Strenghtening of the geothermal sector in Ethiopia

Abstract

The goal of this study is to analyse the current status of geothermal development in Ethiopia and explore a way to strengthen it. The objective is to study how to improve the electricity generation mix in Ethiopia with geothermal power and to analyse how substantial amounts of stable baseload power will increase the electricity sector’s reliability. Ethiopia has experienced strong economic growth over the past decade and is with an averaged- of around 10% growth per year the fastest growing economy in Africa. Today about 20.6% of the population lives in urban centres, with the great majority of them living in Addis Ababa. Access to electricity in urban areas is 85.4% and 26.5% in rural areas. It has been estimated that Ethiopia has a geothermal power generation potential of up to 10,000 MW. The estimated potential is found in different places in the Ethiopian rift valley. A recent geothermal master plan study was conducted including 22 potential geothermal areas. Of these prospected areas the government of Ethiopia prioritizes 7 sites for the development of a geothermal project.

Geothermal energy could reduce Ethiopian dependency on hydro power alternatives, helping to provide stable electricity and increase the energy security of the country. The government of Ethiopia recognizes that engagement with the private sector as Independent Power Producers (IPP) for power generation is crucial to meet the country’s needs and enabling the country to develop. Ethiopia has increased its electric generation capacity during the last two decades from 380 MW in 1991 to around 4355.8 MW in 2018. The actual consumption of electricity energy has been increasing at an annual average rate of about 25-30%. Hence, the government of Ethiopia has planned to increase the electric generation capacity of the country to about 25,000 MW by 2030, utilizing hydro, wind, geothermal and solar energy to address and satisfy domestic demand and export the surplus neighbouring countries. The government needs to explore all options to increase the energy availability in the country including PPP and IPP to radically improve the energy sector in the country and enhance service delivery to their people. Geothermal development business models allow the government to share risks and responsibilities with private firms while ultimately retaining control of assets what will improve services while avoiding some of the pitfalls of privatisation such as unemployment, higher energy prices and corruption