Ethiopia energy sector gets US$17.5m from AFD and EU

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Ethiopia has signed a financing agreement to see the French Agency for Development provide US$9.5m loan and European Union Trust to provide about US$8m loan in order to revamp its geothermal energy sector. The agreement was signed in a ceremony held at the Ministry of Finance and Economic Development on 7th last week.

The amount will be spent on identifying of low-carbon geothermal resources and developing these resources to exploit the huge energy resources Ethiopia has. Some amount will also be spent on strengthening the capabilities of Ethiopia Electric Power (EEP) and the Geological Survey of Ethiopia (GSE), purchasing equipment and developing shallow reservoir.

The funds will be channeled in development of Tendhao Geothermal Energy Project  in the north-east Ethiopia. Review of previous geo-scientific studies revealed that there were knowledge gaps and unresolved issues that needed to be solved in order to identify the exact targets before deep well drilling was carried out. This made Ethiopia, through the Geological Survey of Ethiopia to ask UNEP for its technical and financial support to do indepth surface exploration studies although there were previous studies done.

The results would see capital investment on exploration by a number of investors identified by Ethiopia, including African Union Commission (AUC)-German development Bank (KfW) Geothermal Risk Mitigation Facility (GRMF) and by other potential geothermal private and public sector investors.

The proposal was reviewed and approved by UNEP in 2013 and a conceptual model that revealed three wells was arrived at from this process. The country is hoping that the Dubti-Ayrobera geothermal project will generate about 100MW of power by 2016. The plant will be installed after deep resource at Tendhao has been proven.

The Japanese government is funding the Alto Langano geothermal power plant – a 70 MW electric power plant Lake Langano, which is expected to start power generation by the end of 2018. It was reported that the Ato Langano geothermal power plant was experiencing shortage of water for initial test drilling this January. The Corbetti geothermal power project also received US$8m last year from the EU and the African Union (AU) and the Icelandic-US private developer, Reykjavik Geothermal Limited (RG) to see the drilling of two wells. 500MW Phase 1 is expected in 2018 while the second phase is expected to be finished in 2021. An additional US$178.5m was approved from World Bank last year for Geothermal resources development.

The agreement was put to pen by the State Minister of the Ministry of Finance and Economic Development of Ethiopia Ahimed Shide and the French Agency for Development Regional Manager in Addis Ababa, Christian Yoka. Also present at the signing was State Minster for Development of the French Ministry of Foreign Affairs, Girardin.