Macroeconomic performance²

Real GDP growth slowed in 2017/18, due partly to civil unrest, political uncertainty, and policy adjustments that involved fiscal consolidation to stabilize the public debt. On the supply side, GDP growth was driven by services (8.8% growth) and industry (12.2%), facilitated by the development of energy, industrial parks, and transport infrastructure. On the demand side, private consumption
and investment continued to drive growth, along with the government’s stable spending on public infrastructure and strong foreign direct investment inflows. With a public debt–to-GDP ratio of 61.8% at the end of June 2018, Ethiopia remains at high risk of debt distress, according to a 2018 debt sustainability analysis. A tax transformation program is under way to strengthen tax policy and administrative efficiency. A reduced trade deficit and strong growth in remittances helped improve the current account deficit from 8.1% of GDP in 2016/17 to 6.0% in 2017/18. Gross official reserves remained low, at 2.5 months of imports in 2016/17 and 2.1 months in 2017/18.

²Source: African Economic Outlook, 2019, African Development Bank. Accessible here: https://www.afdb.org/en/knowledge/publications/african-economic-outlook/

Business environment and private sector development³

The GOE currently recognized that engagement with the private sector especially with the development of power generation is crucial to meet the country investment and energy policies and to establish sustainability in infrastructure investment. In line with this EEP has started to implement a transparent procurement process to provide a competitive bidding process related to generation and transmission projects. Ethiopian Electric Utility and Ethiopian Electric Power is moving forward with improvement to their procurement process and establishment of a process for monitoring of procurement contracts. At present, the GOE is liberalizing the energy sector for private sector participation, specifically to generate significant financial resources and stimulate investment in power generation and transmission. Ethiopia is in the process of 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 rates⁴.

³Source: ETHIOPIA: Power Sector Market paper – US Commercial Services
⁴ETHIOPIA EIU
⁵Source: African Economic Outlook, 2019, African Development Bank. Accessible here: https://www.afdb.org/en/knowledge/publications/african-economic-outlook/

Key takeaways on the electricity sector

Electricity Access

57% of households have access to at least one source of electricity: 33.1% of households have access through the grid, and 23.9% have access through off-grid solutions. Of these 57% of households, only 77.7%—or 44.3% of all Ethiopian households—have access to at least basic electricity supply.

The remaining 55.7% have no access to any electricity source, rely on dry-cell batteries, or have a grid or off-grid electricity supply that does not provide basic energy service (ability to light the house and charge phones and available for at least 4 hours a day, including 1 hour in the evening).

38.1% of unelectrified households are within 7 kilometers of the national grid and report administrative barriers or delay or refusal in being connected as the main reason for not having a grid connection. Half of the electrified households receive service at least 8 hours a day.

A fifth of households have electricity available 23 hours a day, 7 days a week. 5.2% of electrified households receive less than 4 hours of service per day.

57.6% of grid-connected households face 4–14 disruptions a week, and 2.8% of households face more than 14 disruptions a week

15.8% of households face voltage issues—which can damage appliances and limit their use.

Electricity is affordable for the majority of households: 99.5% of households spending is less than 5% of their total household expenditure for basic grid electricity service.

On average, electrified households have been connected to the grid for 11 years and consume 120.7 kWh of electricity per month. Most households that use an off-grid solar device bought their first solar product within the last three years.

Only 29.8% of grid-connected households have medium- or high-load appliances, such as a refrigerator or washing machine.

96.1% of households are willing to pay for a grid connection, and 79.8% of households are willing to pay for a solar home system capable of powering a television, either up-front or with a payment plan⁶.

75–80 percent of the population resides within 5 km; • 90 percent lives within 10 km; • 95–96 percent of the current and future national population is estimated to reside within 25 km of existing lines.

The overwhelming majority of these communities are expected to be most cost-effectively served by grid expansion over the long term. Accounting for progress in grid connections in 2018 after the MTF survey was conducted, around 6.9 million households are estimated to already have a grid connection (accounting for 34 percent of access, a one percent increase from the baseline identified with the MTF). Fewer than half of these (3.1 million) are estimated to have formal connections, while the rest (3.8 million) have informal connections that will need to be “regularized.”

