Development Bank of Namibia invests $53m in renewables

From the newsletter

The state-owned Development Bank of Namibia has recently supported renewables, particularly solar and wind, with $53 million in funding. This is part of the bank’s 2025–2029 strategy to harness Namibia’s abundant solar and wind resources while progressively reducing reliance on coal and thermal plants.

• Traditional African energy investment has focused on big economies like South Africa, Egypt and Morocco. The focus has moved from not only targeting internal market size but also exports and now resource-rich countries like Namibia are attracting big investments targeting export markets.

• Namibia is investing heavily in gigascale renewable energy projects. Its green hydrogen project will cost $10 billion, almost the size of its GDP.

More details

• Namibia faces a significant challenge with its heavy reliance on electricity imports, which account for 60-70% of its supply. This dependence has led to a substantial increase in expenditure, with the country's spending on electricity purchases rising from $4 billion in 2019 to $5 billion in 2023. Furthermore,  almost half of the population, nearly 45% of Namibians, lack access to electricity, particularly those in rural areas.

• To address these challenges, the Development Bank of Namibia is taking a proactive role by funding utility-scale solar and wind farms, alongside decentralised energy solutions for rural communities. This initiative aligns with the government's ambitious target of achieving 80% domestic electricity generation by 2028. With 170 MW of new renewable capacity planned, Namibia is taking concrete steps to reduce its reliance on imported electricity, much of which is generated from fossil fuels.

• Namibia's renewable energy resources present a strong advantage, with solar PV systems capable of producing twice the electricity output of similar European counterparts. Concurrently, average wind speeds in the southern and coastal regions exceed 7 meters per second (m/s), contributing to a capacity factor that can reach 50%, enhancing the feasibility of large-scale wind energy projects.

• The push for 80% domestic electricity generation by 2028, driven by high import costs and the need for energy independence, creates a strong and stable market for renewable energy investment. This commitment to renewable energy development enhances the scalability of Namibia's investment portfolio, attracting both domestic and international investors.

• Namibia is strategically positioning itself as a key player in the global green hydrogen market. By developing green hydrogen exports in the form of ammonia, with targets of 1-2 Mt by 2030 and 5-7 Mt by 2040, Namibia aims to capitalise on its ideal Atlantic Coast location and attract significant investment. These bold targets, coupled with strategic partnerships, solidify Namibia's role as a leader in the clean energy transition.

• Namibia's world-leading renewable resources, combined with democratic stability, present a unique opportunity for industrialization and socio-economic growth, making it a highly attractive long-term investment destination.

• Already, investors are flooding to Namibia. Over the past six months, the country has secured major renewable energy investments, including Hyphen’s $9.4B green hydrogen project, Sturdee’s $28M solar plants, GreenGo’s hydrogen expansion, and Solarcentury’s $20M solar plant, boosting energy capacity, jobs, and sustainability.

Our take

• Smart money follows resources, not just populations. Namibia is a prime example that access to prime natural resources outweighs the traditional allure of large populations, making the country a highly attractive destination for astute investors.

• While a $53 million investment is reasonable it could be much greater. To truly capitalise on its renewable wealth, significantly larger investments are needed, potentially in the billions, reflecting the scale of the opportunity.

• Ultimately, green hydrogen is the clear game-changer for Namibia. If investments arrive, as they are likely to, they will enhance green hydrogen exports significantly, bolstering the economy and establishing clean power for Namibians.