Solar Pipeline Swelling

Project announcements and developments over the last few months continue to create optimism with regards to Ethiopia's expanding renewables industry. Such projects include the commissioning of a 120MW wind power plant, the installation of over 13,200 household solar systems in rural communities over 2013 and, most recently, the news that three 100MW solar power plants are in the pipeline. We expect the Ethiopian government to continue pursuing renewable energy technology as it strives to expand its power capacity portfolio, diversify away from an over-reliance on hydropower and help meet its ambitious power export aspirations.

It was announced at the end of November that a build-operate-transfer (BOT) contract was awarded by the Ethiopian Ministry of Water and Energy and Ethiopian Electric Power Corporation (EEPCO) to two US companies, Global Trade and Development Consulting Project and Energy Ventures, for three 100MW solar power plants in the eastern region of the country. There are few details as to when construction is expected to begin but Global Trade and Development Consulting has stated that site selection, due diligence and a feasibility study were all completed earlier on in 2013.

We have witnessed a number of positive announcements with regards to Ethiopia's renewables industry of late, as the country looks to tap its significant wind, geothermal and solar power potential:

  • In late October, the 120MW Ashegoda wind power plant in Ethiopia, the continent's largest operational wind farm, was completed and brought online, at a total cost of US$290mn ( see 'Renewable Energy Prospects On The Up', October 28).

  • The Icelandic International Development Agency (ICEIDA) signed a partnership agreement with the Ethiopian government to develop geothermal capacity in September. Specifically, the ICEIDA plans to work in conjunction with both EEPCO and the Geological Survey of Ethiopia (GSE) to identify sites for surface exploratory drilling and capacity building (see 'Iceland Steps In, As Tectonic Activity Heats Up', September 19).

  • The Ethiopian Ministry of Water and Energy announced at the end of August that, as part of a World Bank-funded programme launched in December 2012, over 13,200 solar systems had already been installed in rural communities that are not connected to the grid (see 'Solar Lighting Up Rural Areas', September 3).

Ethiopia's non-hydro renewables industry is certainly gaining traction and we expect to see more developments over 2014 as the government continues to show strong commitment towards expanding its power capacity - to meet both domestic and neighbouring countries' electricity demand ( see 'Hydro Power Drives Export Ambitions', May 1). In terms of our forecasts, we expect to see growth within the geothermal and wind power sectors; however, we are yet to factor in the 300MW of solar projects until we hear more details about the scheduled commissioning dates and until we see the projects progress further down the pipeline.

Renewables Expansion Underway
Ethiopia Wind, Geothermal and Solar Capacity (MW), 2012-2022

We have previously warned that gaining access to project financing is one of the most pertinent challenges to developing renewables projects in Ethiopia; however, development banks have played an important role in minimising financing risks. Furthermore, Ethiopia has been identified as one of the countries in President Obama's 'Power Africa' initiative - a programme that aims to improve electricity infrastructure in Africa through a number of US funding vehicles with the hope of leveraging private investment ( see 'US Pledges Funds To Power Africa', July 3). The fact that Global Trade and Development Consulting referenced 'Power Africa' in its press release hints that the company will be utilising some of the mechanisms available under the initiative, such as funding, insurance, guarantees as well as technology and knowledge transfer, to mitigate some of the risks that it may face with developing the 300MW solar project.

This article is tagged to:
Sector: Power, Renewables
Geography: Ethiopia