The Government of Namibia has announced that it will select the German consortium Hyphen Hydrogen Energy as the preferred bidder for the green hydrogen project in Tsau Khaeb National Park.
The large-scale green hydrogen project is the most prominent project in the government’s Southern Corridor Development Initiative (SCDI) in Kharas, the country’s southernmost region.
James Mnyupe, the president’s economic adviser and hydrogen commissioner, noted that the region is a perfect fit because of its large solar and wind resources and proximity to the coast. Hyphen describes the park as one of the top five locations in the world for low-cost hydrogen production.
The agreement entitles the company to operate the project for 40 years with operations to begin in 2026 and plans to produce up to 300,000 tonnes of green hydrogen per year. With an eventual project size of $9.4 billion, the country is looking to establish itself as a major force in green hydrogen production.
although green hydrogen sector currently representing less than 1% of global hydrogen production, African countries including Egypt, Morocco and South Africa are all interested in its potential in a world shifting to renewable energy.
The World Platinum Investment Council estimates that the sector will be worth $2.5 trillion by 2050, supporting 30 million jobs. Japan alone plans to import up to 800,000 tonnes of the product annually from 2030.
Currently, global hydrogen production is based on the release of hydrogen from fossil fuels such as methane, natural gas, or coal. In contrast, green hydrogen energy is generated using electrolysis, a process that separates molecular hydrogen from desalinated water using wind turbines or solar energy.
This process converts electrical energy into chemical energy without carbon emission. The recovered hydrogen makes it possible to obtain energy in two ways: through direct combustion with oxygen or in the form of electricity via fuel cells.
Green hydrogen can be used to decarbonize sectors that are hard to power, such as steel and cement production and has wide application possibilities in the transportation sector, helping to limit climate change.
But with technology requiring extensive new investment in infrastructure, Namibia and its partners have the right job to make this project a success.
Green hydrogen potential
Green hydrogen has been increasingly allocated for growth. Reducing greenhouse gas emissions was at the center of debate at November’s global climate change conference in Glasgow, where Cop26 Energi Energy Transition Board set a goal of doubling investment in green energy by 2030.
Meanwhile, vulnerable to the impacts of climate change and highly dependent on the agricultural sector, Namibia has recently experienced an extreme drought. To tackle climate change, Namibia has pledged to reduce its emissions by 91% over the next five years and reach net zero by 2050.
Namibia was the first country in Africa to include environmental protection in its constitution and green energy is a key pillar of its economic recovery plan launched in March 2021, Harambee II Prosperity Plan.
Namibia plans to exploit the potential of renewable energy to reduce the region’s dependence on carbon-based fuels. By fighting climate change and harnessing its natural resources, Namibia hopes to attract significant foreign direct investment into the green energy sector.
A German government expert estimates a kilogram of hydrogen from the country costs around $2, a competitive price that would place Namibia among high-potential green hydrogen producers and position it as a major domestic producer and exporter. Namibia has abundant reserves of platinum and iridium, the two metals used to separate hydrogen from water.
In addition, there is vast unused land in Namibia, and the country enjoys over 3,500 hours of sunshine and ideal wind speeds. These factors make it possible to utilize solar and wind energy to meet their needs.
Challenge for Namibia
Despite the optimism of the Namibian government, the country faces several challenges as it seeks to become a major producer of green hydrogen. The amount of water needed to produce hydrogen is a challenge in a largely desert country characterized by water scarcity where desalination can be very expensive.
The cost of electrolysis used in the hydrogen manufacturing process is also high. Namibia relies on the low cost of green hydrogen to become one of the world’s leading exporters, but the competitiveness of Namibia’s green hydrogen is not guaranteed.
Without a net price advantage, Namibia will find it difficult to compete with more experienced producers such as Australia, Chile and Morocco, the latter of which has strong links to the European market.
Concerns have also been expressed about the costs and feasibility of developing a hydrogen infrastructure in Namibia. The size of the investment is almost the same as Namibia’s entire GDP in 2020 ($10.7 billion), and Namibia will need extensive sources of capital from the DFI and the private sector if the $9.4 billion budget is to be realized. The initial phase of the project will be a modest $4.4 billion before the planned expansion in the late 2020s.
Policies and regulations are very important for the government to attract investment in sustainable energy and provide a stable environment for investors. While Namibia has committed to come up with a legal framework for the exploitation of green hydrogen, there is no such framework at present.
Benefits for the country
However, if the project is truly successful, it could position the country as a distributor for South Africa and Europe, and would make it possible to collect concession rights, contributions to state funds and taxes. At least 18,000 direct jobs could be created, including 3,000 permanent roles, and local communities would benefit from the excess water desalinated by the factory.
This initiative aims not only to bring Namibia to the global energy market but also to decarbonize all sectors of the country and strengthen Namibia’s job market.
With the country’s economy ravaged by the Covid-19 pandemic, the Prosperity Plan aims to kickstart Namibia’s economic recovery and growth, creating meaningful jobs and new industries. 3.6% growth is expected this year after 1.3% in 2021, but the economy contracted by -8% when the pandemic hit in 2020.
Hyphen director Tobias Bischof-Niemz said that the consortium involved in the project is made up of shareholders and technical partners who are world leaders in their respective fields: “Deep collective technical expertise across the green hydrogen value chain, combined with the financial and our experience in developing, raising funds and implementing infrastructure projects in Africa, will be critical to the successful implementation of projects of this size and complexity.”
“This is a milestone project,” said Nangula Uaandja, head of Namibia’s Investment Promotion and Development Agency. “This is the kind of project the council wants to attract because it directly aligns with our mandate to unlock investment opportunities that drive the economy forward, and most importantly, improve the quality of life for the vast majority of Namibians.”
Namibia looks to a green hydrogen future
Source link Namibia looks to a green hydrogen future