Written by: The Brief
The Energy Transition
The global energy sector is currently undergoing a major shift from hydrocarbon-based methods of energy production and consumption to systems driven by renewable energy sources. Dwindling hydrocarbon finds and increased consumer preferences for more decarbonized products and processes have necessitated for increased penetration of renewable energy into the energy supply mix. This transition to a lower-carbon economy, requires substituting hydrocarbon-based power with renewable energy whilst ensuring that energy remains accessible and affordable to the broader global community. The Namibian energy sector will need to grapple with the evolving question of how to balance its recent oil and gas discoveries with its immense renewable potential to ensure self-sufficiency and energy affordability for the Namibian population, whilst complying to the global decarbonization agenda.
The Renewable Energy Landscape
As a nation with tremendous renewable energy potential, Namibia is well-positioned to become a key player. Whilst the country’s energy mix is currently dominated by hydrocarbons with renewables making up less than a third of the sector, there has been over the last decade significant effort made to develop
and diversify this mix. The Government driven Vision 2030 has spawned several policies and initiatives to
promote the diversification strategy – These include the Renewable Energy Feed-In Tariff (REFIT) programme which incentivises renewable energy projects with favourable tariffs, and the Green Climate Fund to support the financing of these projects.
Government, in partnership with key private and public sector partners, has earmarked a number of strategic sites for future solar and wind power projects. These would support plans to increase the national energy grid’s renewable energy capacity by over Namibia’s Energy Transition: 170MW by 2025 of which 100MW would be allocated to NamPower while the balance will be tendered to Independent Power Producers. The Modified Single Buyer model allows transmission electricity consumers and Independent Power Producers (IPPs) to transact with each other directly for supply of electricity, for up to 30% of their energy requirements. Namibia, with the right policies and partners, could lead the charge for Southern Africa in moving towards renewable and decentralized power. With this, the country would be able to ensure long-term security of supply and position itself for sustainable growth.
Namibia possesses massive potential for renewable energy resources, and as a result, over the last two years, has been a focal point for the development of green hydrogen for export to the European market. This resource potential makes Namibia an ideal candidate to supplement some of this global demand. While export of green hydrogen faces challenges due to infrastructure, geographic and carrier challenges conventional renewable energy sources face some challenges of their own in decarbonizing the global economy, such as lack of efficient storage and transport technologies. As such, green hydrogen could play a key role in the energy transition alongside these other technologies but only if buoyed by the appropriate supporting policy and investment framework.
The Oil & Gas Landscape
In 2022 Namibia became the world’s most prolific prospect with multi-billion-barrel discoveries. These
potentially giant discoveries, namely Shell’s Graff and Jonker as well as TotalEnergies’ Venus adjacent finds, located in the deep waters of the Orange Basin are estimated to have 7.5 billion barrels of oil with large volumes of associated gas which will likely warrant gas commercialisation. These discoveries were later accompanied by Shell’s LaRona and Culinan wells, and TotalEnergies’ Nara. Chevron and Woodside recently farmed into Namibia and it is expected that BW Energy, Galp and Rhino Resources will all complete their 3D seismic surveys this year while ReconAfrica are currently testing onshore potential. The fiscal impact of the production of oil for the Namibian economy will be significant, with estimates of government revenues from the production of oil and gas, from the early 2030s onwards, to exceed current fiscal revenues.
BW Energy have awakened the 800MW gas-to-power project, with first production scheduled for 2026. This could be a short-term solution to energy selfsufficiency, along with afore-mentioned initiatives to be implemented through NamPower and Walvis Bay Gas Port which plans to generate over 500MW of power. Natural gas has been classified as clean transition fuel and, as such, replacing imported coal-generated electricity will have the effect of reducing Namibia’s carbon footprint and move the country closer to its carbon emission reduction goals as defined in the Nationally Determined Contribution (NDC) policy.
Most oil and gas companies are currently restructuring their strategies to incorporate the energy transition. Going forward, African oil and gas projects will require significant emphasis on adhering to environmental standards to retain their social acceptance for operation and to attract local and foreign investment. We anticipate that upcoming African developments will strive to attain Scope 1 & 2 net zero emissions, and any financial support for such projects will be required to align with the Equator Principles, which Standard Bank Group currently adheres to.
In conclusion, there is an over-abundance of energy potential for Namibia. For Namibia to reach
its economic and energy goals as highlighted in various development plans, it is key that the country
accelerate progress in expanding its energy capacity. The discussion around balancing oil and gas with its
renewable counterparts need not be a juxtaposed one, but rather one of collaboration – Significant investment into renewable energy is required to achieve the NDC goals, and the revenue to be generated from the commercialisation of oil and gas development could be used to bridge this funding gap. Conversely, renewable energy inputs into these hydrocarbon developments can further aid energy companies to achieve their net zero targets.
Author: admin
Managing the Namibia Oil and Gas Platform