Green Hydrogen Infrastructure Development
Green Hydrogen Infrastructure Development
Business Model Description
Develop the required infrastructure to produce highly competitive green ammonia and green hydrogen destined for export. Key infrastructure opportunities include i) a green hydrogen and ammonia plant with wind, solar, electrolysis and desalination assets; ii) a new deepwater port in the harbour town of Luderitz; iii) a wind blade manufacturing plant; iv) and a green steel and fertilizer plant.
Expected Impact
Deliver economically viable green infrastructure solutions to decarbonize Namibia's economy and boost its industrial sector.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Namibia: ǁKaras Region
- Namibia: Hardap Region
- Namibia: Erongo Region
Sector Classification
Infrastructure
Development need
The Africa SDG Index and Dashboards Report 2019, on SDG 9 regarding Industry, Innovation and Infrastructure, indicates that Namibia has “major challenges” in achieving this SDG (6). The country's infrastructure performance is ranked 94 out of 114 countries in the WEF Global Competitiveness Report 2019 (7).
Policy priority
The Government prioritises infrastructure development towards SDG achievement (8). Namibia's 5th National Development Plan (NDP5) highlights how the lack of infrastructure development results in bottlenecks for economic development (23). It committed to spending 42% (NAD 74 billion, USD 5.3 billion) of the country's GDP on infrastructure projects over five years (9).
Gender inequalities and marginalization issues
Given that infrastructure projects are typically linked to large-scale construction, gender representation in the construction industry was used as a proxy to gauge gender equality within the infrastructure sector. Namibia’s construction industry is male-dominated; 92% of its workforce is male (8).
Investment opportunities introduction
Namibia put in place the Public Private Partnership Act in 2018, which aims to address the country's critical infrastructure needs through participation from the private sector through leveraging public private partnerships (PPPs) (10). It also established a dedicated infrastructure fund to support the sector's growth (11).
Utilities
Development need
Namibia has a great opportunity to significantly reduce its own emissions and that of its neighbours, by leveraging its natural endowments to attract much-needed foreign direct investment that would ultimately create significant number of jobs in new industries.
Policy priority
Investigation of the feasibility of green hydrogen and ammonia as a transformative strategic industry is highlighted in the Harambee Prosperity Plan II. This falls under the Government's ambition to develop complementary engines of growth through the accumulation of new productive capacities in strategic sector (21).
Gender inequalities and marginalization issues
Namibia’s electricity, gas, steam and air condition industries are male-dominated; 76% of its workforce are male (12).
Investment opportunities introduction
The Namibian Infrastructure Fund (NIF) addresses infrastructure backlogs in Namibia's key subsectors (13). The World Bank estimates that investments in infrastructure can generate economic returns of up to 11% for electricity projects (14).
Electric Utilities and Power Generators
Pipeline Opportunity
Green Hydrogen Infrastructure Development
Develop the required infrastructure to produce highly competitive green ammonia and green hydrogen destined for export. Key infrastructure opportunities include i) a green hydrogen and ammonia plant with wind, solar, electrolysis and desalination assets; ii) a new deepwater port in the harbour town of Luderitz; iii) a wind blade manufacturing plant; iv) and a green steel and fertilizer plant.
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
The global ammonia market is 180 million metric tonnes driven by fertilizers and mining explosives production. It is expected to grow to over 500 metric tonnes by 2050 driven by maritime shipping and power systems decarbonization, especially by major developed economies with NetZero policies for 2050 (21).
The volume potential for green electricity production in Namibia, including through hydrogen, is many times the country’s domestic electricity consumption. The solar resource is one of the world’s best with DNI greater than 2400 kWh / m2 / year and gross capacity of up to 30%, and wind resource is equally exceptional with wind speed greater than 8 m/s and gross capacity factors of over 60% (22).
Indicative Return
5% - 10%
A techno-economic analysis of a photovoltaic-powered electrolysis plant, which can be used for hydrogen production, provided an IRR of 7% (25).
