Ethiopia has long been realized the potential of its
renewable energy resources of hydro, solar, wind and geothermal energies in
changing the economic fortune of the nation and the people. In light of these
clean, abundant and feasible resources, the nation has engaged itself
to the development of the energy resources probably more than any of its peers
in the region. The available renewable energy resources if developed has
been dubbed not only help meet the local energy demand but also be an
additional income to the nation from the energy export to the countries in the
region.
Hence, the nation has been aggressively working on
the full packages of generating, transmitting and distributing power of
mixed resources to address the energy deficit in the country and beyond.
Irrespective of the ongoing massive efforts, however, it will likely take
longer to clear the backlog of the energy investment over the years
undone mainly due to conflicts and overlooking the energy demand growth before
the people see the nation balancing the energy supply and demand.
To address the prevailing energy poverty, and increase the electricity access per capita of
Ethiopians, it needs the full participation of the private sector not just only
the efforts of the state.
While the contentious Grand Ethiopian Renaissance Dam, Gibe
strings, and the Genale Dawa power
plants lead the generation of power in the country, the shining, new built,
transmission towers crisscrossed all over the country, and
the distribution lines being undertaken, under universal
electricity access program, are indicative of the high level of engagement in
the power infrastructure.
Commitment:
The Ethiopian government's pledge in the Powering Africa: Ethiopia meeting to spend 20 billion dollars on the power development program in the second generation of the Growth & Transformation Plan (GTP-II), from 2015 to 2020, consistent to the country's annual spending track record of two billion dollars for the past three years is another renewed commitment to the energy industry.
To achieve both the ambitious goals of meeting the local energy demand and exporting power to the neighboring countries, Ethiopia should genuinely thrive to avoid the brakes on energy developments such as timely reforming the barriers in the national energy policy. Promoting Public Private Partnerships are also at the nation's disposal to shape the energy future. The energy sector policy should be made wide enough to accommodate best business practices and to the regional competitive standards, at least.
Professionals and the energy stakeholders should be encouraged to be proactive in the participation of international and regional energy conferences to inform the opportunities for investment in Ethiopia.
The new energy law enacted recently allows private developers to generate and sell power to the Ethiopian Electric Utility. So far, Reykjavic Geothermal, the Icelandic company, signed a memorandum of understanding with the Ethiopian Government to generate 1000 MW from geothermal reserve near Shashemene town. Reykjavik which plans to invest USD 4 billion on the geothermal project is negotiating to sign the first power purchasing agreement in the history of the country. Others should also be allowed to follow suite to change the energy picture of the nation once and for all. The competitive environment will create many more advantages to the nation's energy industry.
Financing
For decades in to the future, the investment on energy
resources in Ethiopia seems promising though the financing for such
vast magnitude initiatives remain a challenge. Yet, the global
economic condition has its own role to play as to how and where the funding
comes from. The overall sluggish progress of the current world economy will
increase the uncertainty of the financial resources Ethiopia is
looking for. Despite the challenges; however, the current level of interest
by international financiers to finance
the Ethiopian energy projects is getting better, thanks to the
relentless efforts of the government and all the partners for promoting the
nation's business opportunities, which should be maintained in the times ahead.
The nation's entrance in to the international
capital market this past year has still an
important contribution but it is not yet clear what percentage of the fund is
to be allocated to the energy infrastructures.
Funding massive infrastructure projects with local capacity
has also been started which is critical particularly
to controversial but monumental projects.The 300 MW Tekeze
hydroelectric power plant,
the tallest
dam in Africa by the time, 460 MW
Tana Beles multipurpose hydroelectric power plant and the ongoing 6000 MW Grand Ethiopian Renaissance Dam showcases
the extent of the local capacity to build massive projects.
If the decline in oil price, about 60 percent since the end of 2014,on the global market which comprises about one fifth of Ethiopia's total import cost sustains, the saving will be another plus to fund the power projects.
The Energy Mix
Although the nation is endowed with abundant rainfall and
many big rivers and hence hydro has been the lion’s share of the investment on
energy over the years, tapping other resources has also been taking ground
since recently. The Adama and Ashegoda wind farms
rolling on the edges of Adama and in close proximity to Mekele towns
respectively; the ongoing Alalloba-Tendaho and Aluto Langano geothermal
power plants;the Reppi/ Koshe waste
to energy conversion power plant in Addis Ababa, and the off
grid solutions such as Photo voltaic systems and energy efficient cook stoves
being distributed by Ministry
of Water, Irrigation and Energy in
collaboration with GIZ across the countryside as part of the global energizing development
program(EnDev), are good examples of how the
government is busy growing the energy mix and inventing the future of the
nation's energy sustainability.
Taking the ongoing efforts across the nation for the energy
infrastructure in to consideration, CNN hailed Ethiopia's energy resources as set to be among
the most diversified in Africa.
The 300 MW
solar power project whose memorandum of
understanding was signed between the former Ethiopian Electric Power
corporation and Green
Technology Africa in 2014, and Aora's Solar Hybrid
Technology under demonstration are all major
breakthroughs in the energy sector in the country.
