Ethiopia looks to boost 'investment and expertise' for geothermal power projects

The IFC, part of the World Bank group, said it is working with Ethiopia’s government to boost geothermal development as part of the country’s efforts towards becoming 'carbon neutral' in power generation by 2025.

Geothermal energy is "abundant" in Ethiopia's Rift Valley, but "tapping the potential requires both investment and expertise, making it expensive and risky", the IFC said.

However, the IFC said Ethiopia's government "aims to tap more than 5,000 megawatts (MW) of operational geothermal capacity in the coming decades, which will require approximately $20 billion of investment".

To encourage private sector involvement, the IFC said on 14 January that it is working with Ethiopia's Ministry of Water, Irrigation, and Electricity and the state Ethiopian Electricity Agency "to create an investor friendly regulatory environment".

"IFC is lending support to government to enact regulations to facilitate private developers to engage in geothermal projects," the corporation said. "The goal is to harness the private sector’s financial and technical expertise, while ensuring that Ethiopia's geothermal resources result in broad benefits. Over the coming months, IFC and the ministry will be reaching out to the private sector and civil society stakeholders for input in the drafting of these regulations."

According to the IFC, new energy sources "are vital as demand for affordable energy rises in Ethiopia". Ethiopia has 2,300 MW of existing power generating capacity for a population of 90 million, the IFC said. However, the IFC said only 24% of the population has access to electricity. "Determined to increase access, the government has undertaken bold programmes to develop renewables. Recent power projects include the 1,870 MW Gibe III hydropower plant on the Omo River, which is expected to expand further," the IFC said.

Most of Ethiopia's energy is currently derived from hydropower generating facilities, "where supply is threatened during periods of drought", the IFC said. "Geothermal energy has the added advantage of being baseload power, meaning it does not depend on wind, sun or water, and is constantly available," it said.

Last year, Ethiopia kick-started its geothermal exploration by signing a 500 MW power purchase agreement for the Corbetti project, a joint undertaking in the south of the country between the government and Reykjavik Geothermal (RG), a US-Icelandic private developer.

Under an agreement with Ethiopia’s government, RG is building the facility in two phases (4-page / 1 MB PDF). The first phase, at a cost of $2bn, aims to see the initial 500 MW being brought on line by 2020, followed by a further 500 MW from the second phase in eight years.

The project plans to use geothermal energy from three different resources at Corbetti, Tulu Moyer and Abaya. RG has said that when complete the project will represent the largest foreign direct investment in Ethiopia.

RG has acquired geothermal exploration licences covering an area of more than 6,500 square kilometres in what is known as the Southern Lakes District of the Central Main Ethiopian Rift. Within that area, RG said its scientists had "pinpointed an area of 200 sq km in which temperatures up to 350C (662F) have been identified", indicating a potential of 500-1,000 MW.

In 2013, Norway agreed to provide Ethiopia with $13 million, through the World Bank’s BioCarbon Fund, to help the country’s carbon neutrality programme.