Investment Timeframe
Long Term (10+ years)
Hydrogen investments typically require an investment timeframe of 10-20 years due to the infrastructure requirements (24).
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Business - Business Model Unproven
Business - Business Model Unproven
Impact Case
Sustainable Development Need
Renewable energy consumption only represents 26.5% of Namibia's total final energy consumption levels (23). The country committed to reduce its greenhouse gas emissions conditionally by at least 91% of its business-as-usual scenario (22).
Namibia is committed to the Paris Agreement, and to taking practical and ambitious action to reduce emissions and ensure a climate-resilient economy.
Expected Development Outcome
Green hydrogen can decarbonize Namibia's economy, boost its industrial sector, and create jobs thanks to its numerous applications. The first phase of HYPHEN, Namibia's first large-scale vertically integrated green hydrogen project, can create 32,352 full-time employment during the construction period (29).
Green hydrogen, as a clean power source, can be used to diversify the economy by developing new industries, such as domestic steel manufacture and zinc processing.
Gender & Marginalisation
Targeted capacity building in new industries powered by green hydrogen can offer income generating opportunities to marginalised communities.
Primary SDGs addressed
7.2.1 Renewable energy share in the total final energy consumption
7.a.1 International financial flows to developing countries in support of clean energy research and development and renewable energy production, including in hybrid systems
7.b.1 Installed renewable energy-generating capacity in developing countries (in watts per capita)
26.5% (26).
N/A
179.716 watts per capita (30).
N/A
N/A
N/A
9.2.1 Manufacturing value added as a proportion of GDP and per capita
9.a.1 Total official international support (official development assistance plus other official flows) to infrastructure
10.8% (26).
USD 246.6 million (26).
N/A
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Corporates
Public sector
Outcome Risks
Its flammability and its lightness mean that hydrogen, like other fuels, needs to be properly handled.
Impact Risks
Employment opportunities created by hydrogen could be skewed towards highly skilled technical experts that would need to be brought in from outside of the country and which may leave out Namibians.
Impact Classification
What
What: The outcome is likely to be positive, important and intended because hydrogen could promote infrastructure development and offer economically viable green economy infrastructure solutions.
Who
Who: Green hydrogen energy has the versatility to operate across and impact the value chains various sectors, including transport, industry and electricity generation.
Risk
Risk: While the hydrogen model is proven, Namibia could face challenges in terms of transportation costs, and employment opportunities may be skewed towards skilled experts.
Impact Thesis
Deliver economically viable green infrastructure solutions to decarbonize Namibia's economy and boost its industrial sector.
Enabling Environment
Policy Environment
Harambee Prosperity Plan II, 2020: Building on the inaugural plan covering 2016-2020, it continues to prioritise the implementation of targeted policy programmes in order to enhance service delivery, contribute to economic recovery and engender inclusive growth (21).
National Renewable Energy Policy, 2017: Supports the adoption of a market structure that enables Independent Power Producers to generate and sell electricity to off-takers other than the single buyer and enables Small Scale Distributed Generation from various technologies and resources (27).
National Integrated Resource Plan, 2016: Sets the procurement allocation to supply options to meet the demand and demand growth in Namibia (28).
Financial Environment
Financial incentives: Namibia is set to receive USD 45.7 million from the German government to support green hydrogen research and the recently formed Green Hydrogen Council of Namibia (31).
Fiscal incentives: The Special Economic Zone (SEZ) regime is under finalisation. Its policy framework will set provisions that define the governance structure, applicable investment incentives and guide the transition from Export Processing Zones to the SEZ incentives, including for hydrogen (32).
Other incentives: The Southern Corridor Development Initiative (SCDI), as the umbrella programme for the development of a green hydrogen industry in Southern Namibia, offers various opportunities.
Regulatory Environment
Namibia's Environmental Management Act, Act No 7, 2007: Identifies the requirements pertaining to environmental planning and impact assessments as applicable to electricity generation projects, including for hydrogen development (33).
