Ethiopia signed a land mark PPA agreement for two geothermal projects , Corbetti Geothermal and Tulu Moye Geothermal, as the press release from Reykjavik Geothermal and the state media, EBC, stated.
The signing of these projects will have two major implications for the power sector in the country. On the one hand, as optimists hopped, it might be the beginning of a large overhaul of public and private collaboration through PPPs and PPAs, a clear departure from the dominant public sector led infrastructure development. On the other hand, it shows the EEP's, the state power generator and transmitter, determination to diversify the energy sources upholding the energy security of the country. This is a new experience that begins to unfold in Ethiopia. For both assumptions to work, however, there remains a lot of work to be done by all the stakeholders so that the energy sector of the country moves forward.
The Ethiopian Government has agreed to pay $0.075 cents per kwh for the Corbetti project while paying $0.069 cents per kwh for the Tulu Moye and Abaya projects which will be developed in the second phase as the developers have a scale advantage on the Tulu Moye/Abaya projects and hence feed-in price reduced(Zekarias Amsalu, 2017).
The feed in tariff agreed is way above the current grid price of electricity in the country. The average current grid price of electricity is about 0.03cents per KWH. How EEP will make up the balance will be left for the future as and when the details emerge.
The 1000 MW project will cost up to USD 4 billion in the coming 7-8 years as the company’s press release and the IPPs are responsible for project development, financing, construction, and operation and awaiting parliamentary approval by early 2018 to start the work.