Ethiopian Energy^Power Business Portal

Macroeconomic performance

Real GDP growth slowed in 2017/18, due partly to civil unrest, political uncertainty, and policy adjustments that involved fiscal consolidation to stabilize the public debt. On the supply side, GDP growth was driven by services (8.8% growth) and industry (12.2%), facilitated by the development of energy, industrial parks, and transport infrastructure. On the demand side, private consumption and investment continued to drive growth, along with the government’s stable spending on public infrastructure and strong foreign direct investment inflows.

With a public debt–to-GDP ratio of 61.8% at the end of June 2018, Ethiopia remains at high risk of debt distress, according to a 2018 debt sustainability analysis. A tax transformation program is under way to strengthen tax policy and administrative efficiency.

A reduced trade deficit and strong growth in remittances helped improve the current account deficit from 8.1% of GDP in 2016/17 to 6.0% in 2017/18. Gross official reserves remained low, at 2.5 months of imports in 2016/17 and 2.1 months in 2017/18.

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Global clean energy investment[1] totaled $332.1 billion in 2018, down 8% on 2017. Last year was the fifth in a row in which investment exceeded the $300 billion mark, according to authoritative figures from research company BloombergNEF (BNEF). There were sharp contrasts between clean energy sectors in terms of the change in dollar investment last year. Wind investment rose 3% to $128.6 billion, with offshore wind having its second-highest year. Money committed to smart meter rollouts and electric vehicle company financings also increased.

However, the most striking shifts were in solar. Overall investment in that sector dropped 24% to $130.8 billion. Part of this reduction was due to sharply declining capital costs. BNEF’s global benchmark for the cost of installing a megawatt of photovoltaic capacity fell 12% in 2018 as manufacturers slashed selling prices in the face of a glut of PV modules on the world market.

Solar commitments declined 24% in dollar terms even though there was record new photovoltaic capacity added, breaking 100GW barrier for the first time.

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Humanity has never before had such resources, knowledge, and technology at its disposal — yet it is a long way from translating those advances into decent lives for all the world’s people. We believe that innovation by businesses large and small can play a central role in closing that gap and solving the world’s challenges. Africa’s shortage of electric power is one of the greatest such challenges, and the push to electrify the continent provides inspiring examples of entrepreneurial solutions.

A few numbers show just how far Africa has to go in power generation. Electricity con­sumption per person in large African countries such as Ethiopia, Kenya, and Nigeria is less than one-tenth that of Brazil or China. In poorer countries such as Mali, a typical household uses less electricity in a year than a Londoner uses to boil a kettle each day. And nearly 600 million people in sub-Saharan Africa lack access to electricity altogether — with the result that whole communities literally live half their lives in the dark.

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One of the most overlooked development success stories right now is that the population without access to electricity has fallen below 1 billion for the first time since records began. New data from the International Energy Agency (IEA) shows that in 2017, 120 million people gained access to electricity, meaning more people today have access to electricity than ever before. India has electrified all its villages; in Indonesia, the electrification rate is 95%, up from 50% in 2000. Kenya’s access rate has increased from 8% in 2000 to 73%, and Ethiopia has lifted access from 5% to 45% in the same time.

Modern energy access transforms lives in a myriad of ways. Energy not only powers lights that allow children to do homework and light streets to make them safer, but also the fridges that keep food hygienic and vaccines usable, the technology that brings healthcare and education into the modern age, and allows the economic development that can only be achieved through modern farming, commercial enterprise and industrialization.

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