A Namibia-focused green hydrogen report by DECHEMA has identified transport costs as one of the main challenges Namibia faces in its green hydrogen dream.
Anusha Roshini Alagu, Chokri Boumrifak, and Luisa Fernanda López González wrote the report, which the German federal ministry of education and research sponsored.
Transport costs that could come in at even nearly US$5 (N$92) per kilogram of green hydrogen pose the greatest threat to unfavourable production and export costs, with electrolysers being identified as another key challenge.
The report also notes that most offtake agreements are likely to be based in Europe, which necessitates shipping the green hydrogen, most likely from the port of Luderitz.
While maritime transport costs from Namibia to Rotterdam are difficult to estimate, there are studies for similar distances, such as exports from the Arabian Gulf to Rotterdam for products like LH2 (liquid hydrogen), ammonia, LOHC (liquid organic hydrogen carrier), and methylcyclohexane. The authors note in the report that for these similar distances, we need to consider costs of 2.1–5.2 USD per kg of hydrogen in addition to the production costs.
“Public international agreements provide a glimpse of future hydrogen hubs beyond the African continent. The port of Rotterdam (NL) is to this day one of Europe’s largest trade ports that stepped forward to become a transport centre for green hydrogen and derivatives. A MoU with Namibia already set the groundwork for future exports to this hub. Long-distance transport of green hydrogen is one of the major challenges in terms of cost efficiency in infrastructure expansion. As a result, identifying a suitable medium or derivative is critical due to the low volumetric energy density of hydrogen. Transporting hydrogen in liquid form enhances its volumetric energy density over long transcontinental distances. However, liquifying hydrogen or converting it to ammonia, methanol, or other derivatives requires more energy consumption for the gaseous transformation process (cooling, compression, reaction energy, etc.). The report suggests that increasing production scale can moderately reduce these effects,” reads the report.
By 2030, the authors note that they expect the industry to ship liquid hydrogen over large distances at an average transportation cost of about 2.5 USD per kg of hydrogen, which can range widely between 2.0 and 3.7 USD per kg of hydrogen. The main cost factor for liquid hydrogen handling is the storage capacities that are energy intensive for cryogenic conditions. For shipping of ammonia or LOHC, the main cost factor is the energy-intensive recovery of hydrogen, with about 1.9–2.2 USD per kg hydrogen (NH3) and 2.0–2.5 USD per kg hydrogen (LOHC). Since the energy on the import side is even more expensive, conversion to hydrogen is very costly and requires measures to increase energy efficiency. The cost of transporting hydrogen is significantly higher than that of current LNG.
“Production pathways that do not require hydrogen recovery can save extra costs. These pathways make good use of base chemicals like ammonia or methanol, which can either serve as precursors for chemicals with added value or directly serve as fuels. We could use so-called ammonia crackers to reclaim hydrogen from ammonia. However, ammonia crackers are not yet fully mature. Direct application of ammonia could circumvent the need for such ammonia crackers and significantly reduce production costs. For instance, the report suggests using ammonia to produce fertilisers, polymers, explosives, or fuel.”
In November 2022, the Government of the Republic of Namibia (GRN) published the Namibia Green Hydrogen and Derivatives Strategy, which was implemented by the Southern African Science Service Centre for Climate Change and Adaptive Land Management (SASSCAL) and sponsored by the German Federal Ministry of Education and Research. The hydrogen strategy focuses on the export of green hydrogen derivatives, such as ammonia, methanol, synthetic kerosene, and iron. However, despite the potential for low green hydrogen production costs in Namibia, the costs of transporting green hydrogen and its derivatives could be high depending on distances and the type of transport, which also needs to be considered for the derivatives.
“Despite Namibia’s high potential, it’s important to be aware of the obstacles that could increase the cost of green hydrogen, such as challenging transport. Furthermore, Namibia lacks significant industrialization, leaving the nascent green hydrogen sector in a largely undeveloped environment. This becomes apparent in the absence of a skilled workforce and industrial and basic infrastructure.
“The early pilot projects have already faced these challenges and must show how to overcome them. Nevertheless, Namibia can leverage its developments in the growing renewable energy sector and its high potential for low-cost green hydrogen production in this country. This lays the groundwork for Namibia to become a major global producer of green hydrogen and its derivatives, as well as the country’s economic benefit from new emerging industrial sectors, concludes the report,” the report says.
Hydrogen development in Namibia has the potential to not only reduce internal energy consumption but also accelerate the country’s economic growth. In 2030 and 2040, the GDP could grow by 32%, compared to an economy with no hydrogen industry. This industry could also generate 600,000 jobs by 2040.