East Africa is on the verge of personifying an energy transformation. New advances in natural gas, wind, geothermal, solar power and potentially oil are emerging to feed the hungry markets, while large hydro will continue to expand as well. Ethiopia, a country of 92 million and 7+ percent economic growth, has been a driver in terms of regional electricity development. The Ethiopian Electric Power Corporation (EEPCO) was the vertically integrated utility that oversaw the present and planned future expansion.
In mid-December the Ethiopian Council of Ministers split state-owned EEPCO into two independent entities, transitioning to become an international company in the process. EEPCO had been the only player in the domestic electricity industry; it produced, transmitted, distributed and sold electrical energy in accordance with economic and social development policies and priorities of the government. However, its largess led to it becoming riddled with inefficiencies, an unsatisfactory record and it became outdated to meet the demands of Ethiopia’s new power service needs. The company was compelled to be restructured to upgrade its services.
Now the new Ethiopian Electric Services (EES), under an Indian company’s management (Power Grid Corporation of India), and Ethiopian Electrical Power (EEP) will be tasked with meeting the increasing electric service demand. The EES has the responsibility for operations, transmission, distribution and sale of electric power. And EEP will oversee the country’s power projects including large-scale plants and transmission lines.
This comes on the heels of a new proclamation that establishes the Ethiopian Energy Agency to replace the Ethiopian Electric Agency. The new agency has been given the responsibility for issuing permits for private sector players to generate, transmit, distribute, sell, import or export electricity. It also allows private companies to operate in the country, competing directly with the State utility.
These entities will continue to have complex challenges ahead – none more so than meeting the goal laid out in the government’s Growth and Transformation Plan (GTP). GTP seeks to increase the power generation capacity to 10,000MW, which currently tallies about 2,000MW and increase the high voltage transmission system by more than 7,000 kilometers (4,350 miles) and the distribution system by 250,000 kms (155,343 mi) by 2017. Many outside observers feel this is overly ambitious, but Ethiopia does have vast electric power potential. Looking farther down the road, Prime Minister Hailemariam Desalegn recently said: “My vision is that over the next 30 years, we will need to harness as much as 80,000MW of hydro, geothermal, wind and solar power, not just for Ethiopia, but for our neighboring countries as well.”
Ethiopia was one of six countries selected for President Obama’s Power Africa initiative (a new initiative to double access to power in sub-Saharan Africa) because of its ambitious goals in electric power generation and the utility and energy sector reforms that have been put in motion to create an environment for investment and growth.
Millions left in the dark
While the power expansion targets are important to keep the country moving forward to meet demand and an advancing economy, Ethiopia has lots of work to do to provide more of its citizens access to electricity, as well as more reliable electricity (system losses stand at 23 percent — ironically, there was a minute long blackout during the press conference announcing the split of EEPCO). According to a 2012 interview with EEPCo’s former CEO Mihret Debebe, only 47 percent of Ethiopians have access to electricity; this total was an even more unsightly 16 percent as recently as 2005, according to the World Bank. Ethiopia does have targets to provide electricity access to 75 percent and 100 percent of the population by 2015 and 2030 respectively. Availability of electricity now is concentrated in urban areas, even though 80-85 percent of the population is rural.
Rural communities in Ethiopia have poor access to overall energy, both for subsistence and productive purposes. Biomass fuels account for nearly 90 percent of all energy consumed in the country and kerosene lights the homes of around two third of Ethiopian households.
In addition, Ethiopia has one of the lowest per capita electricity consumption rates in the world. Electric power consumption tallies an appallingly low 51 KWh per capita (for comparison the U.S. measures 13,426 KWh per capita and South Africa 4,694 KWh per capita), according to 2011 World Bank statistics. Out of all countries measured, only Eritrea and Haiti rank lower.
The potential is abundant
Ethiopia does have the energy potential to meet the demand from its citizens, businesses and industries. Experts estimate Ethiopia’s hydropower potential is around 45,000MW and geothermal is 5,000MW, while its wind power potential is believed to be Africa’s third-largest behind Egypt and Morocco.
More than 8,000MW of the GTP is to be covered by the ramping up of hydropower due to its abundant availability and the fact that it is the cheapest source of electric energy, not accounting for environmental concerns.
One of the biggest hydropower generating megaprojects in Ethiopia, the Gilgel Gibe III on the Omo River, is expected to go fully operational in September and add a robust 1,870MW of electric power capacity to the national grid. But that pales in comparison to the Grand Ethiopian Renaissance Dam sited on the Blue Nile River, which, if completed as planned, will have a power capacity of 6,000MW. The expected completion date is 2017, but the project has been met by opposition from Egypt and Sudan as it could influence the amount of potable water the downstream countries receive. Egypt, Ethiopia and Sudan formed a tripartite technical committee to study the possible effects of the dam to try to generate consensus. Ethiopia maintains that Egypt’s water share will not be negatively affected by the successful completion of the project. However, plans thus far have failed as Egypt and Ethiopia do not seem able to agree.
Already relying on hydroelectricity to meet 90 percent of the country’s needs, it is important to offset the dry season when reservoirs are low. Ethiopia does have plans to expand geothermal and wind, and to explore solar energy projects.
One of the largest power projects is the Corbetti geothermal plant, which will become the first independent power producer (IPP) in Ethiopia. The term sheet of the deal is for a 1,000MW plant (by far the largest in Africa) to be built in stages over 8-10 years. The $4 billion project, overseen by project developer Reykjavik Geothermal, expects the first 10MW of power to be on-line in 2015, with an additional 100MW in 2016, and the balance of the first phase 500MW on-line in 2018. No other details have been provided for the second 500MW. Other geothermal projects include Dofan, Tendaho and the expansion of Aluto-Langano.
The $290 million Ashegoda wind project was inaugurated in September and feeds 120MW into the grid. At the launch, Prime Minister Desalegn said: “Various studies have proved that there is potential to harness abundant wind energy resources in every region of Ethiopia.” There are a host of other wind projects in various stages across the country including Adama II, Aysha and Debre Birhan. Ethiopia has targeted the installation of around 800MW wind generation on identified potential sites before the year 2015.
In addition, the government is working on its ambitious plan to make the power sector one of the major export earners for the country and being a major contributor to the East African Power Pool (EAPP) enhancing co-operation and regional integration. Already Ethiopia supplies power to neighboring Djibouti and Sudan. Ethiopia and Kenya will partner on the Eastern Africa Electricity Highway, which is planned to be a 500 kV HVDC 665 mile line with a power transfer capacity of up to 2,000MW. Ethiopia and Kenya signed a 25 year power purchase agreement (PPA) in March 2012 for 400MW at an energy price of US$ 0.07/KWh. The transmission line is estimated to cost $1.26 billion — co-financed from various multilateral development banks – and is expected to be completed by 2018. Deals between South Sudan and Uganda are underway, a line to Eritrea was rejected due to political circumstances and the country has considered a 26 km undersea transmission line for exporting electricity to Yemen via Djibouti.
A bright future
As Ethiopia continues to grow economically and increase it base of industry, power demand will continue to climb. The splitting of EEPCO is a step on the path to making the country’s power supply more efficient and reliable. Attaining 10,000MW by 2017 seems daunting, but with Ethiopia’s mostly untapped energy reserves as described and with feasible planning and funding, reaching that target should be exceeded. This new domestic power era can stimulate opportunities for its citizens for socioeconomic mobility, increase electricity access and allow greater per capita consumption, while nationally maintaining energy security. Ethiopia’s future looks bright.