Ethiopia’s Government sees itself as a renewable energy power house. Therefore it is investing heavily to become a major power exporter in East Africa and build a green economy. The country is building several, hydro, wind and geothermal power plants. The projects will also be a crucial input to enhance Ethiopia’s economic growth to become a carbon-neutral middle income economy by 2025⁷:

Table 1 Electrification⁸ (on-grid and off-grid)

Installed capacity

Ethiopia has a current generation capacity of 4.244 GW (90% hydro, 8% wind , 2% diesel and 1% waste-to-energy) and additional 9.132 GW is under construction (mainly hydro, including the Grand Ethiopian Renaissance, 6.45 GW, and the Genale Dawa-III , 0.254 GW, dams) The peak load is at 2.5 GW, the operation ratio at 93%, the load factor at 60% and the capacity factor at 28% [13]. Ethiopia has enormous power potential: hydro 45 GW (about 8% exploited), wind 1.35 TW (less than 1% exploited), geothermal 5 - 10 GW (less than 1% exploited) and solar (5.5 kW/m2 annual average radiation per day) The grid network has expanded rapidly in recent years. Access to the grid is 33%, and more than 80% of the total population lives in its proximity [11]. In 2016, the transmission line length was 20,000 km of HV, 100,000 km of MV and 110,000 km of LV.

Production

The existing hydropower generation fleet includes reservoir (Dam) and run of river power plants (RoR): 88% of the installed capacity is from power plants with dam and the 12% from run of river power plants located in cascade downstream of reservoirs. In the future new big reservoir power plants are foreseen (the biggest one is Grand Renaissance power plant) together with medium and small hydro units.

Table 2 Detailed breakdown of existing and under construction hydropower plants production, availability and COD year and type and electricity production per site¹⁰:

Ethiopia owns very good geothermal potential located in its rift valleywhich could be very useful to meet the growing demand in mid-long term. The existing geothermal fleet include only a small power plant (7 MW Aluto Langano) but additional 538 MW are committed yet and they are expected in operation by 2026. Geothermal power plants, like hydro power plants, have very low operation costs but also have high investment costs mainly due to exploration projects. Therefore, they are designed to operate as baseload power production (capacity factor near 100%) in order to keep lower electricity costs.

Table 3 Detailed breakdown of existing Geothermal plants production, units and COD year per site¹¹:

No solar generation is present in the Ethiopian electric power system in 2017. For the target years 2025 and 2030 the installation of new PV power plants is foreseen. The following table shows the list of advanced PV projects in pipeline (350 MW) For each PV project the following relevant information is reported: size of the power plant, project status, assumed capacity factor, solar irradiation profile associated in the model, possible commercial operation date and the priority index to be considered in the system integration

Table 4 Detailed breakdown of under development PV plants production, units and COD year per site¹²:

The total wind energy potential in Ethiopia is several hundred times the existing Ethiopian electricity demand but less than 1% is exploited. The average wind speed in the whole country is greater than 6.5 m/s, with favourable locations where the average wind speed is up to 10 m/s.; the locations with the highest mean wind speed are in the south-east and far south of Ethiopia, but these are remote from the grid and in areas with lower population density. Nevertheless, there are also locations with good potential (mean wind speed between 7.5 m/s and 9 m/s) near the grid and with higher population density in the area around Addis Ababa city and in zones of East Shewa and Dire Dawa

Table 5 Detailed breakdown of existing wind plants production, units and COD year per site¹³:

Biomass energy means renewable energy coming from sources such as wood, wood residues, sugar waste, bagasse, agricultural crops and residues, animal and human wastes. The conversion technology depends on the biomass itself and is influenced by demand side requirements. The final result of the conversion process is direct heat and electricity or a solid, liquid or gaseous fuel. Biomass power plants are more flexible than other renewable power plants (e.g. geothermal, wind and solar) but, unlike other RES power plants, they have a greater risk of fuel supply that could increases the LCOE reaching very high values compared with other RES power plants. The first Waste-to-Energy power plant was installed in 2017 with a maximum capacity of 25 MW. A development of biomass generation is expected (sugar bagasse and wood) in the country in order to reach 643 MW maximum capacity by 2022. Ethiopian sugar factories have one crop per year from October to May, and during this period bagasse burning co-generation plants produce steam and electricity. The electricity is used for factory, irrigation and village use around the factory and the surplus is exported to the grid. During the off-crop season from June till September the village loads are completely supplied from the grid. An annual capacity factor equal to 55% has been assumed for biomass power plants, assuming electricity production from October to May according to crop period and limitations in electricity production during the daily off-peak hours

