German utility RWE announced its withdrawal from Namibia’s $10 billion Hyphen green ammonia project, dealing a setback to Namibia’s ambition of becoming a leading hydrogen hub in southern Africa.

The exit reflects a broader trend of companies reconsidering investments in hydrogen technology, which remains costly to develop.

In 2022, RWE signed a preliminary non-binding memorandum of understanding with Hyphen to purchase about 300,000 tonnes of ammonia annually from 2027.

Producers typically make ammonia using natural gas, but decarbonising production requires substituting gas with hydrogen generated from water through renewable energy.

RWE stated that it would not pursue further projects in Namibia, explaining that slower-than-expected demand in Europe for hydrogen and its derivatives like ammonia prompted the review.

Hyphen spokesperson Ricardo Goagoseb clarified that RWE had only signed an exploratory memorandum of understanding, not a binding offtake agreement.

In April, indigenous rights groups wrote to RWE, arguing that the concession fell within a national park and encroached on ancestral Nama lands.

Andrea Pietrafesa, legal advisor at the European Centre for Constitutional and Human Rights, alongside the Nama Traditional Leaders Association, welcomed RWE’s decision not to purchase products linked to indigenous rights violations.

RWE emphasized that its decision was unrelated to the complaints raised by indigenous groups.