Namibia's largest wind farm gets funded

From the newsletter

Standard Bank has partnered with French wind firm InnoVent SAS to fund Namibia's largest wind energy project. The 44 MW plant will cost $106 million, with Standard Bank providing $67 million. Once operational, this project will significantly boost the country's energy independence, as it currently relies on electricity imports for 62% of its power needs.

• Namibia spends billions on electricity import bills, and this cost has been rising due to currency depreciation and increasing electricity tariffs. For instance, its main supplier, South Africa, has seen electricity prices increase by more than 150% in the last decade.

• The country plans to generate 80% of its power from domestic sources by 2028. Its national power utility, Nampower, aims to deploy 170 MW of new generation from renewable energy sources.

More details

• Standard Bank has played a major role in financing renewable energy projects across Africa. In Namibia, it financed the country's first large-scale solar independent power producer (IPP) and its first large-scale wind IPP. The InnoVent Group operates a total of 25 MW of renewable energy projects, comprising four solar PV plants and one wind farm. Additionally, they currently have 93 MW of projects under construction.

• Namibia is increasing its efforts to generate more electricity domestically through renewable energy resources. It is adopting a comprehensive approach, utilising all available opportunities in solar, wind, bioenergy, hydropower, and hydrogen. The country's geographic location provides it with suitable wind and solar resources, but a significant portion remains untapped.

• Recent developments in bioenergy include Canadian bioenergy firm Nopa securing 500 hectares of land for planting cacti for biogas. Furthermore, the state-owned Development Bank of Namibia has recently supported renewables, particularly solar and wind, with $53 million in funding. While this is on a smaller scale compared to the government's investments in its hydrogen sector, which have exceeded $10 billion, the sector is receiving substantial investment.

• Our Renewables Rising project database has tracked at least four projects in Namibia, with one 25 MW solar project completed last month. The sector is attracting significant investment not only for the country's own consumption but also for hydrogen production. Namibia's vast desert, abundant wind, and access to water from the nearby Atlantic Ocean present a major opportunity for hydrogen production.

• The country's numerous ongoing renewable energy projects create significant export opportunities to countries it currently imports from. For instance, South Africa continues to grapple with substantial energy challenges due to electricity shortages. The problem is even worse in Zambia, which has been severely affected by drought, impacting its power generation. Namibia could potentially transform its electricity import bills into export revenue through these initiatives.

• Unlike most utilities in sub-Saharan Africa, NamPower's policy of maintaining cost-reflective rates across all market segments has resulted in passed-on expenses for consumers. This has made electricity prices in Namibia among the highest in Southern Africa. Reducing imports could lead to significant savings for consumers and potentially stimulate industrial growth.

Our take

• Namibia's existing electricity grid is underdeveloped and not equipped to handle the demands of renewable energy. Without significant upgrades, there's a risk that completed projects will lack the necessary transmission lines to deliver power. This could lead to the country incurring unnecessary costs by paying for electricity that cannot be consumed.

• While Namibia's un-electrified population guarantees a strong demand for electricity, an even greater opportunity lies in hydrogen production and export. To fully capitalise on this potential, the country should liberalise its electricity market to attract more private sector investment.

• This project, while not exclusively for hydrogen production, promises lower electricity tariffs compared to the rising cost of imports.