⁶https://development-data-hub-s3-public.s3.amazonaws.com/ddhfiles/145094/cuserswb533616mtfmtf-energy-access-country-diagnostic-report_ethiopia_6.2018.pdf
⁷Source: ETHIOPIA: Power Sector Market paper – US Commercial Services
⁸ESI
⁹Energy Strategy Note Ethiopia RSTa24
¹⁰https://www.res4africa.org/wp-content/uploads/2019/03/Integration-of-variable-renewable-energy-in-the-national-electric-system-of-Ethiopia.pdf
¹¹https://www.res4africa.org/wp-content/uploads/2019/03/Integration-of-variable-renewable-energy-in-the-national-electric-system-of-Ethiopia.pdf
¹²https://www.res4africa.org/wp-content/uploads/2019/03/Integration-of-variable-renewable-energy-in-the-national-electric-system-of-Ethiopia.pdf
¹³https://www.res4africa.org/wp-content/uploads/2019/03/Integration-of-variable-renewable-energy-in-the-national-electric-system-of-Ethiopia.pdf
¹⁴https://www.res4africa.org/wp-content/uploads/2019/03/Integration-of-variable-renewable-energy-in-the-national-electric-system-of-Ethiopia.pdf
¹⁶Ethiopia SEFA SGR PL PR April 18 2019 REV – Africa Development Bank paper

Country strategy on the environment and climate change²¹

Ethiopia has vast and largely unharnessed clean energy resources. Ethiopia is endowed with significant renewable energy resources, with huge potential for hydro, solar, wind, and geothermal power. It is one of the few countries in sub-Saharan Africa, if not the world, which generates all of its electricity from renewable resources. Already, the available generation capacity, mostly hydropower, has reached 4,256 MW (second highest in sub-Saharan Africa). Other largescale hydropower projects (with capacity exceeding 6,000 MW) are now under construction. However, actual energy supplied from these hydropower plants is subject to uncertainty and fluctuations due to variations in seasonal and annual rainfall amounts, as well as climate change (e.g. impact of the El Nino factor in 2015-2016 led to country-wide blackouts). Given the expected strong growth in demand for electricity (nearly 10 percent, annually), complementary energy resources must be developed to mitigate the risk of overreliance on, and variability of hydropower. 5. A diversified mix of supply resources (including solar, wind, and geothermal power) can not only ensure continued sufficiency of supply but can also act as a mitigant to climate change. In line with Pillar Three of Ethiopia’s ‘Climate Resilience Green Economy (CRGE) Strategy’ (2011), the GoE targets to have about 15-20 percent of its energy supply from non-hydropower based renewable resources (during GTP-II). Based on these planned 3 additions to generation capacity, including that provided by solar, wind, and geothermal
sources, Ethiopia is expected to have over 9,000 MW of installed capacity by 2020, which would provide sufficient energy (over 25,000 GWh) to supply the expected demand.

