Djibouti, a geothermal model?
One of the curious ironies within this renewable energy debate is that regions of the world that have the least access to capital investment may be most ripe for adopting new ways to provide energy for its citizens. At solar power conferences that I've recently attended, there's been a lot of buzz over Africa. At first I raised my eyebrows, but then the logic settled in. Wide swaths of land within African nations lack infrastructure--forget utilities lines, we're talking roads. There is no incentive for power companies to expand their reach within rural regions if they cannot even safely and efficiently move and build there in the first place! However, in areas that receive much sunlight, solar panel installations can provide electricity at a price much more cost effectively than fossil-based fuels. Likewise, turbines can provide much needed power to people living where the winds are strong.
One country betting on renewable energies sparking economic growth is Djibouti. This tiny country is one of Africa's youngest nations; once known as the French Territory of Afars and Issas, this small country, a little larger than New Jersey, gained its independence from France in 1977. Despite its proximity to the oil-rich Arabian peninsula, Djibouti has no fossil fuel sources of its own. Lack of resources in general has led to high unemployment, almost no industry, and a huge national debt. Although Djibouti is part of a Northeast Africa free-trade zone, citizens haven't felt the Hong Kong or Shenzhen effect, as they have had a difficult time affording the most basic of necessities: as with energy, most food is imported. After all, free trade means nothing of one party has nothing to trade.
Pollution is a concern in Djibouti; as kerosene prices have increased, citizens have tried cooking their food using wood or charcoal, which is already scarce in this arid nation. Diesel, purchased on the spot market, creates most of the electricity, sending emissions into the air and taking too much of locals' take-home pay. Combine diesel and wind burning, and you can only imagine the health effects. Despite Djibouti's business leaders' attempts to make their small country a hub for telecommunications and services, unreliable and costly energy sources have scared off foreign investment.
An answer awaits in central Djibouti. Between Lake Ghoubet and Lake Assal, lies the Asal Rift. This valley hosts huge potential for geothermal power. In 2008, Reykjavík Energy Invest (REI) signed an agreement with the government of Djibouti that will potentially harvest up to 7,000 megawatts of power. Partnering with IFC InfraVentures, the World Bank, and the Clinton Global Initiative, REI's $150 million project should start running 2012. So what's the connection? Once powered by mostly fossil fuels during the 1970s, Iceland, one of the smallest countries in Europe, now generates most of its electricity from sustainable sources. Despite the distractions of Iceland's economic worries at home, REI estimates the financing of the current phase will be closed in late September. The firm is vetting companies for drilling services, and later this year, the first of three wells will be drilled. By May 2010, this first well should be fully functioning.
Such investment is what African nations have sought and deserved. For too long this continent was a pawn in the cold war geopolitical struggles of old, with huge wads of cash profligately wasted by corrupt leaders. Too often this continent and people have been misunderstood by outsiders. Projects like the Asal Rift geothermal initiative will help struggling countries give its people opportunity. Over 40% of households in Djibouti do not have electricity: and 70% of these families suffer from abject poverty. With a clean, homegrown source of power, this nation of 500,000 should have the building blocks to build a brighter, and cleaner, future. Think of the slogan: Djibouti, a clean Dubai . . .