Hyphen tables financing options for hydrogen

CHAMWE KAIRA

Hyphen Hydrogen Energy is looking at all financing options for its green hydrogen project in southern Namibia.

The company says it is making positive progress on its discussions with the government as it moves towards signature of the implementation agreement before the end of the year on its US$10 billion Namibian green hydrogen project.

Hyphen is a Namibian registered green hydrogen development company, specifically formed to develop green hydrogen projects in Namibia for international, regional and domestic supply. Hyphen successfully bid on and has been awarded preferred bidder status on 4000 square kilometers of land within the Tsau //Khaeb National Park for the development of Namibia’s first fully vertically integrated GW scale green hydrogen project.

The US$10 billion project is planned to be developed in phases, at full development targeting 350 000 metric tons of Green Hydrogen production a year from 5-6GW of renewable generation capacity and GW electrolyser. The project, once fully developed, will employ an estimated 3000 people, with 15000 construction jobs supported over the four-year construction period, over 90% of which are expected to be filled by Namibians.

In June last year, the Cabinet endorsed the composition and appointment of the government negotiations team assembled to finalise the agreement as well as the proposed timeline of its signature.

The signing of the implementation agreement will trigger the commencement of the front-end engineering and design phase in the development of this ambitious green hydrogen project.

Hyphen’s spokesperson Christopher Laing told Observer Money that Hyphen was looking at all routes for project finance including the government’s financial commitment, foreign investment and multilateral and development finance institutions engagement.

“This US$10 billion project will be the largest single foreign direct investment into the country.”

Laing disclosed that the US$4.4-billion first phase is expected to produce 125 000 tons per year of green hydrogen, to be further processed into 700 000 tons per year of green ammonia for export to mainland Europe.

Government went to Europe last year with plans to export three million tons per annum of green or

renewable energy-produced hydrogen from an area in the south-west of the country called the

Southern Corridor Development Initiative (SCDI).

Laing said the project will support the local economy through employment, local procurement and the industrial development of Namibia.

“This is not a one-off project, Hyphen is proposing the development of common user infrastructure to facilitate the scale-up of hydrogen production by a factor of 10, for future projects in the Southern

Corridor Development Initiative project area and Namibia has the potential to produce up to 15 million tons per annum of green hydrogen across the country.”

The project will at full development target 350 000 metric tons of green hydrogen production a year, displacing 5-6 million tons per annum of CO2 emissions annually.

Hyphen anticipates that at full production scale and with additional projects coming online, the excess electricity produced by the hydrogen industry can be used to decarbonise the entire Namibian electrical grid, act as a catalyst for Namibia’s own energy independence and make the country a net-exporter of low-carbon energy, assisting in the decarbonisation of the southern African region.

The newly created Welwitschia Sovereign Wealth Fund will take the role of strategic equity partner in all green hydrogen projects in Namibia, targeting a 24% equity shareholding in Hyphen’s project, with no requirements for additional local equity shareholder participation.

Hyphen will complete all the necessary feasibility, engineering and permitting processes to enable construction to commence in January 2025, with commissioning of the first phase by the end of 2026.

Hyphen has since appointed Boston Consulting Group and Lazard as its international strategic and financial advisors respectively, complementing its existing legal advisory team consisting of Slaughter and May and ENS Africa.

Hyphen has appointed five Namibian nationals, including Toni Beukes the new environment, sustainability and governance leader who will ensure this is an equitable project that benefits the people of Namibia.

Information provided by the company shows that Hyphen’s sister company, Hyphen Technical, together with partners TransNamib, CMB.TECH and the University of Namibia has recently been officially selected to develop a hydrogen powered locomotive with two hydrogen-diesel dual fuel locomotive prototypes with a hydrogen fuel tender wagon. The H2 locomotive conversion project, at a cost of €7.63 million (about N$130 million), is being part funded by grant funding from the German Federal Ministry of Education and Research (BMBF), through the government, supported by Southern African Science Centre for Climate Change and Adaptive Land Management (SASSCAL). This is intended to act as the first step in the journey of the conversion of TransNamib’s locomotive fleet, that uses 11 million litres of diesel a year, to ultimately operate on green, carbon-free fuel and demonstrates the commitment by the government to develop the entire green hydrogen value chain in the country, including hydrogen use applications.

By Observer