Who is our client
The project concerns the funding of the development of a 60MW windfarm Independent Power Plant (IPP) in Djibouti. The project is planned to support about 40-50% of the current Djibouti power demand at a competitive rate and is expected to replace partly inefficient and polluting thermal power, and possibly prevent further expansion of polluting energy industry.
Building Prospects funding will be used for the construction of the project for a total amount of more than USD 100 mln. Building Prospects co-invested in this transaction with the Access to Energy Fund, with a total of USD 25 mln in the project. Partner investors will fund the remainder. The project will sell its electricity under a Power Purchase Agreement (PPA) to Electricité de Djibouti, the Djibouti state-owned utility. Building Prospects had already funded approx. USD 1mln to finance the development phase of the project. Development has now been finalized and construction will commence.
Why we fund this project
The transaction is expected to have a high impact in terms of local sustainable development. It will bring about an estimated 322-331 Gwh/yr of renewable power to Djibouti, increasing Djibouti’s generation capacity by 40-50% and replacing expensive, polluting diesel/HFO generated inefficient power, as well as possibly preventing further expansion of polluting energy industry. The project is a priority project of the Djibouti government given the growing demand for (renewable) power resulting from ongoing industrial and public infrastructure investment programmes. The project intends to contribute towards SDG 7 through the provision of additional, renewable energy capacity and SDG 8 by creating employment opportunities in a remote area. For dispatch, the project will connect to a new transmission line, for which construction is planned to start early 2018 by Chinese contractors and Chinese funding, linking the project to Djibouti City and the not yet connected Tadjourah town.
The project fits well with Building Prospect’s strategy and focus on renewable energy: (i) it is a renewable energy project that will increase the share of renewables in Djibouti’s energy mix, to date completely based on fossil fuels; (ii) the project will increase the share of Djibouti’s own generation, improving the country’s energy self-reliance and reducing energy costs; (iii) FMO’s funding is highly additional, since providing construction and development funding is very scarce in Djibouti; and (iv) it is the first Independent Power Producer (IPP) in Djibouti (LMIC income class) representing an opportunity for FMO to support the Djibouti government’s renewable strategy by providing expertise and guidance in the energy IPPs financing and execution.
Building Prospects investment | EUR 11.5 mln
Instrument | Equity