Namibia agrees deal to progress $10bn green hydrogen project — a sum nearly equal to nation's GDP
Namibia’s government has formally signed an agreement with independent producer Hyphen Hydrogen Energy to develop a $10bn green hydrogen and ammonia complex in the country.
The southwest African nation, which has a GDP of around $12bn, originally appointed Hyphen as its preferred partner for the project in November 2021 and has already allocated the developer two parcels of land in its Tsau Khaeb national park.
Hyphen — which is based in the Namibian capital Windhoek but is a joint venture between German renewables developer Enertrag and international investment firm Nicholas Holdings — initially announced it would start producing green H2 by 2026.
The developer now says it will bring on line one million tonnes of annual ammonia production capacity by the end of 2027 and the full two-million-tonnes-a-year phase in 2029. The final phase will have 3GW of electrolyser capacity powered by around 7GW of renewables.
The company has already signed offtake memoranda of understanding (MoUs) covering more than the first phase’s capacity with Germany’s RWE, South Korean industrial gases firm Approtium, and an unnamed “major chemical company”.
A rendering of the 3GW Hyphen project. Photo: Hyphen Hydrogen Energy
RWE has provisionally agreed to offtake 300,000 tonnes a year of ammonia from 2027, while Approtium plans to buy 250,000 tonnes a year — leaving the anonymous industrial customer with the largest share of the project’s initial output at 500,000 tonnes a year. However, no binding agreements have yet been signed.
Hyphen is also only due to finish raising finance for the project around the second half of 2025, after its design has been approved in a 120-day review by the government following a two-year feasibility study.
The new “Feasibility and Implementation Agreement” between Hyphen and Namibia sets out the terms for the validation, financing, construction and operation of the project, but is not a final contract for Hyphen to begin building the facility.
Namibian President Hage Geingob said that the signing of the deal will “kick-start a process that has the potential to transform the lives of many in our country, the region and indeed the world”.
The agreement allows the government to take a 24% equity interest in the project at a cost within the first six months. It has already secured €540m from the EU’s financial arm the European Investment Bank and Dutch impact fund Invest International toward financing its stake in the project and developing the domestic green hydrogen sector more broadly.
“Namibia has the potential to become one of the main renewable energy hubs on the African continent and even world-wide,” says European Commission president Ursula von der Leyen. “Today’s agreement is a major step for the production of green hydrogen in the country. I am proud that Global Gateway [a strategy promoting European investment into sustainable infrastructure worldwide] allows the EU and Namibia to invest in a shared future fighting climate change together, making Namibia energy-independent and creating jobs and prosperity.”
Hyphen will pay the government land rentals worth a total of €10m ($10.72m) during the initial two-year feasibility assessment. The developer will also rent the land for €10m a year once the project moves into financing and construction, which will increase to €26m (including environmental levies) once it is commissioned.
The project is expected to create 15,000 new jobs created during the construction phase and 3,000 permanent positions once operational. The government aims for 90% of these roles to be filled by Namibians, and 20% by young workers.
It has also set a target for 30% of goods, services and materials during construction and operation to be locally procured.