As Djibouti continues to expand transport infrastructure to leverage its geographic position, rising energy consumption has required additional investment in energy infrastructure to increase supply. Beyond securing enough electricity to support economic growth and an expanding population, Djibouti has taken on the more challenging endeavour of deriving 100% of its power supply from renewable sources.
As of late 2022, between 60% and 80% of Djibouti’s electricity comes from Ethiopia through a transmission line completed in 2011. According to figures from the African Development Bank, the interconnection allows Djibouti to buy roughly 532 GWh from its neighbour’s vast hydroelectric capacity. The rest of its electricity comes from thermal power plants, which run on imported oil and fuel, accounting for a generation capacity of 126 MW. In addition to the environmental impact, this generation capacity is often unreliable.
The government plans to replace thermal generation with sustainable power by investing in multiple green energy sources. Over the short term, the increase in demand will be met by additional electricity imports from Ethiopia through a second interconnection line that is under construction. The country is looking to geothermal energy – with a total potential of 1000 MW – as well as on developing solar, wind, biomass and green hydrogen production.
Increasing Share
Although policymakers initially aimed to reach the 100% renewable energy goal as soon as 2025, the deadline was postponed to 2035 due to the sizeable investment needed along with regulatory reform and supporting infrastructure. The use of renewable energy will prove beneficial for the environment and the economy.
The construction of the 60-MW Ghoubet wind farm has concluded. Its energisation phase is expected to end by the first quarter of 2023. It was built by the Spanish-German contractor Siemens Gamesa and covers an area of 395 ha near Lake Assal. The project is being financed by a public-private partnership between the government and several investors, including the Africa Finance Corporation; FMO, the Dutch Entrepreneurial Development Bank; and Great Horn Investment Holding.
In May 2020 the government approved a 30-MW solar generation unit to be built in the Gran Bara Desert in southern Djibouti. French contractor Engie was selected to manage the $40m project under a develop, construct and operate public-private partnership. However, Engie withdrew from the project as it divested its business in Africa in April 2022. In an interview with regional media in April 2022 Djibouti’s President Ismaïl Omar Guelleh said another contractor would take over the project. The output will be sold to the state utility Electricité de Djibouti. The project will be part of a larger solar complex to be built at a cost of $390m with a generation capacity of 300 MW.
In August 2020 the government signed an agreement with US-based firm CR Energy Concepts to set up a $190m renewable energy park to generate biomass energy out of urban waste. The project was expected to add 35 MW to the generation capacity. At the same time, the country is looking to exploit the potential of green hydrogen reserves. In July 2022 the authorities signed a contract with Australian firm Fortescue Future Industries to study the potential of the resource.
Track Record
The speed and outcome of these projects will determine the attainability of Djibouti’s renewable energy plans. Established technologies such as solar and wind energy will be relatively easy to replicate in Djibouti. These projects will be an important signal to both foreign and domestic investors of the potential and stability of the market, and the impact of the regulatory environment on business projections.
In the long run, the decision to diversify electricity generation sources and increase domestic production, while reducing dependence on imports from Ethiopia, will be a positive step towards energy sovereignty and the goals outlined in Djibouti Vision 2035.
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