Dr. Kayad moussa, General Manager, ODDEG Iceland Geothermal Conference 2018 - Breaking the Barriers 24 - 27 April, 2018, Harpa, Reykjavík

1. ODDEG
Dr. Kayad moussa
General Manager
Djibouti Geothermal Energy
Strategy and Action Plan

2. ODDEG
The GoDj Recognized that;
❖ 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 was lack 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 upfront risks 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

5. ODDEG
ODDEG DEVELOPMENT
STRATEGY
250 MW

6. ODDEGCritical Considérations
❖ There’s strong 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 AND REGULATORY
FRAMEWORK BEING DEVELOPED

11. ODDEGInstitutional challenges
❖ Creation of 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
❖ Projects to 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
❖ Various tools 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
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14. ODDEG
DEVELOPMENT A LEGAL
AND REGULATORY
FRAMEWORK

15. ODDEG
The government of Djibouti 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.
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17. ODDEGEXPECTED OUTPUT
Timeframe for the 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 to be 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.
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19. ODDEGGeothermal Energy
Djibouti Geothermal Sites
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
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21. 23 www.redseadrilling.
com
GEOTHERMAL, OIL & GAS DRILLING
Drilling Depth Capacity
4000m (8-1/2inch)
DRILLING RIGS ODDEG

22. ODDEGGeothermal Energy
Djibouti Geothermal Sites
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 SCHEDULE FOR 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 SCHEDULE FOR 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 been made 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