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German power utility RWE has withdrawn from the $10-billion Hyphen green ammonia project in Namibia, delivering a blow to the southern African nation’s aspirations of becoming a major global hydrogen hub.
The decision, confirmed by RWE on Monday, reflects a broader trend of companies reassessing investments in the nascent green hydrogen sector due to the high costs and slower-than-anticipated demand development in Europe.
RWE had signed a preliminary, non-binding memorandum of understanding (MoU) with Hyphen in 2022 to potentially purchase around 300,000 tonnes of green ammonia annually starting in 2027. Green ammonia, primarily used for fertilizer, is produced by replacing natural gas with hydrogen generated from water using renewable energy.
“We can confirm that RWE is currently not pursuing any further projects in Namibia,” the company stated, citing the sluggish demand for hydrogen and its derivatives in Europe as the primary reason for reviewing its commitments.
While a Hyphen spokesperson clarified that the agreement was only an MoU “to explore potential off-take,” not a final purchasing contract, the withdrawal raises questions about the project’s ability to secure large-scale buyers.
The announcement comes months after indigenous rights groups wrote to RWE, raising concerns that the project’s concession area encroached on ancestral Nama land within a national park. However, RWE maintained that its decision was purely commercial and unrelated to these complaints. The European Centre for Constitutional and Human Rights, which partnered with the Nama Traditional Leaders Association, nevertheless lauded the decision against purchasing “goods produced on land where indigenous rights are violated.”
