Ethiopia has taken significant steps to boost the country’s energy generation, following the signing of an agreement to build two geothermal power plants at a combined cost of $4 billion.
The two plants, to be built at Corbetti and Tulu Moye in the volcanically-active Rift Valley south of the capital Addis Ababa, will have a combined 1,000 MW of power when completed in eight years.
The plants will be run by the country’s first privately-owned utility for a period of 25 years.
The East African country is eager to match rising energy demand from its industries, as well as becoming the continent’s biggest exporter of energy.
“No doubt the success of this effort will have a significant impact in the country’s future economic well-being,” said Azeb Asnake, Chief Executive of Ethiopian Electric Power (EEP), a state-run firm.
The project’s equity investors include the Paris-based asset manager Meridiam, as well as the Africa Renewable Energy Fund and InfraCo Africa – funds that focus on infrastructure.
“Going forward, the government recognizes the added value to be gained by working in partnership with the private sector, specifically in sharing with it the burden of investment for large-scale power generation,” Seleshi Bekele, Minister of Water, Irrigation and Electricity, said.
Under a new 2015-2020 development plan, Addis Ababa wants to raise power generation to 17,346 MW from a current capacity of just over 4,300 MW from hydropower, wind and geothermal sources.
It has an array of projects under construction, including the $4.1 billion Grand Renaissance Dam along its share of the Nile river that will churn out 6,000 MW at full capacity upon completion within the next 10 years.
However, the country’s power ambitions have also caused disputes. Egypt – solely dependent on the Nile – is concerned that the Renaissance Dam will reduce the river’s flow. Both countries are currently at odds over the project’s technical details