Namibia’s vast renewable energy potential holds significant opportunities for socio-economic development. Located on the Southwest Atlantic coast of Africa, with a small population of 3 million people, the country is endowed with world-class solar and wind resources. Solar photovoltaic (PV) systems in Namibia can generate twice as much electricity as comparable systems in central Europe. Meanwhile average wind speeds in its southern and coastal regions exceed 7 m/s and capacity factors can reach 50%. Backed by robust policies to help harness these resources, renewable energy could play a central role in advancing Namibia’s vision for sustainable development and economic growth – driving local value creation and industrialisation.

Renewables can lower costs, reduce import dependency and increase energy security for Namibia’s electricity sector. Namibia is highly dependent on imports to meet its electricity needs, with the share of imported electricity standing at 60%‑70%. Meanwhile, Namibia’s spending on purchased power jumped to USD 5 billion in 2023, up from USD 4 billion in 2019, due to the rising cost of imported electricity. As a result, Namibia currently has the highest electricity prices in Southern Africa. To increase electricity security and decrease costs to the consumer, the government has set a target to generate 80% of its electricity domestically by 2028. Current plans include deploying 170 MW of new renewable capacity, which would account for more than a third of that goal. Given the competitive prices that the government has been able to secure through public tenders, renewables are poised to become a cost-effective new source of domestic power.

The deployment of renewables can help Namibia reach its goal of providing universal electricity access by 2040. Despite significant progress over the past two decades, nearly 45% of Namibians still lack access to electricity. Most people without power live in sparsely populated rural areas across the country. Off-grid renewables are therefore particularly compelling as an access solution. Closing the gap will depend on sustained government efforts, support from development partners and active participation from the private sector.

Integrating renewable energy into the mining sector can enhance the competitiveness of Namibian products in global markets, while reducing emissions. Mining is Namibia’s largest industrial sector (14% of GDP) and consumes 21% of the country’s electricity. As Namibia develops its downstream industry to capture a greater share of the mineral value chain, electricity demand will continue to increase. Recent auction prices for solar PV and wind in Namibia were nearly 80% and 65% lower, respectively, than the retail price of USD 135/MWh that mines pay today for electricity. This is a strong indicator of the potential that renewables represent for lowering costs, reducing emissions and enhancing the competitiveness of the mining industry, including in markets that seek for more sustainable products. There are currently several renewables projects under development in Namibia – totalling 40 MW of capacity – that are associated with mining.

Electrifying mobile mining equipment can lower overall costs, enhance efficiency and provide environmental and health benefits for miners and local communities. Although most mines are connected to the electricity grid, mobile mining equipment such as haul trucks, excavators and loaders rely on fossil fuels for their operation. The electrification of these tools – either with large batteries or through high-voltage trailing cables – is progressing rapidly around the world, with Namibia’s uranium mine emerging as one of the world’s pioneers. Despite higher upfront investment needs, overall cost savings can be significant over the life of a mine, especially when accounting for the low cost of renewable electricity.

High-quality renewable resources, combined with ample available land for large-scale project development can facilitate competitive production of renewable hydrogen. Recognising Namibia’s renewables potential, the country has set ambitious renewable hydrogen production targets of 1-2 Mt per year by 2030, rising to 5-7 Mt per year by 2040. Currently, however, Namibia lacks a domestic market for hydrogen – meaning that all production would initially need to be exported. Delivery to international markets would require shipping hydrogen in the form of ammonia, which would necessitate large-scale investments in port infrastructure and development of ammonia handling expertise. Moreover, neighbouring countries could be supplied with new or repurposed dedicated hydrogen pipelines. The country has already established strategic partnerships with prospective export markets to enable technology transfer, secure offtake agreements and attract the investment flows needed to unlock this potential.

Mitigating the risks associated with large-scale projects and lowering financing costs are essential for competitive ammonia production. The cost of capital – a measure of how investors and financiers price the risks associated with an investment project in a particular country – can be up to two to three times higher in emerging markets and developing countries than in advanced economies, making it much harder to finance new projects. This is especially relevant for renewable hydrogen and ammonia plants, which require a significant portion of upfront investment relative to the total project costs. Efforts to lower the cost of capital are not only crucial for attracting investors but also for the overall competitiveness of a project. For example, reduction in the cost of capital from 15% to 5% would slash the levelised cost of ammonia production in Namibia from nearly USD 1 400/tonne today to USD 740/tonne. Anticipated reductions in the cost of electrolysers and renewable electricity could lower the levelised cost of ammonia still further, to around USD 560/tonne by 2030.

Renewable hydrogen production requires significant amounts of purified water, which can be cost-effectively obtained through seawater desalination powered by renewables. To achieve Namibia’s hydrogen production goals, the country would need between 10-20 million cubic metres (Mm³) of purified water per year by 2030. Water demand would continue to increase in line with rising hydrogen production so that, by 2050, demand would exceed current municipal water needs. Such water requirements can be cost-effectively supplied for hydrogen production using seawater desalination powered by renewable energy – which would ensure that a thriving hydrogen industry does not jeopardise water security and that other associated environmental impacts are minimised. The cost of desalinated water has a marginal impact on the levelised cost of hydrogen, being in the range of 2%-5% depending on cost of hydrogen and cooling method.

All stakeholders must take close and coordinated action to ensure that large renewable investment projects provide tangible socio-economic benefits and support broader development goals. Incorporating socio-economic considerations in renewable project design can support job creation and skills development, lead to direct investments benefitting communities and attract fiscal revenues that can be deployed for infrastructure development and public services. It is important to draw from successful experiences and tailor actions to the Namibian context to ensure that these expectations are met in practice.

Care should be taken to ensure that large-scale projects support – rather than compete with – key priorities. It is critical to design and calibrate policies that ensure export-oriented industries like mining and renewable hydrogen are developed in a way that complements national electrification and water needs. The scale of these projects offers opportunities for leverage towards local economic development, including by de-risking investment and lowering costs of auxiliary energy sectors, such as distributed renewables. This could include initiatives to build skilled workforce and aggregate demand for the purpose of procurement, lowering costs for off-grid developers.

Namibia has the opportunity to leverage its renewable energy potential as a foundation for broader socio-economic development and industrialisation. By linking the country’s world-leading renewable resources, vast areas of open land and strong and stable democratic institutions, Namibia is positioning itself at the forefront of catalytic change. A holistic approach that integrates renewable energy, industrialisation and development targets – informed by best practices in policy and governance – provides a solid foundation for advancing socio-economic progress. Establishing strong governance and fiscal frameworks to manage revenue inflows is equally critical, as it enhances transparency and accountability. This can enable the government to use these funds to mitigate risks for projects that cannot solely rely on commercial capital, such as off-grid access.