Electricity Act No, 4, 2007: Regulates the production and supply of electrical power, and provides for the establishment of the Electricity Control Board and its powers, functions and internal organization (34).
Quality of Supply and Service Standards, 2004: Governs the quality of electricity supply and quality of service (QOSS) provided by licensed electricity undertakings in Namibia (35).
Namibian Transmission Grid Code, 2005: Contains a set of connection conditions for generators, distributors and end-use customers, and the standards used to plan and develop the Transmission System (TS) (36).
Marketplace Participants
Private Sector
Companies such as HYPHEN Hydrogen Energy.
Government
The Green Hydrogen Council, which was recently established by the Government, works to ensure that financing is translated into meaningful project development that supports critical national goals; Namibian Investment and Promotion and Development Board; Electricity Control Board.
Multilaterals
The African Hydrogen Partnership Trade Association (AHP) is the only continent-wide African umbrella association solely dedicated to the development of green and natural (native) hydrogen, hydrogen based chemicals, fuel cell technology and related business opportunities in Africa.
Non-Profit
The Namibia Green Hydrogen Research Institute (NGHRI) is anticipated to serve as a national research and capacity building hub for hydrogen development in the country under the University of Namibia.
Public-Private Partnership
The Namibian Government seeks to undertake climate combating feasibility activities inside the Sperrgebiet National Park, for which it has advertised a Request for Proposal.
Target Locations
Namibia: ǁKaras Region
Namibia: Hardap Region
Namibia: Erongo Region
References
- (1) Canning, David & Bennathan, Esra, 2000. The Social Rate of Return on Infrastructure Investment. The World Bank, Policy Research Working Paper Series. https://elibrary.worldbank.org/doi/abs/10.1596/1813-9450-2390.
- (2) Schwab, K. World Economic Forum, 2019. The Global Competitiveness Report 2019. http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf.
- (3) Republic of Namibia. Namibian Statistics Agency, 2018. Labour Force Survey 2018 Report. https://d3rp5jatom3eyn.cloudfront.net/cms/assets/documents/NLFS_2018_Report_Final_.pd.
- (4) United Nations, 2018. Accelerating SDG 7 Achievement Policy Brief 12 Global Progress of SDG 7 - Energy and Gender. https://sustainabledevelopment.un.org/content/documents/17489PB12.pdf.
- (5) Ministry of Foreign Affairs of Denmark, 2021. Green Hydrogen Compact Catalogue. Available upon request.
- (6) SDG Center for Africa and Sustainable Development Solutions Network, 2019. Africa SDG Index and Dashboards Report 2019, Kigali and New York: SDG Center for Africa and Sustainable Development Solutions Network, https://sdgcafrica.org/wp-content/uploads/2019/06/SDGS_INDEX_REPORT_2019WEB.pdf.
- (7) Schwab, K, World Economic Forum, 2019. The Global Competitiveness Report 2019. http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf.
- (8) Republic of Namibia, National Planning Commission, 2018. Implementation of Sustainable Development Goals, Voluntary National Review. https://sustainabledevelopment.un.org/content/documents/19880New_Version_Full_Voluntary_National_Review_2018_single_1_Report.pdf.
- (9) African Development Bank Group, 2018. 2018 African Economic Outlook. https://www.afdb.org/fileadmin/uploads/afdb/Documents/Generic-Documents/country_notes/Namibia_country_note.pdf.
- (10) African Development Bank Group, 2020. Namibia: African Development Bank approves $121.7 million loan, Euro 3 million grant to support water and sanitation sector. https://www.afdb.org/en/news-and-events/press-releases/namibia-african-development-bank-approves-1217-million-loan-euro-3-million-grant-support-water-and-sanitation-sector-34727.
- (11) World Bank, 2020. Leveraging Pension Fund Investment for Domestic Development: Namibia’s Regulation 29 Approach. http://documents1.worldbank.org/curated/en/125241594367606090/pdf/Leveraging-Pension-Fund-Investment-for-Domestic-Development-Namibia-s-Regulation-29-Approach.pdf.
