The Namibian government has secured an option to acquire up to 24pc of the $10bn Hyphen project and the right to royalties of 5pc of gross revenues under a landmark deal with the developer that sets a benchmark for terms governing foreign investment in green hydrogen in Africa and other emerging economies.

Hyphen, located in the Tsau Khaeb National Park in southwestern Namibia, is sub-Saharan Africa’s largest and only fully vertically integrated green hydrogen project. Finalisation of the terms of the feasibility and implementation agreement (FIA) with Hyphen Hydrogen Energy—a Namibia-registered company, the shareholders of which are German renewables company Enertrag and Africa-focused investment firm Nicholas Holdings—allows the project to move to a two-year feasibility study stage, after which the government will have 120 days to validate the final design.

2mn t/yr – Target green ammonia output

Plans envisage the project reaching first-phase capacity of 1mn t/yr of an eventual 2mn t/yr by 2027 from 3GW of electrolyser capacity powered by 7GW of renewables.

Under the FIA, Hyphen’s developer is responsible for the technical, financial, environmental, social and commercial delivery of the project. The government is responsible for providing the land, and developing and implementing the required legal, fiscal and regulatory environment necessary for the establishment and sustainable operation of Namibia’s green hydrogen industry.

The FIA sets land rent for the project at €10mn/yr ($10.7mn/yr) during the financing and construction phase, with an uplift of 2pc/yr. Once in the operational phase, the rent rises to €26mn/yr, with a 2pc increase each year.

Other jurisdictions are expected to monitor the terms around Hyphen closely as governments look to secure royalties and other economic and social benefits from the deployment of green hydrogen production based on their domestic wind and solar resources.

“[The government of] Namibia and Hyphen believe the FIA will set a new global benchmark, creating a template for the sustainable and equitable development of other green hydrogen projects,” the two parties say in a joint statement.

Strategic bet

The FIA includes terms on local job creation and procurement. It is estimated the project will create up to 15,000 new jobs during the construction phase and 3,000 permanent jobs during its operation, with the target for 90pc of these jobs to be filled by Namibians and 20pc by young people. The project is further targeting 30pc local procurement of goods, services and materials during the construction and operational phases.

“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,” says Obeth Mbui Kandjoze, chair of the Namibian Green Hydrogen Council and director general of the country’s National Planning Commission. “Namibia is resolute in its unwavering commitment to realise potential of this transformative strategic bet.”

Earlier in May, Hyphen signed a letter of intent with storage and logistics company Koole Terminals to supply Namibian green ammonia to Europe via a planned import terminal in the port of Rotterdam.

The company has already signed memorandums of understanding for offtake with Germany’s RWE, South Korea’s Approtium and an unnamed industrial user. The RWE offtake agreement would cover 300,000t/yr from 2027, while the other two deals account for a combined 750,000t/yr.

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Author: Stuart Penson