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B2 - Djibouti Geothermal Energy Strategy and Action Plan from 2018 to 2021
The document outlines Djibouti's strategy for developing geothermal energy, emphasizing its importance in transforming the country into a green economy, with plans to harness geothermal potential through partnerships and investment strategies. Key challenges include the need for a regulatory framework, addressing high upfront costs, and building human capacity while attracting private investment. The document also details various development models and the government's commitment to creating an effective policy environment to foster geothermal energy growth.
B2 - Djibouti Geothermal Energy Strategy and Action Plan from 2018 to 2021
- 1. ODDEG Dr. Kayad moussa GeneralManager Djibouti Geothermal Energy Strategy and Action Plan
- 2. ODDEG The GoDj Recognizedthat; ❖ Geothermal will play a leading role; transform the country into a green economy. ❖ A first successful geothermal project in Assal can be replicated in other potential areas in the country. ❖ Geothermal development stands to benefit from blending of concessional, climate change finance and private sector investments. ❖ Will help achieve a transformative impact when properly used for power generation and direct use. ❖ High up-front investment costs associated with high geothermal development resource risk can hinder fast development of this resource unless addressed. Government Policy
- 3. ODDEG Recognized; ❖ There waslack of capital risk insurance for private sector investment ❖ Lack of specific laws and regulations governing geothermal resources ❖ Lack of geothermal equipment and resources for applied research and development ❖ Low awareness and limited information about geothermal energy, estimated ressource potential and available technologies ❖ There was need to form ODDEG an SPV to develop strategies that will establish the geothermal potential, identify targets and define clear implementation and investment plans for accelerated development Government Policy
- 4. ODDEGODDEG Mandate 4 ❖Remove upfrontrisks and reduce costs • Help the government to think (develop strategies) • infrastructure, surface exploration and drilling Upfront Risks and Costs ❖Promote direct uses of geothermal • Industrial process heat, floriculture, aquaculture and others Direct Use ❖Develop human capacity • Train a core team and manage public resources • Provide capacity base to support a dynamic industry Capacity Development ❖Support GoD in fund mobilization • Technical input -policies, strategies and regulations • Develop projects to a bankable stage (feasibility) • Engage Investors and assess investment appetites Funding ❖Support Private Sector entry • Handle land and community issues • Facilitate local licensing • Evaluate and recommend technologies to IPP’s • Facilitate 250MW by ODDEG/IPP 2027 Power Plant
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- 6. ODDEGCritical Considérations ❖ There’sstrong interest from donors in supporting green energy -geothermal development in Africa ❖ Need to diversify financing and optimize complementarity between investors/donors to leverage existing resources ➢ Grants from donors for early stages to demonstrate potential (site identification, resource exploration drilling), feasibility studies, capacity building ➢ Concessional loans for public investment ❖ Private sector involvement to speed-up development ❖ Encourage non-traditional geothermal investors ❖ Risk mitigation/insurance instruments for early stages 8
- 7. ODDEGDevelopment Model –Option I (Galla Le Koma) ODDEG INFRASTRUCTURE AND EXPLORATION DRILLING APPRAISAL AND PRODUCTION DRILLING FEASIBILITY STUDY PRODUCTION DRILLING AND CONSTRUCTION OF STEAM GATHERING SYSTEM CONSTRUCTION & OPERATION OF POWER PLANT ODDEG Sale of steam ENVIRONMENTAL IMPACT ASSESSMENT AND ENVIRONMENTAL MANAGEMENT PLAN ODDEG EPC
- 8. ODDEGDevelopment Model –Option II (NORD Goubhet) IPP 80%, ODDEG 20% INFRASTRUCTURE AND EXPLORATION DRILLING APPRAISAL AND PRODUCTION DRILLING FEASIBILITY STUDY PRODUCTION DRILLING AND CONSTRUCTION OF STEAM GATHERING SYSTEM CONSTRUCTION & OPERATION OF POWER PLANT IPP Sale of steam ENVIRONMENTAL IMPACT ASSESSMENT AND ENVIRONMENTAL MANAGEMENT PLAN/IMPLEMENTATION IPP/ODDEG EPC
- 9. ODDEGDevelopment Model –Option III (Fiale) ODDEG (20-40%) INFRASTRUCTURE DEVELOPMENT/ EXPLORATION DRILLING APPRAISAL DRILLING AND FEASIBILITY STUDY PRODUCTION DRILLING CONSTRUCTION AND MANAGEMENT OF STEAM GATHERING SYSTEM CONSTRUCTION & OPERATION OF POWER PLANTIPP Sale of steam ENVIRONMENTAL IMPACT ASSESSMENT AND ENVIRONMENTAL MANAGEMENT PLAN ODDEG & JDP ODDEG Joint Development partner (60%)
- 10. ODDEG ENABLERS GOVERNMENT POLICY ANDREGULATORY FRAMEWORK BEING DEVELOPED
- 11. ODDEGInstitutional challenges ❖ Creationof a special purpose dedicated Geothermal development entity - ODDEG ➢ ODDEG has been fully mandated by the Government ❖ ODDEG was granted independence a) Specific Geothermal Act with it’s regulations b) Effective delegation of authority with defined roles c) Empowered to make operational decisions d) Reporting periodically to a parliamentary committee ❖ Strong Government financial commitment ❖ Choice of PPP structure was determined by and aligned with a sector-wide strategy and policy ❖ The sector-wide strategy is aligned to the East African power pool (EAPP). ❖ The strategy clearly defines the public and private roles ❖ The PPP is structured to also benefit from Funds & market size under a single window within EAPP.
