Renewable Energy Prospects On The Up

The commissioning of a 120MW wind power plant in Ethiopia is extremely positive news for the country and its renewable energy prospects. We believe Ethiopia stands in good stead as it strives to become a key power and renewables market in Sub-Saharan Africa (SSA) and the successful completion of projects such as the Ashegoda wind facility lends credibility to Ethiopia's capacity expansion and regional power export ambitions. That said, financing is likely to remain a key issue, but with multiple participants involved, risks with regards to project financing can be limited.

It was announced in late October that the 120MW Ashegoda wind power plant in Ethiopia, the continent's largest operational wind farm, was completed and brought online, at a total cost of US$290mn. Although the project has been subject to delays (construction began in 2009 and it was initially scheduled to be completed in 2011), we believe the news is hugely positive for Ethiopia's power and renewables sectors; helping the country diversify away from an over-reliance on hydropower and lending credibility to Ethiopia's ambitious power export aspirations.

At present, Ethiopia relies on hydropower for roughly 97% of its electricity generation, a situation that sometimes proves problematic given the climatic variations within the country. However, steps have been taken to both expand and diversify the country's electricity sector- incorporating non-hydropower renewables into the mix. In fact, the Ethiopian Ministry of Water and Energy announced at the end of August that, as part of a World Bank-funded programme launched in December 2012, over 13,200 solar systems had already been installed in rural communities that were not connected to the grid (see 'Solar Lighting Up Rural Areas', September 3). In relation to the wind segment, the Ashegoda plant is not the first wind power project in Ethiopia, as the 52MW Adama 1 plant was reportedly brought online in 2011, and other wind projects are in the pipeline; underpinning our relatively positive forecasts for the wind sector.

Hydro Heavy
Ethiopia Total Net Generation, By Type (TWh), 2013f

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This article is tagged to:
Sector: Power, Renewables
Geography: Ethiopia

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