Context 

Namibia imports 60 to 70% of its electricity, rising to up to 90% at peak demand. Around 65% of imports come from South Africa, largely coal-based, with the remainder sourced from Zambia and Zimbabwe. Despite policy efforts to increase domestic generation and achieve greater self-sufficiency, supply remains highly import-dependent and vulnerable to external shocks and climate risks.

To meet its Nationally Determined Contribution (NDC) target of 70% of renewable energy in the electricity mix by 2030, Namibia must integrate dispatchable generation to complement intermittent wind and solar. At the same time, widespread bush encroachment, affecting around 60% of the country’s grassland savannah, reduces biodiversity, land productivity, water availability and rural livelihoods driven by CO₂ levels and unsustainable land management.  

Goals and approach to transformational change

The “Encroacher Bush Biomass Power” (“Namibia – Biomass”) turns bush encroachment from an environmental challenge into a sustainable energy solution. By supporting the national power utility NamPower in constructing and operating the 40 MW Otjikoto Biomass Power Station (OBPS), it demonstrates biomass as a dispatchable, locally sourced renewable energy option that strengthens energy security and grid stability.  

As a proof of concept, the plant aims to catalyse private investments in biomass power across bush-encroached regions, including through Independent Power Producer (IPP) models. Forest Stewardship Council (FSC)-certified harvesting and sustainable aftercare will contribute to grassland restoration, job creation and reduced harvesting costs, supporting ecosystem recovery and Namibia’s ambitious NDC target to restore 15.5 million hectares of savannah. 

Components and support mechanisms 

The project will support Namibia in the implementation of its NDC through two mitigation actions:  

1. decarbonising electricity supply by replacing fossil fuel electricity imports; and  
2. attracting new carbon-intensive investments in the restoration of grassland savannahs, leading to increased soil carbon sequestration. 

The Financial Cooperation (FC) component provides a CAPEX grant of EUR 20.8 million to support the construction of a 40 MW OBPS.  

The Technical Cooperation (TC) component, with a budget of EUR 3.9 million, focuses on establishing a sustainable local biomass supply chain sourced from encroacher bush, promoting socio-economic and environmental best practices to stimulate the local economy while contributing to the restoration of Namibia’s savannah landscape. 

Long-term impact 

Over the course of its implementation, the project expects to reduce around 500,000 tCO₂e.