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Djibouti Launches Red Sea Wind Farm Aiming for 100% Green Energy

Monday, 11 September 2023 18:13
The 17-turbine Goubet wind farm will generate 60 megawatts of clean energy, substantially increasing the share of renewable energies in Djibouti's energy mix. The 17-turbine Goubet wind farm will generate 60 megawatts of clean energy, substantially increasing the share of renewable energies in Djibouti's energy mix.

(REPUBLIQUE DE DJIBOUTI ) - President Ismail Omar Guelleh officially inaugurated Djibouti’s first-ever wind farm. This innovative project is a response to the country's serious energy shortage, thanks to a 50% boost to overall capacity while pushing forward his agenda to make the nation of 1.1 million the first in Africa to rely entirely on renewable sources for electricity. The country has enough wind, solar and geothermal resources to triple existing capacity to at least 300MW.

For President Ismail Omar Guelleh, "this achievement is of the utmost importance. It bears witness to our forward-looking vision and illustrates a major, concrete stage in our development. The construction of this wind farm, as part of our energy transition, is a decisive milestone. We are convinced that without increasing our national energy production capacity, the development we want for our country would be neither possible nor conceivable".

The Red Sea Power (RSP) wind farm, near Lake Goubet, will provide 60 megawatts of clean energy, and avert 252,500 tonnes of CO2 emissions annually. The first significant international investment in the energy sector in Djibouti, the US$122 million project creates the country’s first independent power producer (IPP) and sets a template for further private investment.

The consortium of investors behind RSP, namely the Africa Finance Corporation (AFC) as lead developer, the Dutch entrepreneurial development bank (FMO), blended finance fund manager Climate Fund Managers (CFM), and Great Horn Investment Holding (GHIH), the investment firm owned by Djibouti Ports & Free Zones Authority and Djibouti Sovereign Fund, is already planning to generate a further 45 MW of renewable energy. Djibouti has thus participated directly, with its own funds, in the financing of this major project.

The wind turbines will provide electricity to 38% of the population currently without access. Critically for the East African nation, it will also spur industrialization, job creation and economic stability as Djibouti seeks to take advantage of its strategic location as a global transshipment hub.

The electricity generated is to be sold under a long-term power purchase agreement to Electricité de Djibouti (EDD), the national state-owned utility. EDD's payment obligations under the Power Purchase Agreement (PPA) were backed by a government guarantee, and in turn the government’s obligations were also backed by political risk cover provided by the World Bank’s Multilateral Investment Guarantee Agency (MIGA).

Human development, sustainable development, financial structuring: the Red Sea Power project is definitely part of the economy of the future.

  • Djibouti has abundant renewable resources for sustainable and clean energy production,” said Aboubaker Omar Hadi, Chairman of Great Horn Investment Holding (GHIH). “Our aim is to be the first country in Africa to be 100% reliant on green energy by 2035. Investment in renewable energy infrastructure is the key to enabling our ambitions and the inauguration of the groundbreaking Red Sea Power wind farm today is a major milestone. With the development of Industrial Free Zones projects, we estimate that the country faces a projected demand of 3700 MW in the next decade.”
  • Increasing access to green energy is urgently needed to unlock the huge economic potential within the country,” said Samaila Zubairu, President & CEO of Africa Finance Corporation. “The new plant will play a pivotal role in the battle against climate change, as it not only amplifies the reach of renewable energy in Djibouti, but also substantially curbs harmful emissions generated from the region’s thermal plants. Alongside our partners, AFC is committed to providing alternative reliable and climate friendly energy sources across Africa to close the continent’s energy deficit.”
  • “Today’s inauguration marks a leap forward in closing Djibouti’s energy access gap and ensuring energy sovereignty, supporting the country’s long-term social and economic development,” said Michael Jongeneel, CEO of FMO.
  • It is testimony to the power of blended finance,” added Andrew Johnstone, CEO of Climate Fund Managers. “Groundbreaking transactions like this are immensely challenging to fund with traditional project finance as the territory is uncharted and there is no track-record, making it almost impossible for lenders and equity partners to get comfortable with the risk. Blended finance combines both concessional and commercial capital, enabling investors to take a higher share of risk and providing a single source of funding from development to operations. In this case, we believe the project simply would not have been possible without a blended approach.”
  • Francois Maze, CEO of Red Sea Power said: “Access to electricity is vital for business growth, job creation, education, healthcare, social services and infrastructure. In a country currently served entirely by fossil fuels and electricity imports, large-scale renewable energy solutions are urgently needed to mitigate and increase resilience to climate change. Today’s inauguration is an important milestone in Djibouti’s aim to be entirely served by renewable energy sources by 2035. We are proud to be part of that journey and thank all of our partners for their support over the last five years to turn our ambition into a reality.