During the GTP I period, the Climate Resilient Green Economy (CRGE) strategy was formulated to embark on building green economy. A series of consultations at all levels had been conducted before the strategy was approved. To implement the CRGE, new institutions and/or organizational structures have been put in place since then. Key among these is the establishment of the Ministry of Environment and Climate Change to oversee and coordinate the implementation of the CRGE strategy. Formulating and effectively implementing environmental strategies and laws are essential to accelerate the process of building climate resilient green economy. In this context, it was planned to prepare 14 environmental conservation systems and 15 were prepared by the end of the plan period. In addition, Ethiopia’s CRGE implementation (2010/11-2014/15) status report was produced. With regard to forest development, it was planned to prepare Management Plan and Maps on 815,300ha forest lands and performance stood at 5.1 million hectare by the end of 2014/15. Besides, through improved systems of protection and conservation measures, forest coverage of 62 the country increased from 13.0 million ha in 2010/11 to 15.93 million ha by the end of 2014/15. Multi-purpose trees planting target was 16.2 million hectare and performance stood at 15.5 million hectare by the end of plan period. Moreover, to rehabilitate degraded areas, it was planned to cover 10.21 million hectare. Accordingly, 13.4 million hectare was demarcated and rehabilitated. With regard to CRGE implementation, one of the priorities has been to mobilize adequate resources, which would assist environmental developers. In this context, financial resources have been mobilized from various donors. About Birr 4.6 million, from the 5th and 6 th Global Environment Facility (GEF), USD 7.5 million and 27.23 million has been mobilized, respectively. On the other hand, from six sectors, about 48 projects were submitted for CRGE facility fund, of which 43 were accepted with USD 23.0 million outlay and they are currently under implementation. In addition, to facilitate CO2 trading in the country, REDD+ National Secretariat was established with USD 13.5 million grants from the Norwegian Government. Similarly, for Oromia Pilot Forest Development and Protection project, about USD 50.0 million and for capacity building in the other regions USD 9.0 million was obtained from the Government of Norway. Leadership commitments, new organizational arrangements, active participation of communities; conducive polices, strategies, action-plans; strong working relationship with relevant stakeholders, communities and implementing agencies were opportunities witnessed during the plan period. However, limited implementation capacity as well as inadequate adaptation and promotion of Green Technology Packages have remained challenges in the course of implementation, which need to be taken and addressed in GTPII²².

²¹World Bank Report
²²https://www.greengrowthknowledge.org/sites/default/files/downloads/policy-database/ETHIOPIA%29%20Growth%20and%20Transformation%20Plan%20II%2C%20Vol%20I.%20%20%282015%2C16-2019%2C20%29.pdf

Regional Integration with East African Power Pool (EAPP)

Currently, all power trade in EAPP is through bilateral power purchase agreements. Interconnected member countries are trading power through medium to long term bilateral contracts. With Ethiopia expecting highly competitive hydropower generation developments, EAPP is looking to scale up mutually beneficial power trade among its members and beyond. Ethiopia and Kenya have signed a 20-year power purchase agreement for 400 MW to be delivered through the Ethiopia-Kenya interconnection, which is expected to be commissioned in 2020. Tanzania and Ethiopia are also currently negotiating a long-term PPA for another 400 MW to be delivered in two stages once the ongoing Kenya-Tanzania interconnection is completed²³

Recent investments in transmission interconnectors

Provide opportunities for Ethiopia’s power sector to become an integral part of the growing regional integration agenda in the Horn of Africa and the East Africa Power Pool (EAPP)3 countries. Recently completed and ongoing investments in power transmission interconnections to neighboring countries enable exports to, among others, Djibouti, Sudan, Kenya, Tanzania, Uganda, and Rwanda already now or in the near future. While power trade in the EAPP region is based on bilateral agreements between countries, plans are underway for development of a trading platform which could enable more competitive power trade in the medium-term. In the long term, given its massive clean energy reserves, Ethiopia can become a cornerstone of the regional power trade in the EAPP, and even export into the Southern Africa Power Pool (SAPP). Ethiopia’s renewable energy potential will also be crucial in addressing the electricity access deficit in East Africa. Just the Horn of Africa subregion accounts for nearly 25 percent of the total electricity access deficit in Sub-Saharan Africa. Until the regional power pools develop spot markets, this regional power trade would rely on Ethiopia erecting the remaining power transmission interconnections and getting into bilateral agreements with neighboring countries. Based on the Government’s plans, by 2025, Ethiopia could export nearly 1,000 MW of power, generating over US$500 million in export revenue. The electricity sector can also become a major driver of the wider regional integration agenda²⁴.

