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USAID is facilitating private sector investment in Djibouti''s energy sector to ensure sustainability and support the country''s path to energy independence. USAID PowerAfrica funds were critical to unlocking $225 million in private sector investment in a first-of-its kind waste-to-energy plant capable of processing more than 85 percent of Djibouti''s trash into renewable energy.
U.S. company CR Energy Concepts (CREC) will build a $220 million Renewable Energy Park and five regional transfer stations to collect all organic and inorganic materials destined for landfills across the heavily urbanized capital city and all five of Djibouti''s rural regions. The facility will provide 35 Megawatts per hour of base-load electricity to Djibouti''s power grid.
USAID funding will establish training centers at the Renewable Energy Park and regional transfer stations in each of Djibouti''s five regions. The facilities will conduct technical training for the transfer station''s 140 new employees and offer skills and employment training for the communities, addressing Djibouti''s severe youth unemployment rate.
Budget: $1,200,000Activity Location: Djibouti City, Obock, Tadjourah, Dikhil, Arta, Ali SabiehPerformance Period: Five Years (2023 – 2028)Implementing Partner: CR Energy Concepts LLC (CREC)
Djibouti faces critical challenges with power generation and distribution. Heavy reliance on fossil-fuel imports keeps the country exposed to price volatility, constraining economic development plans. But significant geothermal, wind and solar energy resources could be developed to extend reliable electricity supply throughout the country, meeting the twin concerns of energy access and energy security.
A Renewables Readiness Assessment (RRA) identifies the actions needed to overcome a country’s barriers to renewable energy deployment, with the International Renewable Energy Agency (IRENA) providing technical support and expertise to facilitate consultations among different national stakeholders. While the process helps to shape appropriate policy and regulatory choices, each country determines which renewable energy sources and technologies are relevant and consistent with national priorities.
Djibouti’s indigenous renewable energy resources can help to meet rising power needs as Djibouti pursues its ambitious Vision 2035 economic development programme. Renewable energy development would also help to address high youth unemployment, creating more jobs per megawatt than conventional installation in the power sector.
As part of IRENA’s Africa Clean Energy Corridor initiative, Djibouti can benefit from the flexibility offered by increased cross-border electricity trade. The country can also position itself as a trans-continental transmission hub between power pools in Africa and the Arabian Peninsula, thereby bolstering its own energy security as well as supporting wider power-sector decarbonisation.
BAKU, November 20, 2024 – Increasing exposure to extreme heat, droughts, and floods pose serious risks to livelihoods in Djibouti as well as for the country''s long-term economic growth. Without swift action, Djibouti could lose up to 6 percent of its GDP annually by 2050, equal to nearly four years of today''s economic output, according to the World Bank Group''s first Djibouti Country Climate and Development Report (CCDR).
The report provides a detailed roadmap for how Djibouti can transform these climate challenges into opportunities for sustainable growth and economic diversification, highlighting the importance of infrastructure investment, action on water and food security, and energy sector reform.
Djibouti shares many climate risks with other countries of the region, but Djibouti''s role as the major port for the Horn of Africa makes the resilience of its transport infrastructure important to the entire region. Also, economic activity is concentrated in low-lying coastal Djibouti City, making protection against coastal flooding from sea level rise a key priority.
The International Development Association (IDA), the World Bank''s fund for the world''s low-income countries, has been a key partner in supporting Djibouti''s development journey. The Djibouti CCDR emphasizes the crucial role of IDA support in helping the country secure the substantial investments required to adapt to climate change over the next 25 years.
"This report emphasizes the opportunity for Djibouti to accelerate investments as we move to the goal of 100 percent renewable energy very soon," said Ilyas Moussa Dawaleh, Minister of Economy and Finance, in charge of Industry – Republic of Djibouti. "Our main objective is to reduce energy costs and expand access to it. We must ensure that all Djiboutians benefit from reliable and affordable energy. Djibouti is full of multiple renewable energy resources including solar, wind, geothermal and green hydrogen."
Djibouti has already made important infrastructure investments that can enable it to become a resilient hub for the region, ensure livability in a hotter and drier climate, and diversify its economy. These include investments in ports, rail, and roads, clean energy generation, water desalination and a water pipeline connection. The CCDR concludes that additional investments, capacity building in public sector management, and policies that incentivize private sector participation are needed to ensure that Djibouti reaps the full benefits of these investments.
Overall investment needs could exceed $2.8 billion, while even a limited set of priority adaptation actions requires US$1.1 billion in additional funds. Such investment can be consistent with Djibouti''s goal of achieving both growth and debt sustainability if it is accompanied by economic reform and if additional adaptation resources are provided on a concessional basis. International support is particularly warranted given the regional importance of the resilience of Djibouti''s economy.
At the second-lowest place on Earth, 155 meters below sea level, giant structures have sprouted from the arid ground. The 85-meter-tall turbines catch the winds that blow almost constantly through the northern end of the Great Rift Valley, spinning their 64-meter-long blades and sending electricity coursing toward Djibouti City, the country''s capital.
The opening of the Ghoubet wind farm this month is a giant stride toward the country''s goal of energy independence using 100 percent renewables by 2035. This is the first independent power project in the country. Currently, Djibouti imports more than 80 percent of its electricity needs from Ethiopia, its neighbor to the west.
Strategically located where the Red Sea meets the Gulf of Aden, Djibouti has an area of just over 23,000 square kilometers – smaller than the state of New Hampshire – and a population just under one million people. It has few natural resources and has built its economy around a state-of-the-art port complex. Agriculture is nearly impossible, with rainfall at 13 centimeters per year, but wind, sun, and geothermal potential are abundant.
"We decided to aim to transition to 100% renewable energy by 2035," said Yonis Ali Guedi, Minister of Energy and Natural Resources. "We believe we have the potential today to develop national production."
The wind farm was built by Red Sea Power, a public-private consortium of four investors – three international and one domestic. MIGA provided $91.6 million in guarantees to two of the international investors — Africa Finance Corporation and Climate Investor One, a blended finance facility managed by Climate Fund Managers — using its own resources as well as the International Development Association''s MIGA Guarantee Facility, part of its Private Sector Window.
"Without MIGA, this project could not have been implemented," said Aboubaker Omar Hadi, Chairman of Great Horn Investment Holdings, the domestic investor, which is owned by the government of Dibouti.
The 17 turbines will produce about 237,000 megawatt-hours per year, which will be fed into the national electricity grid through newly built power lines and substations. That''s about eight times Djibouti''s current electricity use.
The geography of the site near saline Lake Assal makes it ideal for a wind farm, explained Daniel Erasmus, site manager with Red Sea Power. Two mountain ranges create a natural wind tunnel. The turbines will turn with wind as low as 3 meters per second, and reach peak capacity at 9 meters per second.
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