• Business 7

Euro flood for green energy

• 10 Months Ago

At a time when Europe is grappling with its own energy crisis, African energy is the solution the bloc needs, with Namibia continuing to make significant strides towards becoming a global energy giant.

This is the opinion of NJ Ayuk, executive chairman of the African Energy Chamber (AEC), on Namibia inking a deal with green hydrogen development company Hyphen Hydrogen Energy for the next phase of a US$10 billion project set to be located in the Namib Desert’s Tsau//Khaeb National Park.

Cabinet last week approved the entry into a feasibility and implementation agreement (FIA) with Hyphen to govern the development, implementation and operation of Sub-Saharan Africa’s largest, and its only fully vertically integrated, green hydrogen project.

On Friday, Pres Hage Geingob witness the signing of the agreement between the Namibian government and Hyphen.



‘New era’



Under the FIA Hyphen is responsible for the technical, financial, environmental, social and commercial delivery of the project.

Government 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.

Commenting on the deal on the AEC’s website, Ayuk said: “Notwithstanding the milestones that continue to be achieved regarding its oil and gas sector, the country [Namibia] has taken an accelerated approach to maximising its renewable energy resources in collaboration with global partners.

“This green hydrogen project will open up significant avenues for the country, ushering in a new era of industrialisation, energy access and revenue generation and positioning the country as a global green hydrogen contender.”



Transformative



According to Hyphen, the transformative impact of this project on Namibia and its economy is considerable.

The total project capital investment of US$10 billion is roughly equivalent to Namibia’s annual gross domestic product (GDP). At full scale development, anticipated before the end of the decade, the project will produce 2 million tonnes of green ammonia annually for regional and global markets.

The pioneering signed 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.

Speaking at the signing ceremony, Hyphen CEO Marco Raffinetti said his company and the Namibian government have worked “tirelessly over the last 18 months committing thousands of human work hours to craft what we believe will set the benchmark for fair, equitable and sustainable green hydrogen projects”.

“This is something that we can collectively be extremely proud of,” Raffinetti said.

He added: “This first Hyphen project is only the first stepping stone in Namibia’s ambitions to be a regional green hydrogen hub. The project on its own, being the single largest project ever proposed to be undertaken in Namibia, has the potential to be transformational for Namibia and its economy driving job creation and the economy.”



Impact



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 youths.

The project is further targeting 30% local procurement of goods, services and materials during the construction and operational phases.

The project will generate significant income to the Namibian fiscus through the payment of land rentals, royalties on all project revenues and taxes.

Government also has an opportunity to be a co-investor in the project with the right to take up to a 24% equity interest at cost.

Thanks to its partnership with the European Union and the Global Gateway Initiative, Namibia has mobilised donor and concessional funding from Invest International and the European Investment Bank of more than 540 million euro or N$11.167 billion to finance the development of the green hydrogen industry and to fund its equity participation in the project, with additional support expected to be announced post the execution of the FIA.

Government has mobilised more than €40 million to date to de-risk its equity investment in the project, associated infrastructure and future green hydrogen projects, additional support is expected to be announced post the execution of the FIA.



Journey



“The Harambee Prosperity Plan II noted that the Namibian government would investigate the feasibility of incubating a synthetic fuels industry in Namibia, as a key transforming agent of our economy. On Friday, 26 May 2023, we earnestly embark on that journey, as we kick start a process that has the potential to transform the lives of many in our country, the region and indeed the world,” Geingob said.

Ursula Von Der Leyen, President of the European Commission, said: “Namibia has the potential to become one of the main renewable energy hubs on the African continent and even world-wide. Today’s agreement is a major step for the production of green hydrogen in the country.

“I am proud that Global Gateway allows the EU and Namibia to invest in a shared future fighting climate change together, making Namibia energy-independent and creating jobs and prosperity.”

Obeth Mbui Kandjoze, chairman of the Namibian Green Hydrogen Council and director general of the National Planning Commission said: “We are honoured by the trust and confidence exhibited by Hyphen and the global community, for choosing to build such a catalytic project in Namibia.

“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. The government of the Republic of Namibia is resolute in its unwavering commitment to realise potential of this transformative strategic bet!”



Development partners

Namibia is also working closely with its development partners to establish a dedicated programme that will provide the requisite resources to coordinate the implementation of the Hyphen project and Namibia’s broader green hydrogen strategy.

This programme illustrates the multinational nature of this industry and the important role Namibia will play in decarbonising global hard to abate sectors, while industrialising its own economy.

Hyphen is a Namibian registered green hydrogen development company, specifically formed to develop green hydrogen projects in Namibia for international, regional and domestic supply. Hyphen is a joint venture between Nicholas Holdings Limited and ENERTRAG SE.



‘Blueprint’

“As Europe looks towards the lucrative opportunities in Africa, partnerships such as those between Namibia and Germany serve as a blueprint for other markets across the continent,” stated Ayuk.

He added: “The Invest in African Energy Forum in Paris provides the perfect opportunities for European investors and project developers to seize partnership opportunities with African countries.”

The forum is currently underway in France.

“At the Frankfurt edition, we advocated for strengthened global collaboration, emphasising the crucial role that European investment plays in not only developing Africa’s economies but bringing new energy supplies on the global market,” Ayuk said.