Namibia and South Africa are not in competition when it comes to producing hydrogen energy, German renewable energy technology company Enertrag business case development manager Jonathan Metcalfe has said.

“We did a map of some of the leading project development jurisdictions around the world. We normalised all the assumptions and simply looked at the best 5% of renewable energy resources and ran a levelised cost of ammonia calculation.

“This highlights why we are looking at Namibia but also South Africa, because they sit very far down the cost curve,” he explained.

In cooperation with German investors, the Namibian Cabinet recently approved its entry into the $10-billion project with Namibian green hydrogen development company Hyphen Hydrogen Energy, whose shareholders are Enertrag and infrastructure developer Nicholas Holdings.

Speaking at the 2023 Hydrogen Economy Discussion on July 20, Metcalfe explained that the plan would be to build wind farms and solar photovoltaic plants with a total capacity of 7 GW to produce green ammonia, which was a hydrogen derivative that could be transported more easily. This would be the largest green hydrogen project in Africa and the first vertically integrated one.

He said this would mean that Hyphen had the rights to develop the project, from the renewable energy component all the way down the value chain to the port logistics, which would involve developing a new port for the export of the product into European and Southeast Asian markets.

“The resource advantage is largely irrelevant because if you then take into account the high early capital cost of these projects relative to the low operating expenditure, your cost of capital plays a bigger role in being cost-effective than your resource does.

“So this is why, although Namibia is a very good resource, it's not necessarily going to be the cheapest in the world because of the cost of finance,” Metcalfe explained.  

He also noted that the project’s impact on the environment would be its most significant risk. The project is being developed in the Tsau // Khaeb National Park, near Lüderitz.

“We're working very closely with the international funding community and the local Ministry of Environment and Tourism to derisk the environmental process. We are busy with scoping the entire site to make sure that we microsite our infrastructure in a way that we do not affect biodiversity sensitivities,” he said.

This project will be developed in phases, at full development targeting 350 000 metric tons of green hydrogen production a year from 7 GW of renewable generation capacity and a 3 GW electrolyser capacity.

The project, once fully developed will employ about 3 000 people, with 15 000 construction jobs supported over the four-year construction period, most of which will be Namibian nationals.