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AfrElec COMMENTARY AfrElec
Siemens’ Djibouti deal highlights opportunities for utility-scale wind
Siemens Gamesa is to supply 59MW of turbines to Djibouti’s pioneering wind farm as wind surges forward in Africa, writes Richard Lockhart
DJIBOUTI
WHAT:
Siemens is confirmed as turbine supplier for Djibouti’s 59MW, IPP wind farm
WHY:
Siemens is looking to expand its share of the recovering African market
WHAT NEXT:
The Djibouti project
is a prime example of African investors driving utility-scale wind farms that can boost industrial development
EAST Africa’s utility-scale wind sector received a much-needed boost this week as Siemens Gamesa confirmed that it would supply 17 tur- bines for an Africa Finance Corporation (AFC)- led, 59-MW wind farm in Djibouti.
The news comes after utility-scale wind addi- tions in Africa and the Middle East dipped by 7% in 2019 to 894MW.
Investors, both private and development finance (DFI), face a number of barriers in devel- oping bankable wind farms in the region.
The Global Wind Energy Council (GWEC), which published the 7% drop, found that pro- jects must overcome poorly developed policy and power market frameworks, transmission infrastructure bottlenecks and high off-taker risk.
However, the 59-MW wind farm in Djibouti has attracted support from African investors and is supported by a government that already has a 25-year power purchase agreement (PPA) in place with state utility Electricite de Djibouti.
The project offers better prospects for East Africa. With 10.7 GW of new wind installations forecast for Africa and the Middle East between 2020 and 2024, according to the GWEC, the region is set for renewed growth.
Wind farm
Siemens Gamesa is to supply 17 turbines to a 59MW wind farm project in Djibouti led by African infrastructure investor Africa Finance Corporation (AFC).
Siemens Gamesa is to provide its SG 3.4-132 turbine model to a 395-hectare site in the Goubet area in the Gulf of Tadjoura.
The AFC, which is funded by a number of African governments, is investing $63mn in the project, Local state-owned partner Great Horn Investment Holdings, blended finance specialist Climate Fund Managers and Dutch develop- ment bank FMO are the AFC’s partners. The funding for the project is in the form of equity financing.
The project is covered by the World Bank’s Multilateral Investment Guarantee Agency for $100.81mn.
The project is the country’s first utility-scale renewables plant and will double available its
grid capacity, which is currently dominated by fossil fuels, predominantly dirty and expensive imported fuel oil. The AFC said that only around half of its 100 MW of capacity reliably available for a population of 1mn people. The wind farm will be operational in mid-2021.
This is Siemens Gamesa’s first wind project in Africa to be led by an African investor.
The consortium has already signed a 25-year Power Purchase Agreement (PPA) with state utility Electricite de Djibouti.
The AFC said it was investing in Djibouti as the country has a number of large-scale infra- structure projects in development, including ports, free-trade zones and railways.
AFC project development and investments vice-president Osaruyi Orobosa-Ogbeide said: “We believe that this project is the beginning of a new partnership and we will be relying on Siemens Gamesa’s extensive experience in the region to deliver on the project within the stipu- lated timeframe.”
The AFC said that the wind farm would ena- ble clean energy supply, decrease the cost of elec- tricity and allow the country’s population and its key industries to “strengthen its electrical inde- pendence and economic development.”
Siemens
Siemens Gamesa chief executive Markus Tacke said: “Access to affordable energy is key to sup- porting long-term sustainability and economic growth.
“Industrialisation, agricultural improve- ment or even the expansion of municipal water systems depend on reliable and cost-effective energy access.
“This project is another step in Siemens Gamesa’s commitment to shaping a sustainable future for Africa.”
Indeed, Siemens Gamesa in 2019 won a con- tract from Egyptian IPP Lekela Power to supply 250MW of turbines to the West Bakr wind farm in Egypt.
This would raise Egypt’s wind capacity to 1,650MW and support Cairo’s target of 20% wind by 2020 and 42% by 2035.
Siemens Gamesa has now completed eight wind farms in Egypt with 1,200MW of capacity,
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w w w. N E W S B A S E . c o m Week 08 27•February•2020