They say 'Necessity' is the mother of 'Invention' and 'Opportunity' is its father.
Driven by the ongoing economic and the energy sector reforms, the Ethiopian energy and power sectors have become attractive to private sector investment. Generation side independent power producers including geothermal and utility scale solar projects are being introduced, currently just passing the stage of a financial close, with lots of expectation to follow by other forms of generation technologies such as in hydro and wind. There are also a few PPP based examples in the transmission side albeit at an early stage.
Historically, the energy and power sector infrastructure development in Ethiopia has been dominated by public sector investment where the responsibility of communities and key stakeholders rested on the shoulders of the government. The private sector has been engaged mainly in consulting and contracting scope of works with minimum direct responsibility of engaging the wider community.
At the same time, until very recently, the communities buy in to the government’s aspiration of building infrastructure for a larger public good as opposed to the individual and communal loses they incur whether loss of their land, environmental safety concerns, disruption of their social constructs and etc. and despite incomparably lower (as compared to current market prices) compensations in place, the broken promises and the slow bureaucratic procedures they often faced. It is no more the same.
Note: the 2nd round of the tariff adjustment is in force since December of 2019
The Ethiopian Electric Utility made an adjustment to the Electricity/energy tariff applicable since the beginning of December 2018. The Electricity/energy tariff is one of the key factors that determine the investment decision of private players in the power sector of countries. After such a long delay, the utility has finally made a decision and increased the tariff as indicated in the tables below.
Apart from the increase of the rate, there is also a clear distinction between the old and the new tariff calculations in the residential category. Historically, the tariff used to be non-flat or an increasing rate. The new tariff is set in a block or flat range and will have major cost implication for the consumers. In the new tariff of the residential category, the energy in KWH is multiplied with the tariff block where the monthly energy figure rests.
The Energizing Finance series is an in-depth primary research and analysis by Sustainable Energy for All (SEforALL) and partners that examines supply and demand for finance across two key areas of energy access: Electricity and Clean Cooking.
This year's publication: Energizing Finance: Missing the Mark 2020 is just released and the report found out that financial disbursement to energy access continues to significantly lag behind commitments.
1956 required investment Vs 137 tracked investment
191 required investment Vs 0.9 tracked investment
Ethiopia attracted only USD 0.9 million in 2018 in contrast to the USD 191 million it needs annually to provide its entire population with access to clean cooking solutions
Ethiopia registered only 0.1 while Ghana achieved a USD 4.7 annually,
My Take Away
While the access deficit is huge, the financing for energy access both for electricity and clean cooking is meager. Further reform of the energy sector, enhanced financial commitment and faster execution of programs and projects is critical to realize the stated goals of reaching every Ethiopian household by 2025.
A tailored policy support in tandem with the burgeoning digital transformation strategy, new business models can help address the energy access needs of millions of households in the country while creating the needed jobs to the growing youth population. Ethiopia has become one of the few last frontiers in access to energy challenge, and there are whole lot of opportunities and solutions tested anywhere else that can be applied in Ethiopia. It just needs open mind and convenient business environment.