- (12) Republic of Namibia. Namibian Statistics Agency, 2018. Labour Force Survey 2018 Report. https://d3rp5jatom3eyn.cloudfront.net/cms/assets/documents/NLFS_2018_Report_Final_.pdf.
- (13) Ino Harith Capital, 2020. Our Partners. https://www.harith.co.za/our-partners-2.
- (14) Canning, David & Bennathan, Esra. 2000. The Social Rate of Return on Infrastructure Investment, The World Bank, Policy Research Working Paper Series. https://elibrary.worldbank.org/doi/abs/10.1596/1813-9450-2390.
- (21) Office of the President, 2020. Harambee Prosperity Plan 2. https://hppii.gov.na.
- (22) Ministry of Foreign Affairs of Denmark, 2021. Green Hydrogen Compact Catalogue. Available upon request.
- (23) Republic of Namibia, National Planning Commission, 2017. Namibia's 5th National Development Plan (NDP5). https://www.npc.gov.na/?wpfb_dl=294.
- (24) Hydrogen Council, 2017. How hydrogen empowers the energy transition. https://hydrogencouncil.com/wp-content/uploads/2017/06/Hydrogen-Council-Vision-Document.pdf.
- (25) Science Direct, 2020. Green hydrogen as feedstock. Financial analysis of a photovoltaic-powered electrolysis plant. https://www.sciencedirect.com/science/article/abs/pii/S036031992030625X?via%3Dihub.
- (26) NSA, 2019. Sustainable Development Goals Baseline Report 2019. https://d3rp5jatom3eyn.cloudfront.net/cms/assets/documents/SDG_Baseline_Report_2019.pdf.
- (27) Government of the Republic of Namibia, Ministry of Mines and Energy, 2017. National Renewable Energy Policy. https://mme.gov.na/files/publications/03f_National%20Renewable%20Energy%20Policy%20-%20July%202017.pdf.
- (28) Government of the Republic of Namibia, Ministry of Mines and Energy, 2016. National Integrated Resource Plan for the Electricity Supply Industry in Namibia. https://www.ecb.org.na/images/docs/Noticeboard/ELECTRICITY%20SECTOR%20NATIONAL%20INTEGRATED%20RESOURCE%20PLAN%20(NIRP)%202016%20Version%201.pdf.
- (29) Mnyupe, J. 2021. Cop26 Presentation: SCDI. Available on request via James Mnyupe (James.Mnyupe@op.goc.na).
- (30) IRENA, 2018. Energy Profile: Namibia. https://www.irena.org/IRENADocuments/Statistical_Profiles/Africa/Namibia_Africa_RE_SP.pdf.
- (31) Goosen, M. 2021. Namibia to Receive $45.7 Million from German Government for Green Hydrogen. Energy Capital & Power. https://energycapitalpower.com/namibia-to-receive-45-7-million-from-german-government-for-green-hydrogen.
- (32) Brandt, E. 2020. Transitional measures to cater for EPZ beneficiaries…as Special Economic Zone regime is being finalised. New Era. https://neweralive.na/posts/transitional-measures-to-cater-for-epz-beneficiariesas-special-economic-zone-regime-is-being-finalised.
- (33) Republic of Namibia, 2007. Environmental Management Act 7 of 2007. https://www.lac.org.na/laws/annoSTAT/Environmental%20Management%20Act%207%20of%202007.pdf.
- (34) Republic of Namibia, 2007. Electricity Act 4 of 2007. https://www.lac.org.na/laws/annoSTAT/Electricity%20Act%204%20of%202007.pdf.
- (35) Namibia Electricity Control Board, 2004. Namibian Quality of Electricity Supply & Service Standards. https://www.ecb.org.na/images/docs/Technical_Regulation/standards_ECB/quality_service_standard.pdf.
- (36) Government of Namibia, 2007. Transmission Grid Code: Electricity Act, 2007. https://www.lac.org.na/laws/2018/6731.pdf.