Djibouti looks to renewable energy to boost self-sufficiency and competitiveness

With significant renewable energy potential, including geothermal, wind and solar, the Djibouti government is looking to increase the share of renewables in the country’s energy mix in a bid to lower domestic energy production costs and ultimately increase energy security. The country’s long-term development plan, launched in 2014 and known as Vision 2035, envisages a full transition from 100% fossil thermal energy in 2010 to 100% renewable sources by 2020. The sector is already attracting significant interest from international investors and donors alike and a series of projects in geothermal, wind and solar energy promise to redefine Djibouti’s energy landscape in the medium term.

Going Green

A full transition to renewables constitutes an ambitious but achievable goal for Djibouti, a country which, for the size of its land mass and population, has considerable renewable resources at its fingertips that are, as yet, untapped. In 2015 it became the first East African nation to have its renewable energy potential assessed by the International Renewable Energy Agency (IRENA).

The report, entitled “Renewable Readiness Assessment” and published in May 2015, confirmed that a transition to 100% renewable energy was possible through the development of the country’s renewable resources both for on-grid and off-grid applications, in tandem with the strengthening of the interconnection with Ethiopia, which currently supplies around 65% of Djibouti’s electricity needs. According to IRENA, renewable energy represents an opportunity for the country to meet its growing demand for power and move away from its current dependency on expensive imported fossil fuels and irregular imports from neighbouring country, Ethiopia.

“The focus is now on the potential for renewable and clean energy sources: solar, geothermal and natural gas,” Ali Yacoub Mahamoud, the minister of energy, told OBG. “It is a way for us to be energy independent and to reduce the costs of energy in order to help us develop our industrial sector.”

Geothermal

Djibouti’s geothermal energy potential is particularly promising. Other East Africa countries – including Kenya, which has a number of plans under way to develop geothermal generation – have also begun to explore the potential of geothermal power, but Djibouti, located within the Afar Depression, the geological triple junction at the intersection of the Red Sea, the Gulf of Aden and the East African rifts, is well situated to take advantage of the substantial geothermal resources its location provides, particularly in the Assal rift.

Ongoing exploration work since the 1970s has helped identify a total of 13 potential geothermal sites, including the caldera Assal-Fiale, Hanle-Garabbayis, North Goubet and Gaggade. Overall, the country’s geothermal energy potential is estimated at 1000 MW, according to Djibouti’s Ministry of Energy and Natural Resources (Ministère de l’énergie chargé des ressources naturelles, MERN).

Despite its significant potential, the country only recently began serious efforts at developing geothermal sources, with the launch in mid-2013 of the Geothermal Power Generation project in the Assal Rift. Led by the World Bank, the project entails a first phase of exploratory work at a total cost of $31.2m, financed by seven donors, including the International Development Agency, the Global Environment Fund, and the African Development Bank, among others.

Saida Omar Abdillahi, director of energy conservation at MERN, told the press in April 2015 that companies including Texas-based Halliburton and Baker Hughes, state-owned Turkish Petroleum and Exalo Drilling of Poland had pre-qualified to drill wells in the country. Four exploratory wells near the caldera at Asal-Fiale are to be drilled by April 2016. Once the commercial viability of the project is confirmed, a competitive tender to attract private investment for the construction of a 50-MW geothermal power station for electricity generation is expected to follow.

Key Priority

Given the comparative advantages geothermal offers, the development of Djibouti’s resources is a focal point of the government’s efforts to procure 100% of its energy needs from renewable sources by 2020. To assist, in 2014 the government set up the Djibouti Office for Geothermal Energy Development to identify and assess geothermal resources and carry out research and exploration activities.

Unlike intermittent energy sources such as solar or wind, geothermal energy can replace the existing heavy fuel oil and diesel baseload, stabilising the electrical system while supporting the integration of other energy sources. Moreover, it can enable energy production at stable and affordable prices. According to IRENA, geothermal power plants could reduce the cost of power generation by nearly $0.20 per KWh, compared to a cost of generating fossil-based electricity at $0.30 per KWh. Mahamoud said the replacement of thermal stations with geothermal energy would allow the national electricity company Electricité de Djibouti (EDD) to save $57m per year.

Here Comes the Sun

Djibouti’s aim is to ensure a diverse basket of generating sources to power the country. With an estimated solar potential of more than 70 MWh per year, according to MERN, the potential for its development is substantial, both for on-grid and off-grid applications. This untapped potential hasn’t gone unnoticed by international investors. MERN has recently announced interest for a number of solar projects expected to come online in the short to medium term, including the construction of a 300-MW solar power plant at the Grand Bara plain site, in the country’s south, at a cost of €360m and other smaller solar projects.

Off-Grid

In Djibouti’s case, solar energy is a very attractive option for off-grid rural electrification solutions, given the distance between rural areas and the national grid and the cost of connecting isolated areas with low populations to the main grid.

The government’s rural electrification scheme aims to expand energy access to 10 villages, through renewable resources, in line with the government’s goal to increase rural electrification from about 1% in 2010 to 30% by 2017. “As of early 2016, the rural electrification programme was nearing 30% completion, with two solar plants being fully operational and a third due to be inaugurated in the coming months,” Abdourahman Awaleh Yacin, energy engineer and rural electrification manager at the Djiboutian Social Development Agency, (l’Agence djiboutienne de développement, ADDS), the entity in charge of implementing the programme, told OBG.

The first of these, a 62-KWc solar power plant in Ali-Addeh, has been online for three years, and provides energy to some 203 households through its mini-grid system. The second, in Adelou, 63 km from Tadjourah, was inaugurated in January 2016 with a capacity of 100 KWc, financed by Korean firm KC Cottrell at a cost of $2.5m. The third, a 200-KWc solar plant in As-Eyla, in the Dikhil district, was set for inauguration in the first half of 2016. According to Yacin, the energy needs of four other villages are currently in the study and planning phase as the ADDS searches for financing for the projects.

Wind Power

Since 2000, a number of studies have been carried out to assess wind-energy potential. A study by the Centre for Study and Research in Djibouti, in 2005, identified the coastal areas around the Gulf of Goubet, near Lake Assal, as a particularly promising site, recording average wind speeds of 9-10 metres per second and averaging 4000 exploitable hours per year. MERN estimates Djibouti’s wind energy generation capacity at 5000 KWh per year.

A series of wind-power projects are now reportedly in the pipeline. In mid-2015 Yacoub signed a memorandum of understanding with Chinese Shanghai Electric for the construction of the country’s first 60-MW wind farm, to be completed in two phases of 30 MW each. The project will also include the installation of two 230-KV power lines in the country’s north. Also in 2015, MERN announced plans for a 60-MW wind farm, as part of a joint venture between EDD and Qatar Electricity. The project is to be financed entirely by the Qatar Development Fund, with the EDD in charge of feasibility and data collection studies. Another 20-MW wind farm is also in the works as part of the Project for Producing Safe Drinking Water and will help power a new desalination plant.

Investment Friendly

As energy self-sufficiency schemes continue, an increasingly investment-friendly environment is taking shape in Djibouti. The liberalisation of the electricity market for renewable energy generation in the first half of 2015 signaled the country’s commitment to its renewable energy targets and is in line with the authorities’ efforts to increase private sector participation in the sector. In May 2015, a law was passed providing a tax exemption on all renewable energy equipment .

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