Green Hydrogen in Namibia: An Update

JAMES MNYUPEA YEAR AGO, president Hage Geingob launched the Harambee Prosperity Plan II (HPPII) at State House.

This manifesto for his second term in office contained a deliberate focus on an urgent and dynamic social-economic recovery plan.

Good governance remains the core of the plan while the economic advancement pillar, the infrastructure pillar and the international relations pillars bear the brunt of the responsibility to drive an urgent economic recovery with a trying macro-economic backdrop.

The social progression pillar is the pivotal safety net that aspires to take all Namibians along on the journey to shared prosperity in an industrialised Namibia with Vision 2030 firmly remaining the guiding lighthouse.

Arguably, the most controversial suggestion in HPPII was that Namibia should embark on exploring the synthetic fuels industry as an idiosyncratic spark that could light up a whole new industry, which could catalyse Namibia’s aspiration to grow the secondary sector of the economy instead of continuing to rely on the primary and extractive industries that to date have borne most of the economic development brunt.

AN UPDATE

So a year on, what progress has been made?

The ultimate goal was kick-starting a dearth of much needed investments, with a promise to unlock prospects for new employment, gross fixed capital formation and improve our next exports position.

The first sub activity was the formal establishment of the inter-ministerial Green Hydrogen Council, which was executed by July 2021, which went on to develop terms of reference for the green hydrogen strategy and crafted the vision of the Southern Corridor Development Initiative, meeting the second and third sub-activity.

The feasibility study was the fourth sub-activity and was packaged as a key requirement for a request for proposal (RFP/tender).

Here the government demonstrated their willingness to work with the private sector to pursue a national priority, living up to the ethos captured throughout the second pillar, that of allowing the economic recovery to be private sector-led.

The last of the five sub-activities entailed a coordinated deployment of green diplomacy to unlock support and concessionary funding from various strategic partners at an international level.

The result of these efforts has surpassed even the government’s expectations.

Namibia is now hailed as a visionary and strategic enabler in an industry that Goldman Sachs estimates will unlock “US$5 trillion of cumulative investments in the clean hydrogen supply chain, while the total addressable market (TAM) for hydrogen generation alone has the potential to double by 2030 (to US$250 billion) and reach US$1 trillion by 2050 in the next 20 years”.

By August 2021, the Namibian government unlocked €40 million which was to be deployed to develop a national green hydrogen strategy, fund various feasibility studies and get some pilot plants deployed in Namibia as soon as possible.

The government, with its strategic partner the Ministry of Education and Research from Germany (BMBF) also recognised the need to allocate some funding for the development of a scholarship programme, which is to start a comprehensive effort to build the intellectual capacity and skills needed for Namibia to deliver on this ambition and capture as much of the value chain of this burgeoning new industry as possible.

The programme was launched in March 2022, and applications for pilot projects have been allocated €30 million and call for the crafting of the strategy and accompanying studies, which have been allocated €5 million, while the five-year scholarship programme has been allocated €5 million.

All this was done in less than 12 months after the state conceived an idea that many expected would only unlock benefits to the Namibian economy in five to 10 years from 2021.

THERE’S MORE

However, this was merely the tip of the iceberg.

The RFP resulted in Namibia receiving nine offers from regional and local developers.

The winning bid estimated that the cost of delivering the project in the //Kharas region would be about US$9,4 billion, creating 15 000 direct jobs during construction and 3 000 during operation.

To estimate the full time equivalent (FTE) number of jobs to be created during construction and operations, data from South Africa’s independent power producer (IPP) office on wind and solar PV projects was sourced by international consultants appointed by the winning developer, Hyphen Hydrogen Energy.

Based on data used, the number of direct full time equivalent jobs created during the construction and operation of the renewable energy technology to be deployed (wind and solar) was deduced.

For all other project components, the estimation of the potential number of jobs to be created was based on the multipliers derived from a proprietary economic model constructed using the Social Accounting Matrix, originally developed by the International Food Policy Research Institute (IFPRI) in 2007, which was updated using the latest available figures from the revised national accounts of Namibia.

The only exception from the above was the calculation of jobs to be created by the electrolyser plant during operations.

The CE Delft study completed in 2021, was utilised to approximate the job creation potential of this element of the project.

To estimate labour costs and potential direct income to be earned from the project by households, average salary data for 2018 from the Namibia Statistics Agency was utilised.

To ensure that all the figures reported represent 2021 figures, the 2018 average salary figures were adjusted by consumer price index (2019: 3,7%, 2020: 2,2%).

Based on the above modelling, the corporate social plan concluded that 93% of the jobs will be absorbed by Namibia-based labour mainly in the construction sector.

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