Betting on Green: Namibia's Green Hydrogen Agenda

DISCLAIMER: This webinar transcript was loosely edited and there may be inaccuracies.

(Mnyupe) Hi guys thanks a lot for coming out to listen to our conversation. It's really good to be back. The last time I was here physically was in 2019, I took a class actually with the Harvard Kennedy School. I did an infrastructure and markets economy with a really cool lecture and I had a really good time so it's good to be back.

As Ricardo has said, he together with the Growth Lab essentially the Namibian government sort of retained the services of the Growth Lab to help us think about economic complexity a little bit and this is where this journey started to a large extent as well.

So I started working for the Namibian government in in September 2020. To give you some context, Namibia’s GDP is anywhere between 11 to 12 billion US dollars on a good day our annual budget is about 2.77 billion. What we spend is about 3.3 so you definitely have a deficit of 500 million US dollars or more. I'm giving you all of those numbers to get context of who we are. Countries around two and a half million people the size of the country is about two and a half times Germany's size so it's about 824 a thousand square kilometers, being shared by two and a half million people and that gives us the dubious honor of being the second least densely populated country in the world.

Which before, this it was really hard to sort of see the utility of that particular statistics but it'll start to come to light. So when we started trying to look at increasing the economic complexity of our country this is basically something we were going or we were looking to do with the growth lab. You know, what sort of new exports we could put together currently, maybe a sort of export minerals to a large extent, so you'd think of diamonds uranium some meat some fish so nothing too complex we're not exporting Nokia cell phones just yet and then at the same time services or tourism right so that was it there may be an economy in a nutshell.

And then we got approached by a big green hydrogen developer I think it was October 2020 and we started looking into this whole green hydrogen thing. I started working with the world bank and they started saying to us, look, you are actually, potentially very uniquely positioned to do something very special in this space. You have some of the best wind resources on the planet we checked that with various tools that we were able to access through the Bloomberg new energy Finance tools and we saw that the capacity factors we could generate in Namibia.

55 percent or more than eight meters per second of wind meant you had a really interesting world-class wind resource especially in this area the solo was pretty good as well easily  north of 30 capacity factors in selected areas it just so happened to be in the very same area so typically Namibia has started to build some renewable energy potential around the country but like small plants right so Namibia produces, or we consume about four and a half terawatt hours of electricity and we import 60 to 70 percent of that.

I know right pretty sad, and we input a lot of that actually from South Africa right here and they produce a lot of that using coal-fired Power um our biggest generation asset is up here in the north in the ruachana area. And it's Hydro right and then half of our population are certainly a working population work in the agricultural sector so you can imagine you're very exposed to climate change right if you get hit by a big drought you don't get enough electricity half of your people unemployed and you have to pay very high prices for emergency power you're importing from qualified power stations which is that's the right climate change um so that was sort of our reality and then we tried to turn our reality into this so after doing a lot of work in this area we essentially put together a fairly robust governance structure that I can talk to you to you guys in some detail.

We went out to the world we put out a global um RFP a request for a proposal and we invited private sector developers to Envision a future um that had green hydrogen as a big part of that and we got nine proposals from six developers, and I'll show you one such project. But essentially, as we embarked on this economic diplomacy, we started actually getting a lot of interest from people who wanted to build projects everywhere.

We started unlocking interesting grants and funding from larger economies such as Germany and the EU that wanted to partner Namibia on this particular journey and this is where we are at the moment we're envisioning about three hydrogen valleys we’re putting together a green hydrogen strategy and we're going to launch that at cop27 um, and this is being done by McKinsey and this I think was a big part of the secret Source I think a lot of international players did not expect the government to organize itself as quickly as we did there's a technical committee full of technocrats that essentially reports to a green hydrogen Council you could see my one of my roles is a green hydrogen commissioner which essentially entails project managing this Vision.

And then of course we're reporting to cabinet and that's the out ultimate decision-making body and so once you started creating a certain amount of clarity but also robust sort of governance structures it just engendered a lot more confidence and a lot more people were willing to come and take the risk of developing in Namibia so that got us you know going on a really exciting Journey this is um the project that is envisioned um in the southern part of Namibia actually the developers are online as well so if you get that really cool technical questions for them we can ask them um but essentially this in the beginning this was envisioned as a 9.4 billion US dollar project we're now looking north of 11 billion closers to 12.

You must remember the size of our GDP when you're thinking about that number and it essentially entails almost seven gigawatts of renewable energy assets three gigawatts or so of um electricity about 700 megawatt hours of battery 70 kilometers or so of transmission lines some pipelines that are at the industrial site with desalination at the front ammonia synthesis at the back and ammonia storage tanks you liquefy the ammonia, and you then bring that off to a ship this is a floating a floating boy Mooring system get that into a tanker and then that goes off to you to your client at the moment.

Our clients are predominantly envisioned to be German so two weeks ago we were in Germany in Berlin working closely with their Ministry of economic Affairs and climate change and there was a Business Roundtable where essentially, we were introduced to prospective off takers this particular company hyphen is 35 owned by a German company as well called nit rag and so Germany and Namibia are working very close through economic diplomacy trying to make this project um come to bear and I think Dan and I will get into some details around that as well.

Some interesting features that obviously are really important for Namibians full-time jobs about 15000 90 of those should be Namibian employees now you have to know that the town that is to host this project probably has a population of about 30 000 people ums so if you imagine that these full-time employees have two or three um dependents and most of them are coming from not and they don't live in the in the town you could double the town's population right and these are some of the challenges I think that we would love to be working very closely with Ricardo's team to start really thinking about why this project actually means on the ground what are the anthropological issues socio-economic as well of course as techno economic.

But you know for example what does Namibia have to do um with our immigration policy as well Do all of these skills exist um and what would it take to bring in skills but also accommodate them in a manner that they Thrive as well big local content about 30 local content a big part of that is other local companies balance sheets big enough right um I think one of the examples the developer was giving was that the largest develop the largest construction company in Namibia their order book is typically about 70 million US Dollars and um this project might have an order book of about seven billion rights so we're going to need many of those Namibian construction companies to actually absorb all of these um all of this capital.

I think this is another very interesting one - the idea is that the project will produce about 18 terawatt hours possibly more actually, because the project has been growing in size since then um about four to five of those terawatt hours would actually be curtailed energy and so we're looking into the possibility of capturing some of that and actually, feeding that into the Namibian grid possibly with a bit more of a dispatchable profile.

And obviously that would require unique Investments strengthening the grid, a new connection battery storage as well possibly green hydrogen re-electrocution units as well and all of that will then obviously determine the price of this electricity relative to the Imports that we get from South Africa. We think they should be cheaper but we've commissioned two studies to do that we think this project can easily produce electricity at two cents a kilowatt hour we pay nine to twelve cents a kilowatt hour for our Imports so there's an interesting opportunity there to get Namibia to be energy independent. At the same time, if this is the first of many projects you might actually be able to become an exporter of electricity let alone the molecules of to Europe.