- 12. ODDEGCommercial Challenges ❖ Projectsto be based on long term contracts a) Long term contracts to manage commercial risk (At least 25 years) b) Project design to emphasize financial sustainability instead of low tarrif c) Structured as predictable commercial contracts d) A successfully implimented contract is incentive ❖ Early negotiation of commercial contracts a) Contracts to be negotiated after feasibility report b) Negotiations to be driven by the Investor, ODDEG (Sponsor) and EDD (Off-taker) c) Government to stay at arms length and only give support through quarantee d) Transparency is important to all contracts
- 13. ODDEGCommercial Challenges ❖ Varioustools available for supporting investment in geothermal a) Reducing up-front costs (grants for research, drilling and demonstration, investment tax incentives) b) Increasing financial returns (production tax incentives, reducing cost of licensing) c) Reducing risks (drilling risk insurance schemes, risk mitigation funds, feed-in-tariffs, guarantees, provision of data from surface exploration and drilling performed by government agencies) ❖ National energy policies, established pricing of energy/FiT, credit risk/cost of capital, political stability ❖ Constituted a Geothermal Advisory Group that increases confidence and helps to reduce risk perception/premium ❖ Cost based pricing and established a minimum/Maximum ROE for investors 9
- 14. ODDEG DEVELOPMENT A LEGAL ANDREGULATORY FRAMEWORK
- 15. ODDEG The government ofDjibouti has expressed interest in developing 250MW of geothermal Power within the next 10 years. However, the government recognizes the existence of some challenges/barriers to fast tracking the development of this resource. These include: a. Absence of a clear, legislation and regulatory framework to attract finance and private developers in terms of Public Private Partnership (PPP)/Independent Power Producers (IPP) b. Although ODDEG was formed to FastTrack geothermal resource development, there’s need for alignment and clarity in the roles and responsibilities in the geothermal development framework c. Lack of skilled manpower and equipment The Need for an aligned Regulatory framework
- 16. ODDEGCritical Considérations Through ODDEG,the government plans to attract as many experienced and financially capable private developers and financiers as possible to be involved in geothermal power development. This requires ODDEG to; a. Engage with stakeholders and actively market Djibouti’s geothermal resources as a competitive source of Power and direct use b. Support the Government’s effort to attract funding and investment in Geothermal Energy for rapid development. c. Champion and hold the custodial responsibility of ensuring a viable and holistic geothermal resources development model is implemented. d. Assist the industry to attain financial sustainability through prudent financial mobilization and management e. Build a strong Human Resource capability that will sustain a robust geothermal industry in the country. 8
- 17. ODDEGEXPECTED OUTPUT Timeframe forthe consultancy is 6 months The following draft report will be the expected from this assignment: 1) Assessment of the baseline geothermal industry regulatory status; 2) Draft geothermal bill; 3) Draft geothermal rules, regulations and guidelines; 4) Draft re-alignment of the geothermal institutional framework; 5) Draft implementation strategy of the regulatory framework and guidelines
