Namibia
business card
- Located in southwest Africa, bordered by Angola and Zambia to the north, Botswana to the east, and South Africa to the south;
- Arid and rainless, subtropical and semi-desert climate;
- The land is sparsely populated and rich in mineral resources, known as the "strategic metal reserve";
- Mining, fishery and animal husbandry are the three traditional pillar industries, and the manufacturing industry is underdeveloped;
- The coastline is 1,600 kilometers long, and the coast is desert.
Phased conclusions
Namibia has real potential and opportunities for large-scale green hydrogen production, and the challenges cannot be underestimated.
Phased revelation
Focusing on the planning of Namibia's green hydrogen industry, early layout, early entry, seize opportunities, and explore upstream and downstream and related industry opportunities and cooperation possibilities.
Why is Namibia's green hydrogen production potential and opportunities?
"One side of the coin": development potential + development internal driving force + planning, status quo and opportunities;
"The Other Side of the Coin": Challenges of Reality and the Future.
Let's take a brief look at the development potential and internal drive.
Development potential
1. Blessed with unique scenery resources and geographical location. Because of its unique natural conditions and geographical location, Namibia is particularly suitable for the development of large-scale hydrogen production.
Excellent wind and light resources - Namibia's annual average sunshine is 7-9 hours/day, and the sunshine intensity is high; Average annual wind speeds range from 5-7 m/s in most areas, and as high as 8-9 m/s in some areas. All are at a high level in the world.
Abundant land resources - Namibia has a coastline of 1,600 kilometers, and the coastal area is the world-famous Namib Desert area, which is sparsely populated and the lowest population density country in the world.
The nine ports in Namibia, an important transportation hub in southern Africa, make it the maritime gateway of the southern African region, providing shipping services and transportation networks to neighboring countries, and playing an important role in infrastructure, logistics and trade in the southern African region.
2. Cost has development advantages. Due to its abundant solar and wind energy resources, it provides a good foundation for low-cost green hydrogen production. According to IEA data, Namibia's green hydrogen production cost is expected to be second only to Chile, ranking second in the world.
3. Actively promote at the national level. Namibia has positioned hydrogen energy development as a national strategy, regarded the hydrogen energy industry as an important economic pillar for the country's future, and released a strategic plan related to hydrogen energy development in 2022. According to the plan, by 2030, the hydrogen energy industry will contribute $4.1 billion to Namibia's GDP, bringing a growth rate of more than 32% to the country's GDP.
Develop internal drive
1. Solve the problem of electricity consumption in the country. Namibia's electricity penetration rate is less than 60% (IRENA data, 56%), and the proportion of electricity imports reaches 80%, and the vast majority of them come from neighboring South Africa, which is "difficult to protect itself" in terms of power supply and transmission (South Africa is in a "disaster state" of power shortage, with a cumulative power outage of 200 days in 2022 and a daily power cut of up to 9 hours, which will continue in 2023).
2. Solve the problem of freshwater resources (by-products). Namibia itself lacks not only electricity, but also fresh water, especially in desert areas. Fresh water is needed to produce hydrogen, and desalination is an essential link. According to the plan, a desalination plant will be built in the southern coastal area to treat seawater and provide fresh water for hydrogen production, and the desalinated water will be transported to the project site through pipelines and provide fresh water for the local area and surrounding areas, solving the problem of partial freshwater shortage.
Knock on the blackboard! Digression: Just this past week, the team of Academician Xie Heping of Shenzhen University/Sichuan University and Dongfang Electric Group successfully [broke] the traditional mode of "relying on pure water to produce hydrogen" in the world, and the [world's first] offshore wind power without desalination [seawater] in-situ [direct electrolysis hydrogen production] principle technology and equipment were successfully tested in the mainland Fujian Sea (meaning that the mainland has been able to achieve direct hydrogen production from seawater resources without desalination)
3. Solve employment problems. During the life cycle of the hydrogen industry, a large number of human resources are involved in designing, building, maintaining, monitoring and managing various equipment and engineering projects. The $9.4 billion green hydrogen development project in the south, awarded in 2021, will employ around 3,000 people and create 15,000 construction jobs over four years, more than 90% of which are expected to be filled by Namibians, addressing local youth employment. According to Namibia's hydrogen energy plan, the hydrogen economy will bring 100,000 jobs to Namibia in the medium and long term.
4. Generate revenue (see figure below for revenue structure).
Direct income: green hydrogen sales + transportation + taxation + employment, etc.;
Secondary income: green energy production, fresh water production, green ammonia production and sales, synthetic fuel production and sales, steel production, etc.
*In addition to green hydrogen, green ammonia is an important aspect of Namibia's income generation. At high pressures and temperatures, nitrogen and green hydrogen produce green ammonia. The role of green ammonia for Namibia: on the one hand, it can also be exported to Europe to generate income, and European industry and agriculture have an urgent demand for green ammonia (fertilizer, cleaning agent, refrigerant, etc.); On the other hand, the fuel of cargo ships in Namibian ports is mainly oil, and ammonia can be an alternative fuel for cargo ships in the long run.
