Large-Scale Wind Power Generation
Large-Scale Wind Power Generation
Business Model Description
Invest in or provide project financing for large-scale wind power generation in farms equipped with advanced turbines to provide local power to end consumers or sell the generated capacity into the national energy grid.
Expected Impact
Increase access to energy, enhance economic productivity, and reduce carbon emissions.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Djibouti: Tadjourah
- Djibouti: Ali Sabieh
- Djibouti: Djibouti (City)
Sector Classification
Renewable Resources and Alternative Energy
Development need
Only 55% of Djibouti's population has access to electricity. This is an obstacle to the development of the country because it affects the wellbeing of households and the productivity of corporates (1). The country experiences high energy demand driven by economic growth and the geographic expansion resulting from the rapid urbanization of the capital and regions (2).
Policy priority
The Horn of Africa Initiative prioritizes the development of regional energy markets, and the African Development Bank support the Ethiopia-Djibouti Second Power Interconnection project (27). Djibouti's Government, in partnership with Power Africa, has the goal of achieving 100% access to electricity within the Vision 2035, using exclusively renewable energy sources (3).
Gender inequalities and marginalization issues
Renewable energy globally employs about 32% women, compared to 22% in the energy sector overall (7), and expanding the sector can generate new jobs for women. Energy access for women also contributes to poverty reduction, saving time by substituting manual labor and reduces drudgery of fetching fuel wood and water, tasks typically women are responsible for. Access to energy also improves education, as it enables studying after sunset and greater flexibility in the organization of everyday chores (8).
Investment opportunities introduction
The Government is encouraging private-public partnerships to expand Djibouti’s renewable energy potential. This offers an opportunity for the private sector to fill the energy investment gap in the country within the renewable energy sector (5).
Key bottlenecks introduction
Slow implementation of the Independent Power Producers (IPPs) law, reliance on electricity imports, technical losses, weak supply infrastructure and over-reliance on the public sector are challenges Djibouti's energy sector faces (6).
Alternative Energy
Development need
Djibouti has significant unexploited potential in wind energy (6). Ghoubet zone, near Assal Lake, is the windiest area of Djibouti with a speed of 9 m/s during a large part of the year, which provides on average 4,000 hours of exploitable wind per year (3).
Policy priority
The Government is committed to investing in alternative energy, especially solar, wind and geothermal energy (4). Djibouti set out with a goal to obtain 100% thermal energy by 2010 and 100% renewable by 2020 (6).
Gender inequalities and marginalization issues
Clean energy reduces indoor air pollution levels and hence improves health conditions compared to polluting energy forms such as wood fuel and kerosene-intense cooking stoves, which particularly supports the position of women and other family members (8).
Wind Technology and Project Developers
Pipeline Opportunity
Large-Scale Wind Power Generation
Invest in or provide project financing for large-scale wind power generation in farms equipped with advanced turbines to provide local power to end consumers or sell the generated capacity into the national energy grid.
Business Case
Market Size and Environment
Ghoubet zone alone offers 4,000 hours of exploitable wind per year.
Djibouti has formidable wind resources (6). Ghoubet zone, near Assal Lake, is the windiest area of Djibouti with a speed of 9 m/s during a big part of the year, providing in average 4,000 hours of exploitable wind per year (3).
Only 55% of Djibouti's population has access to electricity (1), which leaves 110,000 households without power (13).
Djibouti envisages a full transition from 100% fossil thermal energy in 2010 to 100% renewable sources, which requires significant investment (6).
Indicative Return
15% - 20%
The Potou Wind Power Plant in Senegal, with a capacity of 25 MW, exhibits an IRR of 17% (11).
Investment Timeframe
Medium Term (5–10 years)
The Potou Wind Power Plant in Senegal, with a capacity of 25 MW, has a payback period of 5 years (12).
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Business - Business Model Unproven
Business - Supply Chain Constraints
Market - Highly Regulated
Impact Case
Sustainable Development Need
Only 55% of Djibouti's population has access to the electricity (1), leaving nearly half of the country with limited social and economic development opportunities.
