Djibouti's Geothermal Potential and the Cost of Power

Djibouti has substantial geothermal potential and has historically imported a significant share of its electricity, a mismatch rooted in the difficulty and cost of geothermal development rather than in the resource itself.

The geology is favourable. Djibouti sits at the junction of three tectonic plates in the Afar triple junction, one of the most volcanically active regions on earth, where the East African Rift meets the Red Sea and Gulf of Aden rifts. Lake Assal, at 155 metres below sea level, is the lowest point in Africa. Areas around Lake Assal, Fiale and Hanle have been investigated for geothermal development over several decades.

The obstacle is exploration risk. Geothermal requires drilling deep wells before anyone knows whether a field is commercially productive. Those wells are expensive, and a dry hole is a total loss. Private capital is reluctant to carry that risk, and concessional finance for exploration is therefore usually the precondition for development.

The alternative supply has been imported Ethiopian hydropower, delivered over an interconnection, plus domestic thermal generation running on imported fuel. Both have drawbacks: the first creates dependency on a neighbour's grid and hydrology, the second is expensive and exposed to fuel prices.

Solar and wind resources are also strong, with high irradiation and consistent coastal wind. Their intermittency makes them complementary to, rather than a substitute for, the baseload that geothermal would provide.

The stakes are larger than domestic supply. Reliable, affordable power is the precondition for the data centre ambition and for any industrial activity in the free zone.