Note: The above figure takes the US$9.4 billion mega green hydrogen project signed by the Namibian government and Hyphen Hydrogen Energy in 2021 as an example. In the project, the government initially held a 10% stake, and according to reports, the government later expanded its stake to 24%. In the figure above, $2-4/kg is the estimated hydrogen production cost price for the project. The cost price structure includes: hydrogen production plant + electrolysis facility + seawater desalination + transportation and storage costs + wind and solar power generation.
Development plans, current status and opportunities
In November 2022, Namibia released its GH2 Strategy Report.
Strategic goal: to achieve green hydrogen production of 10-15 million tons/year by 2050 (equivalent to 5-8% of the expected international green hydrogen trading volume). Achieve the goal in stages:
2030: Production reaches 1-2 million tons/year
2040: Production reaches 5-7 million tons/year
2050: Production reaches 10-15 million tons/year
How to achieve the goal? How?
Development of three hydrogen valleys in the north, central and south:
According to the plan, Namibia will carry out the investment, development and construction of the three major hydrogen energy valleys in the southern, central and northern regions in the future. And, not "on paper". At this stage, the plan for the southern and central regions has been gradually carried out:
In 2021, Hyphen Hydrogen Energy was awarded a contract to develop a US$9.4 billion green hydrogen project in the aforementioned southern region (Namibia's GDP in 2021 was US$12.2 billion) for a 40-year concession period covering more than 4,000 square kilometers. The project will be developed in phases, with the ultimate goal of producing 300,000 tonnes of green hydrogen (equivalent to 1.7 million tonnes of green ammonia) through 5-7GW of renewable energy generation and 3GW of electrolyzer capacity.
* Hyphen Hydrogen Energy is a joint venture between German Enertrag Energy and multinational investment firm Nicholas Holdings focused on sustainable energy in Southern Africa.
According to Namibia's hydrogen energy plan, its green hydrogen industry will require an estimated $190 billion investment by 2040. This includes $95 billion for upstream production and infrastructure (electrolyzers, storage and pipeline infrastructure) and about $30 billion for midstream infrastructure (such as derivatives factories, ports and trucks), as well as investments needed under synergies between projects.
Where does $190 billion come from? From the current hydrogen energy related industries and cooperation in Namibia, mainly from the European Union, Germany and Japan.
What concrete steps will Namibia take for a hydrogen economy in the last three years from 2022 to 2025?
Business structure construction:
Accelerate the delivery of infrastructure, complete the regulatory legal framework for hydrogen and related fuels, create investor-run companies (simplifying the investment process), launch pilot projects, build territorial ecosystems, train talent, and adjust immigration policies
Partner Network Setup:
"Finding money", pushing down risky financing tools, "hydrogen diplomacy" (continuing to promote hydrogen energy intergovernmental cooperation)
Answer
1. Namibia also has shortcomings important [things]
Rare earths, electrolyzers. Green hydrogen plants require large amounts of rare earth minerals, which Namibia has, but has a volume gap compared to neighboring South Africa. However, Namibia is re-energizing its efforts to exploit rare earth mineral resources (two new deposits were discovered by Namibian Key Metals in 2022); Namibia has no electrolyzer production capacity.
2. Can the Namibian government finance be supported? If not, where is the government's say after the influx of external capital? As a capital-intensive industry, green hydrogen needs financial support. Namibia does not have the financial, technological and infrastructural capacity to bargain for such high-end capital projects, and is over-dependent on partners and vulnerable to "manipulation" by partners.
3. Green hydrogen and ammonia exports face competition from South Africa. South Africa also has excellent conditions for hydrogen energy development: abundant renewable resources, abundant land resources, good hydrogen-based chemical foundation, the world's largest producer of platinum group metals, ports, depleted carbon dioxide storage, high-frequency foreign trade and so on. South Africa released the "South Africa Hydrogen Energy Society Roadmap" in 2021, which also gives national strategic importance to the development of hydrogen energy, and has a clear development route and will vigorously develop. For Namibia, which is also located in southern Africa, there is a certain competitive threat.
Later words
brief summary
Hydrogen energy is a capital-intensive industry, and technological innovation, equipment manufacturing, and commercialization all require long-term capital support. In recent years, enterprises in Europe, the United States, the Middle East and other countries have rapidly deployed in the field of hydrogen energy, seized the best potential location, and anchored the development potential of hydrogen energy "future ultimate energy".
Namibia is another popular country on the hydrogen energy "outlet". In the face of the "big market" under Namibia's hydrogen energy economic planning, it is more necessary for our Chinese-funded enterprises to continue to pay in-depth attention to the development difficulties behind its development potential and driving force with a [strategic] vision.
Strategic means that it is not something that can be achieved "overnight", Namibia is using the power to change the national development logic under the wind of hydrogen energy, and when it begins to change, it deserves our attention.
Guofu and enterprises continue to pay attention to the development of global hydrogen energy, including Namibia.