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NEWS

Djibouti secures first renewables project: 60MW wind farm

CategoryStories
CountryNamibia
TagsEnergy Access, Finance and Investment, Renewable Energy

Africa Finance Corporation (AFC), Climate Fund Managers (CFM), FMO, the Dutch entrepreneurial development bank and Great Horn Investment Holdings (GHIH) have announced a landmark investment for the construction and operation of a 60MW wind farm in the Ghoubet area, near Lake Assal in Djibouti.

The east African country aims to transition towards 100% renewable energy-based electricity production and reduce its emissions by 40% by 2030.

Development of the 60MW wind project kicked-off in 2017 by AFC, CFM, as manager to Climate Investor One’s (CIO) Construction Equity Fund, FMO (together “the Consortium”) and local developer Great Horn Investment Holdings (GHIH).

Institutional expertise of individual Consortium members played a defining role in the Project’s development. AFC, being an experienced developer and financier of infrastructure and renewable energy projects, took the lead developer and project manager role.

CFM, a blended finance fund manager, took the co-developer and the technical lead role due to their financing and technical expertise.

FMO has been responsible for Insurance and Environmental, Social and Governance (ESG). GHIH provided local support in terms of engagement with the Government.

The project is owned and operated by Red Sea Power Limited SAS, a Djibouti-based limited liability company. The project is expected to have its commercial operations start in 2022.

Samaila Zubairu, President and CEO at AFC commented: “Renewable energy is a key focus within our investment strategy, and this project will not only be a unique opportunity within our portfolio but will also have a significant impact on Djibouti’s energy generation, improving their reliance on HFO. We are very pleased with this opportunity to be the lead developer and investor, alongside our co-investors FMO and CIO, as we use our experience from the Cabeolica wind farm project, which has been operational for six years.”

“Developing long-term strategic partnerships that ensures sustainable development of projects, such as the 60MW Djibouti Wind Farm Project, remains at the cornerstone of AFC’s strategy”, says Oliver Andrews, Chief Investment Officer at AFC.

“The partnership and innovation have resulted in many firsts being achieved on the project: the first grid-scale IPP in the country, all sponsor bridge financing to accelerate the development of the project to mention a few," Andrews added.

“The investment in Djibouti Wind is a perfect fit with FMO’s strategy because of its contribution to the company’s impact and CO2-reduction goals. This project will significantly reduce GHG emissions in the HFO dominated (90%) electricity sector of Djibouti,” said Jaap Reinking, Director Private Equity of FMO.

“We are proud to co-invest in this project with our strategic partners AFC and CFM. The project benefits from the technical expertise of CFM and the project management and local knowledge and network of AFC. Together with FMO as ESG partner and GHIH as local partner the four consortium partners are truly complementary," Reinking added.

“We are pleased to see this pioneering windfarm transition into construction, having co-developed the project since 2017,” said Tarun Brahma, Director and Head of Investments at CFM. “This project will help to facilitate a clean energy shift in Djibouti by providing sustainable energy and reducing the reliance on domestic thermal power production and power imports. The project, with thanks to our fellow consortium partners, is now positioned to assist the Government of Djibouti in meeting its ambitious emissions reduction targets.”

Aboubaker Omar Hadi, Chairman of GHIH commented: “A social and economic development cannot be achieved without a reliable, affordable, competitive and cost-effective energy solution. With the ports, the railway, industries and other transport infrastructure projects we have developed and developing, the availability of such energy is of paramount importance, in order to ensure the gains are consolidated. The Djibouti International Free Trade Zone (DIFTZ), set to become the biggest in Africa along with the Damerjog heavy industrial park will both create, a demand of 3,700MW over the coming decade. This gap can only be closed if the huge untapped potential of renewable energy in our country, such as solar, geothermal or wind are fully exploited.

"In line with that objective, this project constitutes a very important milestone as it will boost the supply side by securing a very competitive energy that will foster the industrialization. It equally contributes to the country’s strategic direction to shift to a 100% green energy generation. We are, therefore, very pleased to have partnered with the consortium in this venture and remain fully confident on the various impact of this project in tackling the energy challenges and reducing the reliance on other high cost or unstable source of power generation.’’