Namibia is one of the youngest countries in history. With its independence from South Africa in 1990, it is a huge country of 824,300 square kilometers, 40% larger than the Iberian Peninsula. However, its size can be deceptive, since in reality it is a vast desert with a population barely equal to that of Valencia (2.5 million inhabitants). In addition, they have only a very small part of the resources of South Africa and, in practice, it has a smaller economy. However, the EU’s ‘green transformation’ and the Russian gas cut have given it an unexpected opportunity: without large oil reserves in its belly, nor the money to invest in alternative sources, Namibia has plans to become a true energy power and boost your economy.
Europe’s leading dignitaries and the region’s most important companies have been meeting with counterparts from this distant country regularly since 2022. Ursula von der Leyen herself met with the country’s representatives in October 2023, following the signing of a ‘Strategic Partnership Agreement’ in 2022. At the meeting, the Commission President pointed out that “thanks to its abundant renewable energy potential, Namibia is a promising new energy hub for the world”. Becoming a leader in the green hydrogen field.The EU is proud to be a partner in this transformational journey towards green industrialisation. Together we can further decarbonise our economies, create jobs and ensure a more prosperous, greener future for our societies.”
After losing gas from Russia and as part of its Green Transition plan, Europe has proposed that green hydrogen will be the cornerstone of its future energy project. Despite this Currently only 2% of the sector’s energy is hydrogen (and only 5% of it is green) The EU has proposed that it will be its major supplier and has already launched a total of 40 projects for the next decade. The REPowerEU plan sets a target of consuming 20 million tonnes of green hydrogen by 2030.
In this context, Europe has already invested 2,000 million euros in the last decade To increase this energy, according to EIB data. Now these plans are accelerating. This April, the first auction of subsidies from the European Hydrogen Bank has been completed, which concluded with the green light for seven projects in Spain, Portugal, Finland and Norway, receiving a total of 720 million euros. Europe’s idea is to ensure that the continent produces 10 million tons out of a total of 20 million, but you want to ensure the supply of the rest and to do this they are betting on projects abroad in Egypt, Morocco and Mauritania … But the jewel in the crown it is Namibia.
The country has launched six major investment projects since 2021. Since then, the country’s president Hage Geingob said this March that he plans to develop his hydrogen industry in the coming years It increased to 20 billion dollars. This figure may seem completely unimaginable for a country whose GDP is only $12.9 billion. However, the prospect is greatly strengthened by the completion of a €10 billion project in the coastal town of Luderitz, developed and launched by local company Hyphen Hydrogen.
In this project alone, which will be the flagship of its great green offensive, the country hopes to achieve the same level of investment as its entire economy. The idea is to start operating and produce at full capacity by the end of the decade 2 million tons per annum of green ammonia. It will employ 15,000 people during its construction and will require 3,000 permanent employees once it is operational.
But where does a local company get the money to spend practically its entire economy on a single plant and double the amount with five others? The answer is a good chunk of money comes from its former metropolis, Germany. The firm’s main shareholder is German renewables developer Enertrag, and Hyphen is nothing more than a union between this German firm and a local infrastructure firm, Nicolas Holdings. The rest comes from funds
Namibia is going to acquire this project 24% shareholding And it has even more ambitious plans. With help from McKinsey, it has developed a strategy that envisions three hydrogen production zones along the coast, including pilot programs for hydrogen-powered trains and utilities, as well as mineral refining and renewable energy hardware manufacturing.
In addition to this star project, known by the hyphen SCDI, there are already five others underway, although not all of them are for production, but rather for investment so that the production can be stored and exported, becoming a true source of wealth for the African country.
Doures is one of the most recent examples. In March this year, the government announced that it had completed 80% of its construction and would start pumping energy in July. The idea is to start 3,500 tonnes supplied to local market Production of green ammonia, but in the final stage its performance will increase to 700,000. This project was also funded with German capital. Although the exact investment pending completion is not known, the same German government provided a subsidy of $ 220 million to the Finnish firm Enersense, which is behind the project, to open the site in 2022.
The third ‘Hydrogen Valley’, as the local government knows it, is the Puros project in the northern part of the country. The rest of the projects include Being able to transport hydrogen to large ports (and LNG, since they operate in a similar way) around the world and especially in Europe. They are also building the infrastructure to store their production. At the moment, without producing yet, they are already signing agreements with neighboring countries to supply certain companies.
why Namibia
Why Europe has chosen this African country to be the great recipient of its million-dollar bet on green hydrogen is not a result of coincidence. The money from Brussels, Berlin, Paris and Madrid has focused its attention on Windhoek because the country meets the conditions to create one of the largest ‘hydrogen’ empires in existence that no other can. For startersIt is a country with a 1,700 kilometer long coastline which, unlike practically all nations, is practically uninhabited.
According to Hafeni Motsi, senior energy investment analyst at the Namibia Investment Promotion and Development Board, this means that “There are several strategic natural areas thanks to its small population for green hydrogen” and, in this sense, “it is an ideal terrain for hydrogen production activities and the production of synthetic fuels.” Finally, the young republic has found the fact of being the second most uninhabited part of the planet (behind Mongolia) a strategic advantage.
From FdIntellinge they specify more and explain the process by which green hydrogen is created splitting of water into hydrogen and oxygen“, a mechanism that is put into practice through wind and solar energy. In this sense, Namibia offers a unique combination: the World Economic Forum highlights that it has “about 10 hours of intense light per day for more than 300 days a year, that is, one of the largest photovoltaic potentials in all of Africa.” It also has “high wind speeds” which makes the wind energy it offers even cheaper.
Namibian conditions allow production at $1.5 per kilogram, compared to the average world price of $4–6
If this is combined with its large wilderness areas, the country could be one of the most profitable countries in the world for this type of technology. According to calculations by the country’s Investment Promotion and Development Board, future projects will be able to produce Green hydrogen $1.5 per kg. To give you an idea of just how cheap Namibia’s emergence will be, a ‘green kilo’ costs between $4 and $6 worldwide, according to the latest data from the International Energy Agency.
At the same time, Namibia presents itself as one of the key countries in Africa capable of building such large projects. On a continent with very unstable economies, A stable environment is essential for large investments such as green hydrogen. In this sense, Namibia’s credit rating by Moody’s is B1, the sixth highest in all of Africa.
“Namibia has a strong legal system and financial stability”
In 2023, the country has already regained its pre-Covid economic figures on the back of its modest oil industry and Mining grew by 4.3% that year. Although the World Bank now expects a recession by 2024, the institution says it is “making significant progress in reducing poverty, halving the number of people living below the threshold since 2009 and bringing the figure down to 17.5%.” A relatively calm situation for the sector, something that companies investing in these projects consider essential.
“Hydrogen is not like oil and gas. Only a few people have oil. In hydrogen, many people have solar and wind energy. So, in the case of hydrogen, the hydrogen profile Country risk plays a disproportionate role“Namibia has a strong legal system and financial stability,” says Marco Ruffinetti, CEO of Hyphen Hydrogen Energy.