Ethiopia has abundant renewable energy resources and has the potential to generate over 60,000 megawatts (MW) of electric power from hydroelectric, wind, solar and geothermal sources. As a result of Ethiopia’s rapid GDP growth over the previous decade, demand for electricity has been steadily increasing. Despite Ethiopia’s huge energy potential, the country is experiencing energy shortages as it struggles to serve a population of over 100 million people and meet growing electricity demand which is forecast to grow by approximately 30% per year.

Ethiopia’s Growth and Transformation Plan (GTP) outlines a 15-year plan with three 5-year phases to transform Ethiopia from a developing country to a middle income country by 2025. Under GTP I (2010-2015), the goal was to increase the installed generation capacity from 2,000 MW to 10,000 MW primarily through hydro power projects. With some of those projects still under construction, the country currently has approximately 4,500 MW of installed generation capacity. Under GTP II (2015-2020) the goal is to increase installed generation capacity by an additional 5,000 MW by 2022. Ethiopia Electric Power (EEP) is charged with maintaining more than fourteen hydropower and three wind power plants located in different parts of the country.

The Government of Ethiopia has focused on the construction and expansion of various power generating projects to deliver reliable electricity. Approximately 90% of the installed generation capacity is from hydropower while the remaining 8% and 2% is from wind and thermal sources respectively. The hydro dominated systems have been severely affected by drought, and the Government of Ethiopia (GOE) is now diversifying the generation mix with other sources such as solar, wind and geothermal that will result in a more climate-resilient power system.

The Metahara solar independent power producer (IPP) project is expected to generate 100 MW following approval of the implementation agreement (IA) by the Ethiopian government during the second half of 2018. Enel Power, an Italian company, will operate the project. The government of Ethiopia is also working with the private sector to implement the Corbetti and Tulu Moye geothermal projects with over 1,000 MW of combined generation capacity. Ratification of IAs by the House of Peoples Representatives is the last critical step to concluding these two 520 MW projects. On August 19, 2018, Africa’s first waste to energy facility, with  a generation capacity of 25 MW of electricity, was inaugurated in Addis Ababa. This facility has the capacity to consume 420,000 tons of trash per year.

The Grand Ethiopian Renaissance Dam (GERD), expected to be the largest dam in Africa and to generate 6,450 MW of electricity at full capacity, is reportedly 62% completed. The GOE has prioritized construction of the GERD, which is intended to serve as an engine for industrialization and economic development. Ethiopia exports electricity to Djibouti (up to 100 MW) and to Sudan (up to 100 MW) and has concluded power export deals with Kenya and South Sudan. Construction of an Ethio-Kenya-Tanzania transmission line is expected to be completed in 2019. Ethiopia has plans to export up to 400 MW of electricity to Kenya and 400 MW to Tanzania.

The GOE plans to construct an additional 9,000 kilometers of distribution lines and to complete, in the next few years, construction of 102 kilometers of 66 KV transmission line, 3,706 kilometers of 132 KV transmission line, 4,546 kilometers of 230 KV transmission line, 2,947 kilometers of 400 KV transmission line and 61 kilometers of 500 KV transmission line. The total transmission line length has reached 19,664 km. Only 30% of the country has access to electricity, of which only 60% of households are connected to the grid.

The GOE recognizes that partnership with the private sector via IPP agreements for power generation is crucial to meeting the country’s needs. Ethiopia Electric Power (EEP) has developed procurement processes to select contractors and is awarding projects using a competitive bidding process. Under the Global Procurement Initiative (GPI), Crown Agents International, a U.S. based firm, has developed a procurement manual for EEP using a U.S. Trade and Development Agency (USTDA) grant. The procurement manual was launched in June 2018 during the visit of Gil Kaplan, Under Secretary of Commerce for International Trade. Power Africa has assisted EEP with the development of IPP tender documents and the legal and regulatory IPP framework. In February 2018, Ethiopia has enacted a proclamation that will regulate public private partnership (PPP) arrangements, in an effort to attract investment and in recognition that the private sector is essential to supporting the country's economic growth and improving the quality of public services, particularly in infrastructure. Ethiopia is drafting its feed-in tariff bill, which should offer independent power producers the option to sell renewable energy power to the national grid at specified rates. engineering procurement and construction (EPC) contracts are still considered as unsolicited proposals when companies are providing turnkey solutions and bring the financing. Most new EEP projects are tendered.

SourceEthiopia - Energy