Ethiopia boasts considerable water resources. With two major rivers, the Blue Nile and the Omo, cascading from its high central plateau, the untapped hydropower potential in the country amounts to around 45,000 MW.
Hydropower currently accounts for over 80 per cent of the electricity produced in Ethiopia. The landlocked country is set to become a regional leader in the power supply business, exporting electricity to countries across the Eastern Africa Power Pool (EAPP) and beyond.
Ethiopia’s economy is one of the fastest growing in the world: growth averaged 10.8 per cent each year during the period 2003–13 according to the World Bank. Nonetheless, development has been constrained by power shortages and frequent outages.
Meanwhile, demand for electricity is expected to grow at a rate of 12.7 per cent each year according to the Ethiopian Electric Power Corporation. The rapid growth in demand is driven in part by concentrated efforts to increase the electrification rate and widen access to modern energy services.
To meet the growing electricity demand, both at home and in the region, Ethiopia has entered a second stage of concentrated, large-scale hydropower development over the last decade.
Gilgel Gibe III (1,870 MW), a USD 1.8 billion project, brought the first two of its ten 187 MW units online last year, while the remaining eight are expected to be put into service during 2016.
Situated in the south-west of the country on the Omo River, the station will contribute power to the national grid, which is exporting power to neighbouring countries in the EAPP, such as Djibouti, Sudan and Kenya. Ethiopia is currently exporting power to Djibouti and Sudan. Agreements have also been signed with Tanzania, Rwanda, South Sudan and Yemen.
Although Chinese firms and investments are supporting many of the large infrastructure projects in Ethiopia, the 6,000 MW Grand Ethiopian Renaissance Dam (GERD) is being funded without any foreign assistance.
There are also government plans to sell bonds in global markets in the future, and Ethiopia expects to recoup its investments through export revenues, which are projected to reach USD 1 billion per year by 2021.
Construction has already started on a 1,045 km transmission line between Ethiopia and Kenya, which will deliver electricity from GERD and other projects currently under construction. This USD 120 million project is financed by the World Bank and the African Development Bank (AfDB) on the Ethiopian side.
Despite its projected benefits to regional markets, GERD has been received with some controversy in the downstream Nile River countries, particularly Egypt. Nonetheless, an agreement between Ethiopia, Egypt and Sudan signed in March 2015 included an assurance from Ethiopia that the project will not significantly decrease the availability of water downstream.
BRL Group, a French consultancy, is carrying out an environmental impact study on behalf of the three countries. The Nile Basin Initiative is also running a regional power trade project which will help countries in the basin to implement hydropower projects of common interest.
GERD, Gibe III and Genale Dawa 3 were included in Ethiopia’s 2010–15 development strategy, the first Growth and Transformation Plan (GTP1). Together, they are set to boost the country’s installed capacity to over 10,000 MW by late 2016.
Moving forward, the second Growth and Transformation Plan (GTP2) outlines projects which will bring the country’s total installed capacity to 17,000 MW by 2020. This figure includes new hydropower facilities, alongside thermal, wind, solar PV, biomass and geothermal projects.
Within the GTP2 period, Ethiopia plans to commission a further 3,900 MW of new hydropower, including the 254 MW Genale Dawa 3 in 2016, and Geba I and II 385 MW in 2018. Further developments include Gibe IV and Gibe V (2,000 MW and 600 MW, respectively), as well as the Upper Dabus (326 MW) and Halele Werabesa (436 MW). Ethiopia also plans to begin construction on a further 7,500 MW spread across ten projects by 2020.
This country profile is featured in the 2016 Hydropower Status Report. You can download the full report here.
This profile was last updated in May 2016.