Namibia inks US$10 billion hydrogen deal

Hyphen Hydrogen Energy has signed a Feasibility and Implementation Agreement.

By Liz Bains on
30th May 2023

Namibia has signed a US$10 billion agreement with Hyphen Hydrogen Energy for the development of a green hydrogen project.

The two parties signed a Feasibility and Implementation Agreement (FIA) on 26 May.

The project targets the production of 1 million tonnes a year (t/y) of green ammonia by the end of 2027, and 2 million t/y by the end of 2029.

The development will include about 7GW of renewable generation capacity and 3GW of electrolyser capacity over two phases, while the total hydrogen production capacity will be 350,000 t/y. The green ammonia will be sold regionally and internationally. 

Under the terms of the FIA, Hyphen is responsible for the technical, financial, environmental, social and commercial delivery of the project. The Namibian government is responsible for providing the land for the project and developing and implementing the legal, fiscal and regulatory environment necessary for the establishment of a green hydrogen industry in Namibia.

The FIA is split into five sequential phases:

  • A preliminary phase, lasting up to six months, during with the government can exercise its option to acquire up to a 24% interest in Hyphen’s share capital.
  • A two-year feasibility period in which Hyphen is tasked with assessing the technical, financial, environmental, social and commercial viability of undertaking the project, including the potential establishment of common user infrastructure.
  • A validation phase: the Namibian government has 120 days following Hyphen’s submission of the feasibility report to consider and validate (if appropriate) the final project design.
  • The financing and construction phase and the operational phases are the final two stages of the project.

The land selected for the project is in Tsau Khaeb National Park, in the area known as the Southern Corridor Development Initiative.

In August 2021, the Namibian government launched a request for proposals for developing hydrogen projects on two land parcels in the park. After receiving bids from six entities, Hyphen was announced as the preferred bidder.

Hyphen has already signed non-binding memorandums of understanding with potential customers in Europe and South Korea for more than 1 million t/y of green ammonia offtake from the project.

It is estimated that the project will create around 15,000 new jobs during the construction phase and 3,000 permanent positions during the operational phase. The aim is for 90% of these jobs to be filled by Namibians, with 20% aged between 18 and 35. 

Hyphen is also targeting 30% local procurement for goods, services and materials throughout both the construction and operational phases.

The project falls under the Harambee Prosperity Plan II, which committed the government to investigating the feasibility of incubating a synthetic fuels industry in Namibia, as a key transforming agent for the economy. 

To enable the rapid scale-up of green hydrogen production in Namibia, the government is keen on the development of common use infrastructure in the Southern Corridor Development Initiative area. According to Hyphen, Namibia has the potential to produce up to 15 million t/y of green hydrogen across the country. 

This initial project is expected to generate significant income for Namibia through the payment of land rentals and environmental levies, royalties of 5% on all project revenues, and taxes. 

Namibia has mobilised donor and concessional funding of more than US$579 million from Invest International and the European Investment Bank to finance the development of the green hydrogen industry and to fund its equity participation in the Hyphen project, with additional support expected to be announced post the execution of the FIA.

Hyphen is a Namibia-registered green hydrogen development company, specifically formed to develop projects in Namibia for international, regional and domestic supply. It is a joint venture between Nicholas Holdings and German renewable energy firm Enertrag. 

Enertrag has 1GW of renewable assets (wind and solar) in operation and more than 10GW under development across 10 countries.

Photo: Signing ceremony (Twitter, Namibian presidency @NamPresidency)

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