Regional electricity market

The EAPP region is presently experiencing various challenges which must be adequately addressed if the envisioned fully integrated regional power market is to be realised. It is not only insufficient power generation that stands in the way of the EAPP but the absence of interconnectors to wheel power across borders as well. The need for investment in power generation facilities and high voltage power lines cannot be overstated as the discussion below articulates. To overcome these challenges, the region must establish itself as a favourable destination for investment and financing. Legal and regulatory framework The starting point towards the formation of any regional power pool is for the regional governments and the operators of the respective national grid system to define a common legal and regulatory framework to facilitate achievement of regional objectives. The respective regional government and the national utilities comprising the EAPP already took the initial step in 2005 of signing the IG-MOU and IU-MOU that set out the operational framework for the evolution of the pool towards full integration. In 2006, the pool was formally endorsed as a specialized energy institution of the COMESA. This is clearly a step in the right direction and mirrors what other pools such as the SAPP and WAPP have initially done as a first step in creating regional power markets. 5.2 Harmonization of legal and operational framework Though not a precondition for the establishment of regional power pools, harmonization of the legal and operational framework is critical. Harmonization ensures that the legal and operational norms across the power pool partners are similar. Harmonization must be emphasized especially where private investment participation in the power sector is envisaged because it assures a high degree of certainty and predictability about transmission line access, revenue flow and the resolution of disputes that may arise. An interconnection code that provides a framework for the implementation of satisfactory operational security and reliability as well as encouraging the integrated planning of generation capacity and transmission planning among others has already been prepared to provide a benchmark for the harmonization of operational standards of the EAPP. 5.3 Increasing power generation capacity The region is presently plagued by power capacity shortages. Unless there is investment undertaken to generate sufficient power that can cater for both the domestic and export needs, the envisioned EAPP shall not take off. A study commissioned by the East African Community whose report was issued in 2011 identified a number of regional power generation projects that could be undertaken to tackle the challenge of power supply shortages in the region both in the short term and in the long term. These generation projects blend hydropower, nuclear, geothermal and thermal sources. The investment requirements to realize this aspiration is substantial and will require the participation of private investors to help each country achieve its projected generation capacity. Attracting private investment calls for a review of the fiscal and legal regimes to create the most favorable environment. It is anticipated that investment in these projects will enhance generation capacity as is tabulated below²⁵.

Figure 4 Energy mix MW and % in East Africa²⁶:

²³https://www.greengrowthknowledge.org/sites/default/files/downloads/policy-database/ETHIOPIA%29%20Growth%20and%20Transformation%20Plan%20II%2C%20Vol%20I.%20%20%282015%2C16-2019%2C20%29.pdf
²⁴http://documents.worldbank.org/curated/en/596391516729600327/pdf/Concept-Project-Information-Document-Integrated-Safeguards-Data-Sheet.pdf
²⁵http://documents.worldbank.org/curated/en/363131558922556843/pdf/Ethiopia-Renewable-Energy-Guarantees-Program-Project.pdf
²⁶ESI

Electricity Regulatory Index

A country regulator requires a sustainable and independent source of funding to implement its activities and initiatives. Funding from Government compromises the independence of the regulator while dependence on penalty fees is unsustainable and compromises the objectivity of the regulator. Regulators in 31 countries (91%) out of the sample indicated that, fees levied on regulated utilities are their source of funding while 2 countries (Egypt and Eswatini) indicated that licence fees are their source of funding. Only the regulator in Ethiopia indicated government support as its sole source of funding.

The tariffs practiced by the power utilities do not correspond in the vast majority (78.6%) with the Cost of Service, except for the following countries: Egypt, Ethiopia, Kenya, Mauritania, Mauritius, Namibia, Niger, and Tanzania. This means that in more than 78% of the countries in the sample, costs are not covered by tariffs. This reiterates the findings from previous studies, including from Trimble et al. (2016), who identify that underpricing is the largest component of the utilities’ quasi-fiscal deficits in the Sub-Saharan

The utilities with high loss levels, above 20%, are: all ten Nigerian utilities that participated in the survey, Cameroon, Angola, Benin, Cote d’Ivoire, Ethiopia, Gambia, Liberia, Madagascar, Mauritania and Mozambique. Data is not available to better understand this high level of losses, but reasons may be found depending on the country: where there are high poverty rates, consumers find that tariffs are unaffordable and shift to fraudulent practices; low quality of service which discourages customers from paying the bills; lack of strategy for reducing losses. This is detrimental to the company’s financial equilibrium and may tempt them to compensate for this low performance by raising tariffs, leading consumers, particularly those with low spending power, to either switching off their access or connecting through less than legal means. The eleven countries with rate losses over 20% can improve their financial performance by setting up loss reduction programs. The priority is to set an effective loss reduction action plan with the help of the government (special legislation to reduce theft together with the strict enforcement of laws) and the support of the regulator (establish a target).

