Ethiopia - Country Commercial Guide

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2020-07-20


Ethiopia has abundant renewable energy resources and has the potential to generate over 60,000 megawatts (MW) of electric power from hydroelectric, wind, solar and geothermal sources. As a result of Ethiopia’s rapid GDP growth over the previous decade, demand for electricity has been steadily increasing. Despite Ethiopia’s energy potential, the country is experiencing energy shortages and load shedding as it struggles to serve a population of over 110 million people and meet growing electricity demand that is forecast to grow by approximately 30% per year.

Energy Resource Potential of Ethiopia



Exploitable Reserve

Exploited Percent







4 – 6


Wind: Power












Million tons



Agricultural waste

Million tons



Natural Gas

Billion m3




Million tons



Oil shale

Million tons



                                       Source: Ethiopian Electrical Power

Under GTP II (2015-2020) the government has planned to increase the installed generation capacity by an additional 5,000 MW by 2022. Based on updated planning projections from Ethiopian Electric Power (EEP), the forecasted total installed generation capacity will be 10358 MW by 2022. EEP is charged with maintaining more than 14 hydropower and three wind power plants throughout the country, and EEP has announced that it will not develop or operate new power generation facilities going forward. EEP will instead focus on management of existing power generation plants, substations and transmission lines, with all new power generation projects to be developed as Independent Power Producers (IPPs).

Ethiopia’s Growth and Transformation Plan I (GTP) outlined a 15-year plan with three 5-year phases to transform Ethiopia from a developing country to a middle income country by 2025. Under GTP I (2010-2015), the goal had been to increase the installed generation capacity from 2,000 MW to 10,000 MW primarily through hydro power projects. With some of those projects still under construction, the country currently has approximately 4,500 MW of installed generation capacity.

Approximately 90% of the installed generation capacity is from hydropower, while the remaining 8% and 2% is from wind and thermal sources, respectively. The hydro dominated systems have been severely affected by drought, and the Government of Ethiopia (GOE) is now diversifying the generation mix with other sources such as solar, wind, and geothermal that will result in a more climate-resilient power system. Currently all hydro power dams are producing well below capacity. An assessment has been conducted to propose renovations and optimization of their output.  The Grand Ethiopia Renaissance Dam (GERD), with a projected installed capacity  of 5,600 MW, is under construction by the Ethiopian Government and is 77%  completed as of mid-2020. The GOE has prioritized construction of the GERD, which is intended to serve as an engine for industrialization, economic development, and hard currency earnings through the export of electricity.

The Metahara solar IPP project is expected to generate 100 MW after the signing of a Power Purchase Agreement (PPA) and approval of the Implementation Agreement (IA) between Enel Power, an Italian firm, and the GOE. Enel will develop and operate the project. A Saudi firm, ACWA Power, has won a tender to develop two solar power projects, valued together at $300 million, in  Afar and Somali regional states with a capacity of 250MW. ACWA Power offered 2.5260 US cents/kwh for power generated at these two sites, Gad and Dicheto. There are also six other IPP solar power projects in the pipeline, but these are currently suspended due to financing related matters.

The GOE is also working with the private sector to implement the Corbetti and Tulu Moye geothermal projects. Although the two non-tendered geothermal contracts were signed at over 1,000 MW with 500 MW for Corbetti and 500 MW for Tulu Moye in 2015, the GOE recently renegotiated these contracts. After the renegotiation, the 1,000 MW combined upper end was reduced to 300 MW with 150 MW each for Corbetti and Tulu Moye. Finally on March 31, 2020, the Power Purchase Agreements (PPA) and Implementation Agreements (IA) were signed between GoE and Corbetti and Tulu Moye.  The total investment required to develop these projects is approximately $1.2 billion.  The signing of these two projects paves the way for upcoming geothermal projects, creating opportunities for U.S. IPP developers.

In 2018, Africa’s first waste to energy facility, with a generation capacity of 25 MW of electricity, was inaugurated in Addis Ababa and started producing power. This facility has the capacity to consume 420,000 tons of trash per year. Cambridge Industries built this waste to energy project.

Ethiopia exports electricity to Djibouti and Sudan (up to 100 MW/each). There is a plan to increase power exports to Djibouti up to 400 MW due to a growing demand in the region. Ethiopia is also negotiating a PPA to begin exporting up to 400 MW of power to Kenya.

