Namibia has proven to the world that Africa can become a force to reckon with as it produces its first green hydrogen, a clean energy resource produced through splitting of water into oxygen and hydrogen using renewable energy. Its commitment to building a green hydrogen oasis in the mid-2021s was somewhat met with scepticism considering the magnitude of the project intended and also taking into consideration that country has not carried out such massive and complex project hitherto. Against all odds, Namibia has shown that dedication and tenacity can pay off as the country is set to produce its first green hydrogen and ammonia by July 2024.
This production would be done at the Daures Green Hydrogen Village facility (which is 80% complete), with current production capacity of 18 tonnes of hydrogen (H2) and 100 tonnes of ammonia (NH3) that would be used for the production ammonia sulphate fertilizers. Targets have been set to increase its capacity to 3500 tonnes of yearly ammonia production in 2027, further increase to 352, 000 tonnes in 2032 and a whooping 700, 000 tonnes when the project gets to its final phase. In addition, there are reports that the country would produce its first green hydrogen produced iron by the end of the year. Namibia really seems to be doing the impossible in Africa, putting the continent on the map.
While this is happening, it leaves moments of reflection for other countries in the Global South that are endowed with resources such as wind and solar energy; “what are they not doing right as regards their energy transition journey?” should be the question in their minds. This particularly applies to Nigeria which is reported to have significant wind and solar energy potential. For instance, a report by International Institute for Environment and Development stated that Nigeria has about 427, 000 MW of solar thermal power potential. In addition, the country is found to have about 5.7 – 22.5 W/m2 of wind power density, also the good prospects of wind energy in Nigeria. Therefore, Nigeria should be in a place to adopt green hydrogen production like Namibia but unfortunately, Nigeria is no where near developing its green hydrogen infrastructure.
However, the case scenario of Namibia offers a learning curve to Nigeria’s energy transition journey. One of the lessons is that there is great support for large-scale renewable energy projects that can be implemented in Africa when there is huge potential in such projects. For instance, the European Investment Bank offered a USD 528 million loan facility to support renewable energy projects in Namibia immediately the project deal was signed; this is in addition to the funding support about USD 43 million from the Dutch government to support green hydrogen. Although there are insinuations that the support for the project is because of the personal interest of these countries as the project is geared towards exporting about 3 million tonnes of green hydrogen, it is obvious that if Nigeria should take the initiative of an ambitious renewable energy project, the country could also secure funding to actualize it.
Another lesson is that even though about 4% of renewable energy financing gets to Africa showing limited funding availability, innovative finance mechanisms have been found to be effective to support ambitious renewable energy projects. In the case of Namibia, blended finance mechanism is adopted to provide funding for the country’s 24% stake in the Hyphen Hydrogen Energy. This financing mechanism has capacity to reduce the risks of investing in emerging economies and developing countries, hence its suitability for such projects. Along this line, Nigeria can also sort for similar innovative financing mechanisms such as impact investing (which is projected to grow to about 7.78 trillion by 2033 from its value of USD 3 trillion in 2023), green bonds (its issuance as increased exponentially hitting a high of about USD 500 billion in 2022), climate funds (with a target of USD 100 billion per year) and support from development finance institutions. These mechanisms are able to manage the investing risks that make investors wary of investing in developing countries.
Finally, it is evident that Namibia played their cards on the table by themselves–no one did it for them. The government of the country took their project idea to Europe in 2021, attractively selling their green hydrogen project till Germany became interested, which heralded the interest of other investors. Specifically, the Namibian government stated that the cost of green hydrogen production is estimated at USD 1.62 – 2.16 per kg of H2, the lowest in the world compared to the popular cost of USD 4.10 – 7 per kg of H2. Although this cost remains unverified, it shows the commitment of Namibia to positively sell its renewable energy project. In similar vein, the onus lies on the Nigerian government to sell the green energy production capacity of the country to investors–no one else will do it for the government. The Nigerian government can take advantage of its participations in international fora to sell its renewable energy potential, while also lobbying investors to buy into its renewable energy projects.
In all these, there is a common denominator. The Nigerian government needs to be intentional about its energy transition plan. No one will do it for the country. The government has to sell the country as a gold mine for renewable energy investment and make conscious the country energy market investor friendly.