A study from the World Bank (Kojima and Trimble, World Bank, 2016) have indicated that eliminating the losses (technical and commercial) and improving the recovery would be sufficient for full cost recovery about one-third of African countries. Countries with a collection rate above 90% are: Algeria, Botswana, Cameroon, Eswatini, Ethiopia, Gambia, Ghana, Kenya, Liberia, Malawi, Mali, Mauritius, Morocco, Mozambique, Namibia, Rwanda and South Africa. Some of them, including Cameroon, reported a collection rate of 95%, which should be considered as a benchmark for an acceptable collection rate. Other countries can use prepaid meters and smart meters that in addition to enforcing disconnection for non-payment can help improve the recovery.

Lack of customer satisfaction surveys may reduce quality of customer service. Only 14% of utilities (the same rate for the regulators) have implemented a customer satisfaction survey, which can explain the great dissatisfaction of the consumers illustrated by the low score of the ROI for consumers, which averages 0.347. The utilities and regulators need to have a better understanding of the expectations of their consumers and take appropriate action to address them. Countries concerned: Angola, Botswana, Burkina Faso, Côte d’Ivoire, Ethiopia, Gambia, Kenya, Liberia, Madagascar, Mali, Mauritania, Mauritius, Namibia, Nigeria, Rwanda, Senegal, South Africa, Togo, Uganda and Zimbabwe

National utility

General profile

The Ethiopian Electric Light and Power Authority (EELPA) which was established in 1956, after having undergone restructuring was reorganized as the Ethiopian Electric Power Corporation (EEPCo).EEPCo later a splitted in to two companies and one of these companies is the Ethiopian Electric Power(EEP). EEP which was established in 2013 by the Council of Ministers Regulation No.302/2013 is responsible for generating, transmitting and wholesale of electricity to be utilized nationwide as well as neighboring countries. Presently the company maintains two different power supply systems; namely, the Interconnected System (ICS), which is mainly supplied from hydro power plants, wind farms and the Self-Contained System (SCS), which consists of mini-hydropower plants and a number of isolated diesel generating units that are widely spread all over the country²⁸.

Policy and strategy²⁹

The Government of Ethiopia has plans for universal electricity access, clean energy generation from renewable energy resources, and electricity exports to neighboring countries (EEPC, 2014a; MoFED, 2010). Drawing on policy goals outlined in the Ethiopian GTP, the climate-resilient green economy strategy, the UNDP strategy for sustainable energy for all (SEforAll), and the strategies of the Ethiopia Electric Power (EEP) for further development of the power sector (EEPC, 2014a; FDRE, 2011; MoFED, 2014; MoWIE, 2013). According to the National Growth and Transformation Plan (GTP), the government aims for universal electrification and is developing large-scale hydroelectric projects to support this goal; furthermore, the Ethiopian Electric Power Corporation (EEPCo) plans to integrate alternative power plants, such as solar, wind, geothermal, fuel oil and gas based plants, to meet the expected increase in domestic electricity demand and also to export electricity to neighboring countries. Ongoing and planned power generation capacity is expected to reach 22,500 MW by 2025. Ethiopia is endowed with various renewable energy resources. The estimated potential for hydropower is 45 GW, the potential for wind is 10 GW, the potential for geothermal is 5 GW and the potential for solar irradiation ranges from 4.5 kWh/m2 /day to 7.5 kWh/m2 /day (Mondal et al., 2017). The reserve of fossil fuels is also significant. For example, the natural gasreserve is about 4 trillion cubic feet and the reserve of coal is over 300 million tons.