About Red Sea Power

Red Sea Power is a limited liability company (société par actions simplifiée) incorporated under the laws of the Republic of Djibouti. Red Sea Power is managing the design, construction and operation of the project. Under RSP, AFC holds 51% ownership, FMO and CIO hold 19.5% respectively, and GIHH holds 10%.

About Africa Finance Corporation (AFC)

AFC serves as the lead developer and project manager in the consortium. AFC was established in 2007 to be the catalyst for private sector-led infrastructure investment across Africa. AFC’s approach combines specialist industry expertise with a focus on financial and technical advisory, project structuring, project development, and risk capital to address Africa’s infrastructure development needs and drive sustainable economic growth. Sixteen years on, AFC has developed a track record as the partner of choice in Africa for investing and delivering on instrumental, high-quality infrastructure assets that provide essential services in the core infrastructure sectors of power, natural resources, heavy industry, transport, and telecommunications. AFC has 42 member countries and has invested US$11.5 billion across Africa since inception.

About Climate Fund Managers (CFM)

CFM is the co-developer and the technical lead of the project.

Climate Fund Managers (CFM) is a leading climate-centric blended finance fund manager. It designs and deploys cutting-edge climate finance funds at scale and at pace, working in partnership to co-develop, construct and own sustainable infrastructure solutions that deliver low-emission, climate-resilient growth. Through its innovative model, CFM has created a blueprint for a new generation of climate financiers, whose collective impact can help end the climate crisis. CFM currently manages two emerging market infrastructure funds focused on climate change mitigation and adaptation: Climate Investor One , a USD923m fund focused on renewable energy and Climate Investor Two, a USD855m fund focused on water, sanitation, and oceans infrastructure. The company is currently raising its third fund, Climate Credit Fund, a $1bn target private credit fund focused on post-COD refinancing for renewable energy projects. Established in 2015, CFM is a joint venture between the Dutch entrepreneurial development bank, FMO, and Sanlam InfraWorks, part of the Sanlam Group of South Africa. CFM invests across Africa, Asia and Latin America and is headquartered in The Netherlands.

About FMO - Dutch Entrepreneurial Development Bank

FMO has been responsible for Insurance and Environmental, Social and Governance (ESG).

FMO is the Dutch entrepreneurial development bank. As a leading impact investor, FMO supports sustainable private sector growth in developing countries and emerging markets by investing in ambitious projects and entrepreneurs. FMO believes that a strong private sector leads to economic and social development and has a 50+ year proven track-record in enabling entrepreneurs to make local economies more inclusive, productive, resilient and sustainable. FMO focuses on three sectors that have high development impact: Agribusiness, Food & Water, Energy, and Financial Institutions. With a total committed portfolio of EUR ~12 billion spanning over 85 countries, FMO is one of the larger bilateral private sector development banks globally. For more information:

About Great Horn Investment Holding (GHIH)

GHIH provided coordination and local support in terms of engagement with the Government. Great Horn Investment Holding (GHIH) is playing a central role in transforming Djibouti into a major economic hub for East Africa. It was established by Presidential decree in 2016, with a fixed capital of 15 billion Djiboutian Francs ($85 million USD). It is owned by the Djibouti Ports and Free Zones Authority and Djibouti Sovereign Fund. GHIH develops and implements multi-modal transport systems in rail, aviation, road, maritime industries and energy. Working with strategic partners from around the world and delivering strong returns on investment.

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ECOFIN AGENCY offers a selection of articles translated from AGENCE ECOFIN. Founded in 2011, Agence Ecofin is a leader in Francophone Pan-African economic news, particularly in West and Central Africa. The agency publishes daily news on nine African economic sectors: Public Management, Finance, ICT, Agribusiness, Energy, Mining, Transport & Logistics, Communication, and Training.

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