Djibouti has a high wind power potential for Djibouti, which is currently unutilised. The Ghoubet region alone records 4,000 hours of usable wind per year (6). Despite this potential, the share of fossil fuels in Djibouti's total energy consumption is high and stands at around 72% (21).
Unemployment for Djibouti is reported to be 11.57% in 2020 (22) and it massively affects Djiboutian youth (6), pointing towards the crucial need for job creation.
Gender & Marginalisation
In Djibouti, only 19% of women are employed, compared to 81% of men (16). Employment levels are generally lower in rural areas of the country since most of the economic activity is concentrated in Djibouti City.
Communities lacking access to electricity have lower opportunities to pursue productive opportunities, and women and children particularly suffer from unstable electricity supply.
Expected Development Outcome
Wind energy provides for improved access to energy resources for households through lower energy costs and reduced electricity outages.
Wind energy is a clean fuel source, and is associated with improved environmental conservation (18).
Wind energy creates employment opportunities thanks to its potential to support more than 600,000 jobs in manufacturing, installation, maintenance, and supporting services by 2050 (18).
Gender & Marginalisation
Large-scale wind generation improve job opportunities for women and rural communities, where installations are expected to be located.
Primary SDGs addressed
7.1.1 Proportion of population with access to electricity
7.2.1 Renewable energy share in the total final energy consumption
As of 2018, 60% of Djibouti's population has access to the electricity (22).
Djibouti's renewable energy share in the total final energy consumption is 27.83% (21).
Djibouti aims to meey 100% of energy demand from renewable resources in line with Vision 2035. The initial goal was to reach the target by 2020 (20).
N/A
13.2.1 Number of countries with nationally determined contributions, long-term strategies, national adaptation plans, strategies as reported in adaptation communications and national communications
N/A
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
Planet
Corporates
Public sector
Outcome Risks
Wind turbines may be a threat to wildlife. Spinning blades may cause harm to animals like birds and bats, and installations can disturb wildlife in its natural habitat due to degradation (16).
Wind turbines may create noise pollution. The sound produced by one turbine can be perceived from far distances, which may cause discomfort to both people and animals (17).
Impact Risks
If stakeholder buy-in from local affected communities cannot be cultivated at scale, the expected impact may be limited due to the low number and / or size of wind power installations.
If tariff levels for electricity generated from wind are not competitive against traditional energy sources, uptake by Djibouti's population may be limited.
Impact Classification
What
Large-scale wind power generation in farms equipped with advanced turbines increases access to clean and affordable energy, enhances economic productivity and reduces carbon emissions.
Who
The environment and energy consumers who are underserved due to a lack of sufficient cheap and clean energy are provided with efficient and stable power supply.
Risk
While the wind power model is proven, energy storage requirements and nature and wildlife dynamics of the wind farms require consideration.
Impact Thesis
Increase access to energy, enhance economic productivity, and reduce carbon emissions.
Enabling Environment
Policy Environment
Djibouti Vision 2035, 2014: Envisages a transition from fossil thermal energy to renewables; and seeks to increase electrification rates to 60%, increase share of renewable energy to 87-100% of energy mix, reform the electricity utility, extend the power grid and establish new interconnections (6).
Strategy for Accelerated Growth and Employment Promotion (SCAPE) 2015-2019, 2014: Highlights the development and use of renewable energies, such as wind, as an important part of the energy priorities in Djibouti (23).
National Strategy and Five-Year Action Plan for the Development of the Electricity Sectorn, n.d / forhcoming: Provides the direction for the approach, responsibilities and sources of finance for conventional and decentralized electrification and for promoting renewable energy sources (20).
Financial Environment
Financial incentives: As part of the effort to increase electricity access by low income households, a new law is under preparation to lower connection fees from their present levels of USD 280-350 (20), which would favor investors with expected higher numbers of potential customers.