Figure 12 EEP Production²⁹

List of some high voltage transmission lines under operation in Ethiopia³¹ :

Average tariff, in USD

The current average flat rate tariff charged to customers in Ethiopia is just under 3 cents /kWh. The tariff level has diminished in real terms and in recent years has been insufficient to generate profitability for EEP, particularly for years with insufficient rain and hydro capacity due to the draught.

²⁸ http://96.30.15.137/~eepgov/en/about-eep/facts-and-figures
²⁹http://ebrary.ifpri.org/utils/getfile/collection/p15738coll2/id/132767/filename/132978.pdf
³⁰https://www.res4africa.org/wp-content/uploads/2019/03/Integration-of-variable-renewable-energy-in-the-national-electric-system-of-Ethiopia.pdf
³¹http://96.30.15.137/~eepgov/en/services/electric-transmission

Mapping of ongoing programmes and projects

Donors interventions:

USAID/POWER AFRICA

• Support for the Eastern Africa Power Pool (EAPP) in the development of common codes for the regional network, tracking interconnecting transmission lines, training for EAPP and member countries to operate the regional power system
• Via NARUC: assisting GoE to develop a wheeling agreement and tariff methodology that will serve as a model for other cross-border transactions on the continent
• Employing an expert to perform tariff benchmark studies for solar, wind, and hydropower generation for the national utility company
• Assisting the GoE in the competitive tendering of three solar IPPs (100 MW each) by helping to develop the Requests for Purchase (RFPs), the PPAs, and CA
• Via USEA: Organized a five-day leadership training course for seven to ten mid- and senior-level EEU management personnel. The training will focus on management techniques to deliver greater efficiency, effectiveness, and personal authority
• Via USTDA: working with Ethiopian Electric Power to strengthen its procurement systems.

AFRICAN DEVELOPMENT BANK GROUP

• Ethiopia Kenya power interconnection electricty highway project
• Mekelle - Dallol and Smera - Afdera power transmission project
• Addis Ababa transmission and distribution rehabilitation and upgrading project

WORLD BANK GROUP

• Supporting Ethiopia’s energy development strategy in the governments Growth and Transformation Program (GTP) through a wide range of technical assistance
• $200 million International Development Association (IDA)* loan to improve the reliability of the electricity network and services in Ethiopia
• Energy Access Project: establish a sustainable program for expanding the population's access to electricity and improving the quality and adequacy of electricity supply
• Ethiopia Electricity Access Rural Expansion Project: a grant to increasing access to electricity for up to 228,571 poor households in rural towns and villages with grid access.
• $375 million IDA credit to the GoE for the National Electrification Program
• Ethiopia Geothermal Sector Development Project: $218.5m project to support development of geothermal sector
• ELEAP includes $15m for piloting of off-grid solar and mini-grid models in late 2018
• IFC supporting retail activation, consumer awareness, and quality and standards development as well as B2B matchmaking for off-grid solar industry
• IFC Scaling Solar

EU

• Support to Energizing Development in Ethiopia program to fund existing activities with an additional budget of 10.35 million euros
• Support to MoWIE on establishing private and public-sector interventions in deep rural areas

EnDev

• Energizing Development Partnership – EnDev 2 (01/2010 – 12/2020)

Mapping of ongoing projects across the power spectrum³³

Although Ethiopia has focus its renewable energy capacity has been primarily in large hydro generation, several projects are under development. Some projects are in the stage of pre-feasibility and feasibility studies, and others are in the funding stage. During the 2018 AEMP event, the Ministry of Water, Irrigation, and Electricity identified the following priority projects moving forward :

USAID/POWER AFRICA

• Genale 6 - Government run project – 246MW - To be tendered as IPP - to be Commissioned
• Sor Hydro – Private Project - 50MW - To be tendered as IPP
• Upper Dabus – Private Project- 326MW
• Birbir - Private Project- 467MW
• Werabesa + Halele - Private Project 436MW – (Signed PPA TS) – to be commissionedYeda 1 + Yeda 2 - Private 280MW - To be tendered as IPP to be commissioned.
• Genale 5 -Private MW – to be commissioned
• Tams -Private 1700MW - to be commissioned
• Wabi Shebele - Private 87MW
• Lower Didessa - Private 550MW - to be commissionedTekeze II – Private - 450MW - to be commissionedLower Dabus - Private – 250MW to be commissioned
• Gojeb - Private – 150MW - To be tendered as IPP