The total transmission line length within Ethiopia has reached 17448 km, and an additional 4000 km of transmission lines is under construction. This will increase the total transmission line length to 21448 km by 2022. According to the GOE’s recently launched National Electrification Program 2.0, 44% of the country has access to electricity (33% on-grid, 11% off-grid). However, over half of the on-grid consumers (3.8 million households) do not have a formal connection.

The GOE recognizes that partnership with the private sector via IPP agreements for power generation is crucial to meeting the country’s needs. EEP has developed procurement processes to select contractors and is awarding projects using a competitive bidding process. Under the Global Procurement Initiative, the U.S. Trade and Development Agency (USTDA) has provided a grant to develop a procurement manual for EEP that incorporates full life cycle cost analysis. Power Africa has assisted EEP with the development of IPP tender documents and the legal and regulatory IPP framework. In 2018 Ethiopia enacted a proclamation to regulate PPP arrangements, in an effort to attract investment and in recognition that the private sector is essential to supporting the country’s economic growth and improving the quality of public services, particularly in infrastructure. Following this proclamation, the PPP Directorate under the Ministry of Finance identified 14 power projects to be pursued by the government, which includes five major hydro and eight solar IPPs at the cost of $5.3 billion for a total generation capacity of 3000 MW.

Power Africa Support:

To help achieve Ethiopia’s goals of expanding access to electricity under the Growth and Transformation Plan and National Electrification Program 2.0, Power Africa supports the development of new generation and connections, rehabilitation of the distribution system, self-sufficient utilities, and delivering power to the majority of the population living off-grid. This support is delivered through wide-ranging technical assistance in cooperation with international finance institutions and other development partners. In supporting the entry of the private sector, Power Africa has assisted with new IPPs and the transition to competitive tendering, as well as strengthened the energy regulator.

Energy sector support in Ethiopia is in line with Power Africa 2.0 objectives, which include advancing sustainable development through private sector led partnerships; promoting economic prosperity; and an increased focus on the enabling environment, transmission, and distribution. Technical assistance includes:

•           Developing laws and regulations that will facilitate private-sector investments through IPPs in geothermal, solar, wind, hydro, and biomass generation projects.

•           Supporting EEP’s use of a competitive and transparent procurement process for IPP generation projects.

•           Assisting EEP and Ethiopian Electric Utility (EEU) with the planning, operation, and maintenance of generation, transmission, and distribution systems as the grid is expanded.

•           Introduction of the national grid code and support to the Ethiopian Energy Authority (EEA) in its implementation and enforcement.

•           Developing a process for EEU to improve distribution efficiency and assist with the introduction of “smart grid technology”.

•           Support to improve the commercial performance of the utility and decrease aggregate losses.

•           Strengthening the ability of EEA to determine tariff rates, and issue energy licenses and permits.

•           Support to off-grid electricity planning.

•           Supporting the Eastern Africa Power Pool to promote cross border power trade between Ethiopia and other member countries.

For more information on the Power Africa strategy to address key challenges in Ethiopia’s electricity sector and their support for private sector investment in energy, please refer to:

Renewable Energy Market (‘000)                                


Unit: USD ‘000







2021 (estimated)

Total Market Size






Total Local Production










Total Exports










Total Imports









Imports from the United States






Exchange Rate:






Source: National Bank of Ethiopia and EEP

Leading Sub-Sectors  

•           Engineering services to supply more renewable energy sources, such as wind, solar, geothermal, biomass (municipal landfills, organic waste) as well as hydropower, are highly desired in Ethiopia.

•           Supply and/or manufacturing of drilling rigs and associated equipment, sub stations, hydro turbines, electric and electrical cables, transformers, transmission equipment, electric meters, and expertise are desired.


The GOE has opened the renewable energy sector for private sector involvement in competitively tendered IPP hydro and solar projects.

In addition to the generation of power from renewable energy sources, aging power plants, substations and transmission lines require substantial maintenance and overhaul so as to increase the overall efficiency. These maintenance requirements are key business opportunities for U.S. businesses or investors.

For specific details on the tender announcements and instructions, please refer to Ethiopian Electric Power Company’s website:

Please refer to the Project Financing section of Chapter 7: Trade and Project Financing for specific project opportunities.

Web Resources

Power Africa

United States Agency for International Development

Ethiopian Electric Power (EEP)

Ethiopia Electric Utility (EEU)

Ministry of Mines

Ministry of Water, Irrigation, and Energy

The World Bank