Ethiopian Energy^Power Business Portal

(Harvard political Review/ , 16 April 2018)

Ethiopia’s economic success has attracted widespread attention. Its GDP grew by 10.5 percent annually between 2006 and 2016, outpacing East Africa’s 5.4 percent growth rate over the same time period. As extreme poverty declined by nearly 40 percent in the country between 2000 and 2011, Ethiopia is quickly emerging as a model of how rapid development can swiftly improve the quality of life for millions. This economic boom has also raised living standards by stimulating rapid, dramatic changes in Ethiopia’s power generation sector. In particular, Ethiopia’s ruling coalition — the Ethiopian People’s Revolutionary Democratic Front — has focused on exploiting the country’s immense renewable energy resources, especially its hydro and wind potential.  Its electric grid, with the highest installed capacity in Sub-Saharan Africa at 4.5 GW, is one of few in the world almost entirely based on renewable resources. With its pledge to cut emissions by 64 percent by 2030 following the Paris Climate Summit, Ethiopia has bucked the stereotype of rapidly developing countries opting for cheaper fossil fuels to satisfy growing demand.

Although Ethiopia’s growing electric power industry has generated excitement among both environmentalists and developmental economists, inequalities in Ethiopia’s distribution network persist. Nearly three quarters of the population still lacks access to electricity. While the EPRDF continues to focus on building the country’s renewable capacity, it must also prioritize improving electricity access for all Ethiopians.

The Cleanest Grid on Earth?

The expansion of Ethiopia’s electricity sector has been no small feat, and Addis Ababa has invested heavily in its vision of a clean energy future. In 2010, the EPRDF released its first Growth and Transformation Plan (GTP), which ambitiously dictated a quadrupling of power generating capacity from 2000 MW to 8000 MW within five years. Although this goal was not met, the completion of enormous projects such as the 1870 MW Gibe III Dam has still allowed Ethiopia to double its generation capacity. With powerful rivers such as the Blue Nile and Gilgel Gibe within its borders, Ethiopia has realized and begun to exploit its extensive hydro potential. The EPRDF is currently funding the construction of what will be Africa’s largest dam upon completion — the $5 billion, six GW Grand Ethiopian Renaissance Dam.

Ethiopia’s failure to achieve the objective set by the first GTP has done little to diminish the country’s ambition for its electricity sector.  The country’s second GTP, published in 2016, calls for 17 GW of installed capacity by 2020. In addition to the completion of the massive Grand Renaissance Dam, Addis Ababa seeks to make up the gap by focusing heavily on building wind farms. At the end of 2015, wind accounted for just 324 MW in Ethiopia’s energy mix, a number that should balloon to 5 GW pending the completion of five new wind farms by 2020. In total, Ethiopia’s abundant hydro and wind resources could allow for 45 GW and 1000 GW of electricity production, respectively. The country has already become an energy exporter to countries in the region such as Sudan and Kenya, and it hopes to expand this role in the near future.

Left in the Dark

While the EPRDF may already be enthusiastic about distributing its electricity abroad, there is still a gaping discrepancy between plentiful resources and unmet demand at home. While it seems plausible that this inequality results from infrastructural shortcomings, a recent World Bank report notes that 80 percent of the population lives in proximity of medium-voltage transmission lines. Yet only 24 percent of primary schools and 30 percent of health clinics have access to electricity.

The disparity between Ethiopia’s abundant resources and electricity penetration partially stems from the mentality of the elite leading the country’s economic transformation. In an interview with CNN, Zemedeneh Negatu, a managing partner at Ernst and Young Ethiopia, emphasized the country’s “industrial-based” strategy focused on manufacturing “value-added things.” Heavy industry requires substantial electric input, limiting the electricity available for Ethiopian residences, especially those outside urban areas. Parallels between the GTPs and the Soviet and Chinese Five-Year Plans, which implemented rapid-development strategies at a great toll to the citizenry, are difficult to overlook. These similarities emphasize the possibility that the EPRDF is prioritizing industrial development over improving living standards for the general populace.

The government’s construction of massive power plants like the Grand Ethiopian Renaissance Dam may also be driven by a nationalist agenda detrimental to the interests of its constituents. The EPRDF is funding the $6 billion dam by itself, through domestically issued bonds and private citizens’ donations after adamantly rejectingforeign investment. For a government with a $14 billion budget, proving that it can take on such an enormous project independently is likely a ploy to stir up national pride. Unfortunately, this strategy will only restrict critical investment in the grid’s distribution network.

Light at the End of the Tunnel

Thankfully, the EPRDF has belatedly acknowledged the gap between production and distribution and is now taking necessary action. In November 2017, the government in Addis Ababa launched the National Electrification Program, a plan to make access to electricity universal by 2025 with 65 percent of the population on the grid and 35 percent using off-grid technologies, such as stand-alone solar systems and mini grids. Much overdue, the EPRDF is beginning to recognize the importance of simultaneously expanding the grid and improving its accessibility in generating broad-based growth. The government must continue to prioritize increasing electricity access for its people because for the Ethiopians who are only now coming out of the dark, it is better late than never.



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