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IRENA forecast US$9.4bn green hydrogen investment potential for Namibia

January 17, 2022
IRENA forecast US$9.4bn green hydrogen investment potential for Namibia

The International Renewable Energy Agency (IRENA) says Namibia has the potential to raise the total investment from its initial green hydrogen projects to US$ 9.4 billion, which is almost in line with the country’s current GDP and become a net exporter of energy in the coming years.

This comes as the accelerating deployment of renewables has set in motion a global energy transformation with far reaching geopolitical implications and envisages the sector to meet up to 12% of final energy consumption by 2050.

According to IRENA, current annual hydrogen sales represent a market value of approximately US$ 174 billion, which already exceeds the value of annual trade in liquefied natural gas.

In its latest report, the energy agency noted that green hydrogen will have far reaching implications on the growth and transformation of the Namibian economy, among other countries that are pursuing implementation of the energy source.

“Other countries, such as Chile, Morocco and Namibia, are currently net energy importers. For these countries, a green hydrogen transformation represents a complete reversal of fortune, as ample renewable potential opens new possibilities. Countries that succeed in becoming major exporters of green hydrogen and derived fuels also stand to gain in geostrategic importance,” the organisation said.

“Once complete, the integrated facility would have a renewable generation capacity of 5GW and an electrolyser capacity of 3GW, with surplus electricity capacity to be fed into the Namibian grid and potentially into the regional power pool.”

The global agency added that because of the huge energy potential of the energy source, countries have already started making inroads in securing access to green hydrogen, in Namibia’s case, Belgium and Germany being among those, having already penned agreements.

“As in the early days of the liquefied natural gas (LNG) industry, many governments are forging bilateral deals and agreements to build and operate infrastructure to facilitate cross-border hydrogen trade. These deals range from feasibility studies to letters of intent, memorandums of understanding, energy partnerships, and even trial shipments.

“However, other bilateral deals do not coincide with existing energy trade flows. This is the case, for instance, with the bilateral deals and conversations between Germany and Morocco, Namibia and the Netherlands, and New Zealand and the Republic of Korea, among others. Whether all these hydrogen trade routes will materialise remains to be seen, but the potential is there for a completely new cartography of energy geopolitics. In its early days, hydrogen trade will likely be shaped around bilateral arrangements that carry the risk of default by one or the other party.”

IRENA states that the development of the green hydrogen sector will also spur the growth of other sectors including the shipping sector, which will be key in the transportation of the final products, with the Namibian Ports Authority having already set the plan in motion by allocating land at the Port of Walvis Bay and entering into an agreement with the Port of Rotterdam.

“Africa has vast renewable energy potential, presenting infrastructure opportunities for Africa in the shipping sector. Bunkering facilities for new fuels in the shipping sector go together with the transformation of ports and the construction of export facilities. Actions in this direction have already begun. In November 2021, the Namibian Ports Authority signed a memorandum of understanding with the Port of Rotterdam aiming to establish a trading route for green hydrogen. The port aims to import 20 MtH2 by 2050, while Namibia already has plans to develop a 0.3 MtH2 project, starting exports by 2026.”

“No decision about energy infrastructure should overlook the fact that the geography of infrastructure in a decarbonised economy could turn out to be very different from what it is today.”

The IRENA report, however, notes the challenges that might impact the developments of green hydrogen industries in countries such as Namibia.

“Although there is technical potential to produce green electricity, net energy importers such as Chile, Morocco and Namibia seem poised to become green hydrogen exporters. However, the supply of hydrogen will be constrained by the pace of deployment of capital and cost of production, particularly where long-term markets are not assured.”

According to major investment banks, by 2050, global sales of hydrogen could be worth US$600 billion (Financial Times, 2021), and the value chains of green hydrogen could become a US$11.7 trillion investment opportunity over the next 30 years, covering everything from dedicated renewable capacity and electrolysers, to transport infrastructure (Goldman Sachs, 2020).

IRENA is an intergovernmental organisation that supports countries in their transition to a sustainable energy future and promotes the widespread adoption and sustainable use of all forms of renewable energy, including bioenergy, geothermal, hydropower, ocean, solar and wind energy, in the pursuit of sustainable development, energy access, energy security and low-carbon economic growth and prosperity.

 

 

 

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Last modified on Wednesday, 19 January 2022 18:26
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