia terminal by the end of this year.

However, the government concedes that this favourable LCOH is highly dependent on a number of input assumptions, most significantly cost of capital. It estimates that reducing the weighted average cost of capital by 1 percentage point could cut LCOH by 17pc.

10–15mn t/yr – Target green hydrogen equivalent production and export by 2050

In an effort to reduce cost of capital—driven by projects’ perceived risk—Namibia plans to work with project developers to address operational and technology risks, facilitate offtake agreements to lower market risk and establish an infrastructure fund called SDG Namibia One.

This infrastructure fund has already secured $40mn of seed funding from the Dutch government and will initially mobilise $1bn to develop the planned southern cluster. The fund will link to three other funds to provide capital for different phases of project development with different risk-return profiles, achieved by blending finance from donors and development institutes to attract further commercial investors.

The government estimates $190bn of investment will be required up to 2040 to develop the country’s green hydrogen industry, including $95bn to construct new upstream infrastructure and $30bn for midstream infrastructure. The European Investment Bank is providing a €500mn low-cost loan to Namibia, as well as a €25mn grant to support French developer HDF’s 85MW project in Erongo, in the centre of the country.

Hydrogen diplomacy

Namibia has already taken steps to set up deals with potential demand centres. Last year, Germany signed a memorandum of understanding (MoU) with Namibia, and its Federal Research Ministry has since provided €50mn in funding to identify four pilot projects to kickstart hydrogen development, develop a national synthetic fuels strategy and fund relevant scholarships.

Namibia has also signed MoUs with Belgium, several Japanese companies and the Netherlands through a deal with the port of Rotterdam.

Most recently, Namibia has signed an MoU with the EU to cooperate on the secure and sustainable supply of green hydrogen, as well as raw and refined materials, with the aim to develop an operational roadmap for 2023–24.

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Author: Polly Martin