Ethiopia is poised to become a significant player in Africa’s energy sector with its ambitious plans for expanding electricity production and exportation. Spearheaded by the Ethiopian Electric Power (EEP), the country aims to extend its grid to Tanzania and target South Africa within the next five years.
This initiative is driven by the nearing completion of the Abbay Dam, which stands at an impressive 95% capacity, indicating Ethiopia’s increased domestic energy production and its potential for broader regional impact.
The Abbay Dam, also known as the Grand Ethiopian Renaissance Dam (GERD), is a massive hydropower project on the Blue Nile River. With a capacity of 6,450 MW, the GERD not only generates power but also provides flood protection, irrigation, sediment control, and navigation benefits.
Its development positively impacts downstream countries by regulating flow, controlling floods, and reducing reservoir maintenance costs.
Currently, Ethiopia meets 90% of its electricity demand domestically, with the surplus being shared with neighboring countries. This has led to substantial revenue from power exports, exceeding USD 100 million, with significant agreements already in place with Kenya.
Ethiopia’s energy sector is pivotal to its economic development, and the country boasts abundant renewable energy resources. Hydroelectric power constitutes the majority, accounting for 90% of Ethiopia’s energy supply, followed by wind, and geothermal sources.
Despite these resources, Ethiopia’s current installed generation capacity of 5,200 MW falls short of meeting its energy demands, reaching less than 60% of the country’s needs.
Ethiopia’s energy supply primarily relies on biomass, with electricity contributing only a small fraction. However, there has been a significant increase in electricity generation over the years, driven by policy reforms such as the Energy Law and the National Electrification Plan (NEP).
The NEP, launched in 2017 and further elaborated in 2019 (NEP 2.0), aims to achieve universal access to electricity by 2025 and 96% on-grid access by 2030.
Ethiopia’s energy export agreements extend beyond its immediate neighbors. Ethiopia exports electricity to Djibouti, Sudan, and Kenya. Ethiopia has a 400 MW PPA to export power to Kenya and can export up to 100 MW each to Sudan and Djibouti. Ethiopia also has deals to send power to Tanzania, Rwanda, South Sudan, and Yemen.
The country’s energy sector support aligns with broader initiatives such as Power Africa 2.0, focusing on promoting economic prosperity, sustainable development through private sector-led partnerships. It also includes enhancing the enabling environment for energy transmission and distribution.
Diversification is a key strategy for Ethiopia’s energy sector, aiming to transition from hydro-dominated to a more climate-resilient mix of solar, wind, and geothermal sources. The Government’s electrification programs have been particularly successful, expanding the electricity grid to nearly 60% of the country.
Furthermore, initiatives like the Sustainable Energy Fund for Africa (SEFA) demonstrate Ethiopia’s commitment to unlocking private sector investments for universal access to affordable, reliable, and sustainable energy services.