Other incentives: The Government encourages public-private partnerships (PPP) to expand Djibouti’s renewable energy potential (5). Unité PPP is the public body supporting such partnerships in the country, including a wind power plant project in Ghoubet region, especially with Fonds PPP (29).
Regulatory Environment
Law No. 88, 2019: Seeks to reduce the costs of electricity; favor the production of electricity from renewable energy sources; ensure a production that is adequate as regards to volume, frequency, and quality; and ensure the energy independence of Djibouti (19).
Decree No. 013, 2019: Provides the regulatory framework that aims to facilitate private investment in the sector of electricity production (19).
Decree No. 280, 2019: Outlines the approval of Djibouti's wind power project concession contracts (28).
Law No. 186, 2017: Establishes Djibouti's Public-Private Partnership Act, which may be of relevance for large-scale wind projects, following the Executive Decision No. 045 of 2016 to establish a committee on the creation of a national legal and regulatory framework of 2016 (26).
Marketplace Participants
Private Sector
Siemens Gamesa, ENERTEC, Red Sea Drilling Company (RSDC), Climate Investor One, Great Horn Investment Holdings (GHIH).
Government
Ministry of Energy and Natural Resources, Ministry of Economy and Finance, Electricité de Djibouti, Djibouti Social Development Agency (ADDS), Djiboutian Agency for Energy Management (ADME), National Investment Promotion Agency.
Multilaterals
Islamic Development Bank (IsDB), Investment and Development Bank of the Economic Community of West African States, African Development Bank (AfDB), World Bank, United Nations Development Programme (UNDP), European Union (EU), Global Environment Facility (GEF).
Non-Profit
French Development Agency (AFD), Japanese Government, Centre for Studies and Scientific Research of Djibouti, University of Djibouti, Djibouti Chamber of Commerce.
Public-Private Partnership
A consortium led by the Africa Finance Corporation, the Dutch Development Bank FMO, Climate Investor One and Great Horn Investment Holdings will be developing the Ghoubet Wind Farm and has signed a power-supply agreement with Electricité de Djibouti (24).
Target Locations
Djibouti: Tadjourah
Djibouti: Ali Sabieh
Djibouti: Djibouti (City)
References
- (1) PNUD Djibouti. 2018. Plan Cadre des Nations Unies pour l'Aide de Developpement 2018-2022. https://www.undp.org/sites/g/files/zskgke326/files/undp/library/corporate/Executive%20Board/2018/First-regular-session/DPDCPDJI3_UNDAF%20Final.pdf.
- (2) Ministère des Affaires Etrangères et de la Coopération Internationale. 2015. Evaluation a mis parcours du programme d'action d'Istanbul. http://unohrlls.org/custom-content/uploads/2015/12/Djibouti-National-Report-to-the-Midterm-Review.pdf.
- (3) The Business Year. Djibouti Embraces Renewables. 2020. https://www.thebusinessyear.com/djibouti-renewable-energy-investment-promises-50-percent-contribution-2-years/focus.
- (4) Ministère de l'Habitat, de l'Urbanisme, de l'Aménagement duTerritoire et de l'Environnement. 2012. Rapport National sur le development durable RIO+20. https://sustainabledevelopment.un.org/content/documents/1011DjiboutireportRio+20.pdf.
- (5) Republic of Djibouti. 2015. Strategie de croissance accelere et de croissance d'emploie. https://planipolis.iiep.unesco.org/sites/default/files/ressources/djibouti_scape-francais.pdf.
- (6) Republic of Djibouti. 2014. Vision Djibouti 2035. http://ccd.dj/w2017/wp-content/uploads/2016/01/Vision-Nationale.pdf.
- (7) International Renewable Energy Agency (IRENA). 2019. Renewable Energy: A Gender Perspective. https://www.irena.org/publications/2019/Jan/Renewable-Energy-A-Gender-Perspective.
- (8) ENERGIA. 2021. International Network On Gender And Sustainable Energy. When women have access to energy. https://www.energia.org/case-gender-perspective-energy-access.
- (9) Siemens Gamesa. 2012. Renewable Energy. https://www.siemensgamesa.com/en-int.