- 18. ODDEGCommercial Challenges tobe Addressed ❖ Established specific laws and regulations for geothermal addressing a) Authority issuing licenses for exploration and development of geothermal b) Systems and procedures of licensing (scope and duration) c) Ownership of steam resources d) Fees and liabilities for extraction of geothermal resources e) Steam sales Agreements ❖ Ensure consistency/sufficient provisions in other related laws and regulations a) Links mainly with Energy, Environmental management, Mining and Groundwater laws b) Legislation on land ownership, natural resource management, building legislation, investment, etc. ❖ Deal with other bottlenecks limiting investment a) Transparent procurement procedures and rules b) Customs and tax laws and procedures c) Reliable measure for PPAs d) Sovereign or any other form of guarantees e) Partial risk Guarantee(PRG), Risk Mitigation funds (RMF) ❖ Building capacity to establish a regulatory framework but also for monitoring and enforcement ❖ Included geothermal in national energy development plans ❖ Establish Policy on managing community issues in line with conventions. 8
- 19. ODDEGGeothermal Energy Djibouti GeothermalSites 8 Geothermal sites 1. Lake Abhe 12. Nord Ghoubbet (Afaî-Bolli Daar) 2. Sakalol 13. NE Ghoubet (Assa Foo) 3. Arta 14. Modayto (N Gaggade) 4. Asal Fialé 15. Obock 5. Asal gale-le-koma 16. Okililaeou (SE Gaggade) 6. Balho 17. PK 20-Ambado 7. Daggadé (W hanlé) 18. Roueli 8. Dimbir-Didir (W Gaggade) 19. Sakalol 9. Garabayyis ( E Hanlé) 20. Tadjoura 10. Karapti-san 21. Agna-Galafi (NW Hanlé) 11. Manda Inakir 22. Sud Est Ghoubbet 1000 MW
- 20. ODDEGGeothermal Energy Since 1987,this is only Drilling Program that Djibouti have carried out : Galla-Le-Koma 1 8
- 21. 23 www.redseadrilling. com GEOTHERMAL, OIL& GAS DRILLING Drilling Depth Capacity 4000m (8-1/2inch) DRILLING RIGS ODDEG
- 22. ODDEGGeothermal Energy Djibouti GeothermalSites 8 Geothermal sites 1. Lake Abhe 12. Nord Ghoubbet (Afaî-Bolli Daar) 2. Sakalol 13. NE Ghoubet (Assa Foo) 3. Arta 14. Modayto (N Gaggade) 4. Asal Fialé 15. Obock 5. Asal gale-le-koma 16. Okililaeou (SE Gaggade) 6. Balho 17. PK 20-Ambado 7. Daggadé (W hanlé) 18. Roueli 8. Dimbir-Didir (W Gaggade) 19. Sakalol 9. Garabayyis ( E Hanlé) 20. Tadjoura 10. Karapti-san 21. Agna-Galafi (NW Hanlé) 11. Manda Inakir 22. Sud Est Ghoubbet 1000 MW
- 23. ODDEGGeothermal Energy TIME SCHEDULEFOR SURFACE STUDIES 8 YEAR ACTIVITY 2018 2019 2020 2021 2022 Surface Study : Arta, NE-Ghoubbet and SE-Ghoubbet Complementary surface study : North Ghoubet and North-West Assal Surface Study : Dimbir-dirdir, Daggadé, Okililaeou and Agna Complementary surface study : Obock Surface Study Site : Tadjourah and Roueli Surface Study : Karapti-San and Balho Surface Study : Manda-Inakir and Modayto
- 24. ODDEGGeothermal Energy TIME SCHEDULEFOR DRILLING 8 YEAR ACTIVITY 2018-2019 2019-2020 2020-2021 2021-2022 Drilling and tests : Asal-Fiale and Gale le Coma Well drilling program of geothermal gradient and slim hole : PK20- Ambado Drilling and tests : Arta, Nord-Ghoubbet, Assal-Ouest and Garrabayis Drilling and tests : Dimbir-dirdir, Daggadé, Okililaeou and Agna Drilling and tests : Obock, Tadjourah and Balho
- 25. ODDEG Conclusion Progress has beenmade mainly through: ❖ Government commitment on development of: a. Policies and regulatory framework; b. A dedicated entity (ODDEG) to facilitate investment in Geothermal; c. A clearly defined investment tax regime; d. Registered with AUC for commercial risk mitigation measures for the investor (GRMF and other risk guarantees) e. Different form of guarantees ❖ Financing arrangements: a. Being developed that will be responsive to the country needs. b. Have included capacity building in all funding arrangements c. Emphasize technologies that reduce development time with added direct benefits to local communities and the environment. ❖ Develop human capacity a. 40 young engineers and technician have been trained b. Provide capacity base to support a dynamic industry