For-profit investment management firm Climate Fund Managers inaugurated Djibouti’s first-ever utility-scale wind energy facility: the 60 MW Red Sea Power plant located near Lake Goubet.
Representing the first Independent Power Producer-led and grid-integrated renewable energy facility in the country, the project will increase the country’s power generating capacity by 50% while offsetting up to 252,500 tons of greenhouse gases annually.
The project was financed through a blended approach, with Andrew Johnson, CEO of Climate Fund Managers, stating that, “Ground-breaking transactions like this are immensely challenging to fund with traditional project finance…” and that “Blended finance combines both concessional and commercial capital, enabling investors to take a higher share or risk and providing a single source of funding from development to operation.”
Developed through a partnerships between Climate Fund Managers, Red Sea Power Limited, the Africa Finance Corporation, Dutch investment firm FMO and Great Horn Investment Holding, the $122 million project will provide electricity to over 314,000 people through a long-term Power Purchase Agreement signed with state utility Electricité de Djibouti.
With 38% of the country’s 1.1 million people currently living without access to energy, the facility is expected to bolster energy security and economic growth in the country.
According to Francois Maze, CEO of Red Sea Power, “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.”
Maze added that the inauguration “is an important milestone in Djibouti’s aim to be entirely served by renewable energy sources by 2035.”