- (10) Enertec SARL. 2021. Renewable and alternative energy. https://www.enertec-sarl.com.
- (11) Federal Republic of Nigeria. 2017. Implementation of the SDGs: a national voluntary review. https://sustainabledevelopment.un.org/content/documents/16029Nigeria.pdf.
- (12) Private Financing Advisory Network. 2019. West Africa Forum for Climate & Clean Energy Financing Project Snapshots. https://www.afdb.org/fileadmin/uploads/afdb/Documents/Generic-Documents/WAFCCEF-3_Project_Snapshots.pdf.
- (13) USAID. 2020. Djibouti - Power Africa Sheet. https://www.usaid.gov/powerafrica/djibouti.
- (14) Chisika and Yeom. 2021. Enhancing Sustainable Development and Regional Integration through Electrification by Solar Power: The Case of Six East African State. https://doi.org/10.3390/su13063275.
- (15) Borgen Project. 2020. Women's right in Djibouti and what US is doing to help. https://borgenproject.org/womens-rights-in-djibouti.
- (16) Office of Energy Efficiency & Renewable Energy. 2021. Environmental Impacts and Siting of Wind Projects. https://www.energy.gov/eere/wind/environmental-impacts-and-siting-wind-projects.
- (17) Conserve Energy Future. 2021. Wind Energy Facts. https://www.conserve-energy-future.com/various-wind-energy-facts.php.
- (18) Office of Energy Efficiency & Renewable Energy. 2021. Advantages and Challenges of Wind energy. https://www.energy.gov/eere/wind/advantages-and-challenges-wind-energy.
- (19) AfricaDroit, Association Internationale des Juristes. 2019. Production of Electricity in Djibouti – A new Regulatory Framework favoring Renewable Energy. https://africadroit.com/2019/09/13/production-of-electricity-in-djibouti-a-new-regulatory-framework-favouring-renewable-energy.
- (20) International Renewable Energy Agency (IRENA). 2015. Djibouti Renewable Readiness Assessment. https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2015/IRENA_RRA_Djibout_2015_EN.pdf.
- (21) UN Global SDG Database. 2021. SDG Indicators. https://unstats.un.org/sdgs/indicators/database.
- (22) Sustainable Development Report. 2021. Country Profiles: Djibouti. https://dashboards.sdgindex.org/profiles/djibouti.
- (23) Republic of Djibouti. 2015. Strategie de Croissance Accélérée et de Promotion de l'Emploi. https://economie.gouv.dj/wp-content/uploads/de95d383afef8bcbe0a3bc609a7f5c76.pdf.
- (24) The Business Year. 2020. Djibouti Embraces Renewables. https://www.thebusinessyear.com/djibouti-renewable-energy-investment-promises-50-percent-contribution-2-years/focus.
- (25) UNEP. 2021. Energy Profile Djibouti. https://wedocs.unep.org/bitstream/handle/20.500.11822/20491/Energy_profile_Djibouti.pdf?sequence=1&isAllowed=y.
- (26) World Bank. 2018. Port Development and Competition in East and Southern Africa: Prospects and Challenges. https://documents1.worldbank.org/curated/en/963231561663013431/pdf/Country-and-Port-Fact-Sheets-and-Projections.pdf.
- (27) Horn of Africa Initiative (HoAI). 2021. African Development Fund approves grants for $83.6 million to boost Ethiopia-Djibouti electricity trade. https://hoainitiative.org/african-development-fund-approves-grants-for-83-6-million-to-boost-ethiopia-djibouti-electricity-trade.
- (28) Republic of Djibouti. 2019. Décret N° 2019-280/PR/MERN portant approbation du contrat concession du projet éolien. https://www.presidence.dj/texte.php?ID=2019-280&ID2=2019-11-05&ID3=D%E9cret&ID4=21&ID5=2019-11-14&ID6=n.
- (29) Republic of Djibouti. Unité PPP. https://unite-ppp-djibouti.com/missions-de-la-dgppp/.