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Ethiopia Energy Sector Overview
Ethiopia, under its Growth and Transformation Plan (GTP), envisions becoming a regional renewable energy hub in East Africa by 2015. Ethiopia has roughly 2,000 megawatts (MW) of installed generation capacity to serve its population of around 90 million people and has little prior experience with private sector-led energy projects. Energy constraints limit growth in key areas of Ethiopia’s economy, including the agricultural and industrial sectors. At the same time, Ethiopia is endowed with abundant renewable energy resources, including 45,000 MWs in additional hydropower potential, more than 10,000 MWs from untapped geothermal resources (see landmark Corbetti transaction below), and significant wind and solar generation opportunities throughout the Rift Valley. By 2037, Ethiopia aspires to have a total installed generation capacity of 37,000 MWs and become a major power exporter. Private sector investment will be critical to supporting this development vision.
The Government of Ethiopia is committed to increasing private sector energy participation, expanding transmission and distribution networks to deliver additional power to customers, maintaining a creditworthy off-taker, reforming tariffs to allow for full-cost recovery, and reducing inefficiency in the sector. Power Africa is supporting Ethiopia’s energy development strategy through technical assistance with negotiating landmark Power Purchase Agreements (PPAs) and facilitating financing of private-sector led geothermal, solar and wind projects. The 1000 MW Corbetti geothermal project has reached agreement on a feed-in tariff between the government and a private developer and is moving towards final negotiation. The Power Africa-supported dVentus smart-metering project is completing prototypes for an eventual rollout to improve electricity service and reliability for millions of Ethiopian customers.
The Government of Ethiopia (GoE) is committed to increasing private sector energy participation, expanding transmission and distribution networks to deliver additional power to customers, maintaining a creditworthy off-taker, reforming tariffs to allow for full-cost recovery, and reducing inefficiency in the sector. Power Africa is supporting Ethiopia’s energy development strategy through technical assistance to the GoE in negotiating its initial landmark Power Purchase Agreement (PPA) and facilitating financing of private-sector led geothermal, solar and wind projects. The 1,000 MW Corbetti geothermal project has reached agreement on a tariff between the government and a private developer and is moving towards final negotiation. The Power Africa-supported dVentus smart-metering project is completing prototypes for an eventual rollout to improve electricity service and reliability for millions of Ethiopian customers.
|Name||MW||Type of Transaction||Value (USD Million)||Timeline||Power Africa Support||GOE Actions|
|Corbetti||1000||Power Purchase Agreement with Reykjavik Geothermal||
* Heads of Terms of PPA signed Q3 2013
* Drill, test Q3 2014
* Delivered workshops on structuring of PPAs and Implementation Agreements
* Funding for and facilitation of legal support to the GoE throughout the negotiations
* Provide targeted knowledge transfer to the GoE on creating a framework for private sector investment in geothermal energy
* Authorized terms of first–ever Ethiopia PPA
* Duty free discussions
* VAT Exemption
|dVentus||2 million smart meters||Ethiopian Electric Power contract for Smart Metering manufactured in Ethiopia||
* Produced and tested prototypes Q2 2014
* Production and installation of meters Q3 2014
* Guarantee for $1 million working capital loan
* Facilitated provision of long-term financing
* 5-year income tax incentive
* VAT Exemption
* Duty free imports from the US
The Eastern Africa Power Pool (EAPP) is based in Ethiopia and seeks to facilitate and secure renewable energy power supplies to the countries across the region at the lowest possible cost. In the future, the EAPP can provide the needed integrated system and load demand for increased development of large scale renewable energy generation and transmission projects. Power Africa will assist the EAPP to develop common grid codes and structure transmission interconnection projects that facilitate the integrated development and operations of national power systems in East Africa.
Power Africa Initiative: Mobilizing Investments in Energy
Power Africa is a U.S. Presidential initiative announced in June 2013 and designed to increase access to electricity in sub-Saharan Africa over the next five years. Power Africa begins in six focus countries with ambitious strategies for energy sector development — Ethiopia, Kenya, Tanzania, Liberia, Ghana, and Nigeria. Additionally, in Uganda and Mozambique, Power Africa promotes responsible and transparent resource management.
Power Africa accelerates investments to develop resources responsibly, build out power generation, efficient distribution and transmission, and expand the reach of mini-grid and off-grid solutions. A key goal is to add cleaner, more efficient electric generation capacity.
A New Way of Doing Business for Development
Power Africa directly addresses constraints to investment by taking a transaction-centered approach to galvanize collaboration, producing near-term results while driving forward reforms that pave the way for future investment. This two-pronged approach focusing on transactions and on energy sector management enables public sector partners, such as ministries and power companies, to more effectively and efficiently govern energy resources and leverage private sector investment and technology to meet vital energy needs for economic growth, health, and education.
Power Africa brings the trade, regulatory, finance and other expertise of 12 specialized U.S. Government agencies to advance transactions between public and private investors. Power Africa Transaction Advisors are based in the focus countries. Power Africa outreach efforts, including trade delegations, invite U.S. companies to invest in the region and bring their cutting-edge technologies and solutions to expand access to affordable and sustainable electric power.
Power Africa Contact for Ethiopia:
Shannon N. Cazeau, Power Africa Country Team Leader Email: CazeauSN@state.gov
U.S. Government Coordinator for the Power Africa Initiative:
Making a Power(ful) Impact on Ethiopia [Frontlines January/February 2014]
Global Research Collaboration Awards Will Help Power Ethiopia (August 20, 2014)
Last updated: October 24, 2014