Geothermal Power Projects:

• Corbetti - Private 1000MW - PPA MoU signed – to be commissioned

Tulu Moye & Abaya - Private 400MW - to be commissionedWind Power Projects:

• Ayesha I - Private – 120MW to be commissioned
• Ayisha II - Government – 180MW – to be commissioned
• Debrebirihan - Private – 100MW - To be tendered as IPP to be commissioned
• Adama III - Private – 150MW to be commissioned

Asela - EPC+F 100MW - To be tendered as IPP to be commissionedSolar Power Projects:

• Metehara - Identified 100MW -Procurement, letter of intent signed by EEP
• Humera - Private – 100MW - Tender process 2019
• IFC Scaling Solar Solar - Private 250MW - Tender Process 2019
• Mekele - Private 100MW - Tender process 2019.

³²African Development Bank – AEMP Ethiopia Orientation Paper
³³GoE Presentation AEMP 2018
³⁴GoE Presentation AEMP 2018

Investment opportunities for the private sector

Ethiopia cannot alone realize energy and overall infrastructural development. The private sector plays a paramount role in providing the capital, skill, knowledge and experience for transforming the economy. According to the World Bank report, in 2017 fiscal year Ethiopia's economy had grown by 10.3 percent. But due to forex shortage and other related challenges, in 2018 the rate had experienced a lapse to 9.7 percent. Many investors have been complaining about foreign currency constraints. There is the need on the part of the government to introduce incentives and do encouragements to further promote investment and attract more investors. A stabilized political situation is required for investors to invest their capital. Regarding this, Ethiopia has been taken as the symbol of peace and stability in the highly volatile East African region. However, in recent times, political unrest had broken out especially in Oromia and Amhara states. The inexpensive labor force is an opportunity to incentivize investors from around the world. This would open ample opportunities for Ethiopia to turn itself into the manufacturing hub of Africa. The government recognizes the important role of private sector investment in expanding renewable energy penetration. The main drivers of sustained growth are expected to be both public and private investments in infrastructure, opening up significant opportunities for the energy and electricity sectors.

Priority projects highlighted by the government during the Africa Energy Market Place 2018

Table 13 - GoE AEMP 2018 priority projects I³⁵:

Table 14 - GoE AEMP 2018 priority projects II³⁶:

Sample sources of concessional funding

• African Development Bank financing solutions: https://www.afdb.org/en/projects-and-operations/financial-products/
• A list of available sources are available here: https://www.get-invest.eu/funding-database/?_search=1
• Africa Renewable Energy Fund (AREF): https://www.gogla.org/africa-renewable-energy-fund-aref
• Africa Power Platform: http://www.africanpowerplatform.org/financing/grants.html
• Seed Capital Assistance Facility (SCAF): https://www.scaf-energy.org/
• Energy access Africa: https://energyaccess-africa.com/2016/10/10/funds-available-for-energy-access-companies-and-projects-in-africa/
• Energy Africa Infrastructure Fund: https://energyaccess-africa.com/2016/10/10/funds-available-for-energy-access-companies-and-projects-in-africa/
• IRENA/ ADFD: https://www.irena.org/ADFD/Project-Facility/Funding-Offer

³⁵GE AEMP 2018 presentation
³⁶GoE AEMP 2018 presentation

Contact information of local donor representations

About opportunities in the country

³⁷Ministry of Water Irrigation and electricity - Ethiopia 
³⁸https://www.res4africa.org/wp-content/uploads/2019/03/Integration-of-variable-renewable-energy-in-the-national-electric-system-of-Ethiopia.pdf
³⁹ENERGY STRATEGY NOTE ETHIOPIA - Energy, Climate and Green Growth Complex (PEVP)-July 2018
⁴⁰https://www.res4africa.org/wp-content/uploads/2019/03/Integration-of-variable-renewable-energy-in-the-national-electric-system-of-Ethiopia.pdf

About private sector participation

⁴¹http://www.unido.or.jp/files/Ethiopia-Investment-Policies-and-Incentives-and-Opportunities.pdf