Hyphen Hydrogen Energy CEO Marco Raffinette says the US$10b the company quoted for the green hydrogen project in Namibia is out of date.
Hyphen Hydrogen has partnered with the German company Enertrag and Nicholas Holdings to develop the biggest green hydrogen plant in sub-Saharan Africa. The government of Namibia wants a 24% stake, equivalent to N$16b.
Raffinette told Hydrogen Insight that the $10bn was previously quoted for phases one and two [both 1.5GW] is two years ago pricing.
He suggested that the cost of Namibia’s green hydrogen project will be much higher now than it was two years ago.
According to Raffinette, Hyphen Hydrogen Energy will only update the cost once it has agreed on engineering, procurement and construction contracts.
Raffinette says this expected capital cost increase may not drag the project behind because every developer of large-scale projects is dealing with the same inflation.
The US$10b project, set on ~4,000km2 of land within the Tsau //Khaeb National Park, is planned to be developed in phases, at full development targeting 350,000 metric tons of green hydrogen production a year from ~7GW of renewable generation capacity and ~3GW electrolyser.
Once fully developed, the project will employ about 3,000 people, with 15,000 construction jobs supported over the four-year construction period. Over 90% of these jobs are expected to be filled by local Namibians.
Raffinette believes that the failure rate will be very high with such big projects.
“At this point, that doesn’t mean those projects aren’t going to happen, but they’re going to fail within the expected time scale to come to market,” he says.
He added that everybody suffers from the same supply chain considerations.
“So I don’t think there is much of a strategic advantage between one project and another around capital expenditure,” Raffinetti says.
He also says five to ten projects the same size as theirs would probably be built by the decade’s end.
According to Raffinette, the higher the capital costs, the more important the resource is to ensure that its system operates efficiently.
“In other words, as wind turbines or solar panels get more expensive to install — increasing the cost of input electricity, which represents around 60% of the cost of electrolysis — the more developers are incentivised to run their electrolysers as close to full utilisation as possible to reduce the overall cost of H2 production,” he says.