Ethiopia has embarked upon the development of a climate
resilient green economy strategy addressing climate change, adaptation and
mitigation objectives supported by Global
Green Growth Institute. The
preparation of the strategy is articulated and highly anticipated to be
integrated in to Ethiopia's second five year Growth and Transformation Plan. In
this regard, Ethiopia is named among the first African country to tap the
first ClimDev-Africa
Special Fund (CDSF) securing a USD 1.1 Million
deal with newly launched fund, to strengthen its climate information and early
warning systems for climate resilient development and adaptation.
Africa in general and Ethiopia in particular should seize
the opportunity to benefit from the carbon trading pushing their economies
towards the green growth strategies. The upcoming Third InternationalConference on Financing for Development which
will take place from 13-16 July 2015 in Addis Ababa, Ethiopia should be an
opportunity to let voices heard on the subject.
Energy Regulating Body
To encompass the energy sector in a wider spectrum, the
Ethiopian Electricity agency, used to be an autonomous federal organ to control
the power sector, is changed to Ethiopian Energy Agency with extended mandate. It is accountable to the ministry of water, irrigation and energy and tasked to regulate the energy sector nationwide.
Power Entities
Since the end of 2013, the former sole utility monopoly, Ethiopian Electric Power Corporation, has been split in to two independent entities, Ethiopian ElectricPower and Ethiopian Electric Utility, in a bid to restructure and make the company more efficient. While the former is tasked to undertake and oversee the country's power projects including the mega hydroelectric dams and transmission lines, the later is made responsible for the operations, distribution and sales of electric power, at least until to the near future. Whether the restructuring achieves its objective is an answer the public has been waiting for, however.
At this point in time, potential investors and/or
independent power producers (IPPs) who wish to join the Ethiopian power
industry through power purchase agreements has to deal with
the Ethiopian Electric Utility, EEU, out of the two power entities.
Energy demand:
Pertinent to the government's incentive and what has been
happening in the economy elsewhere, the manufacturing sector, particularly the
small scale, is expected to expand significantly which in turn will drive high
the ever rising energy demand.
Unless the ongoing major power projects are made operational in a short span of time, the current double digit annual economic growth in the nation's economy will pose a real setback to the businesses operating in the country.
The domestic electricity demand in Ethiopia currently is expected to grow by more than 32 percent per year. For that matter, the current installed generating capacity of approximately 2300 MW is far from meeting the rising demand.
Integration
The ongoing national grid infrastructure project when commissioned is anticipated to boost the connectivity of the load dispatch centers and the overall grid network but the integration of the central grid and distributed sources will remain an issue to be resolved in the times ahead. How smart are the smart meters to be assembled locally and introduced to the market determines the pace and the cost of the integration of the two.
A USD 10 million contract that was signed between Information Network Security Agency (INSA) and Asseco S.A, a proprietor of a polish IT
Solution Company through Asseco Utility
Management Solution (AUMS) and Enterprise Resource
Planning solutions (ERP), is set
to improve the comprehensive energy billing and customer data base management
systems in the country.
The Enterprise network solutions could be extended to help the power entities replace the much paper dependent communication which is a cause for red tape, blackmailing and ultimately delays, with modern approach. For an investor accustomed to fast and modern approaches to communication, the long paper work may be a nightmare to cope with.
Once the interconnection of the power network becomes a
reality, grid
cyber security will be an issue which will
not be overlooked. Even if it is not a concern at this point in time, grid
cyber security is likely to be a major threat
in the decades to come when everything goes on line. Considering grid cyber
security in the power infrastructures design and implementation will help
control the potential damages and minimize unnecessary and redundant costs to
the nation. Getting to know the technology and enforcing application of
standard equipment, at least in the upcoming power projects, will have unparalleled
advantage to contain the potential threats to the grid network.
Collaboration
The collaborations of the power companies with the state’s educational institutions, like the case in the Adama wind farm where Addis Ababa University was the project consultant are crucial to the development of the industry. The energy sector should be supported with relevant studies, researches and hence innovations to stand on its feet by its own and maximize the benefit to the 90 million people.
Power entities should set up independent expertise/bodies or consulting partners not only to be able to identify and address the real shortcomings in their operations but also acquire best practices to move the efforts forward faster. The level of expertise required to manage the energy resources as most of the ongoing massive projects are operational is not something to be postponed. Leveraging full features of modern technologies is also another frontier to be dealt with.
Oil and Natural Gas
"A
recent study of the
mineral resources developed by the World
Bank and other development partners suggested that despite
having a huge potential to contribute to Ethiopia’s economy, the development of
oil, gas and mineral resources are not among the key drivers of the countries growth.
Hence, the World Bank Group is
supporting the government with technical assistance to help build a competitive
and responsible strategy, legislative and institutional framework for oil,
natural gas and mining industry".
Subjected to the current decline of the price of oil on the
international market, and the businesses which has been operating in Ethiopia
are mostly from foreign origin, the prospect of oil and natural gas exploration
may likely be slightly slowed for some time. The east African Natural Gas
bonanza discovered recently may also be a hint for careful and further research
and study to the similar geologic formations across the nation. Moreover,
the fracking technology
which is changing the oil dynamics in North America is good to put an eye on if
it does have anything to do in the long awaited oil discovery in Ethiopia.
Maintenance of the power infrastructure
Many Sources are suggesting that the existing
power infrastructures particularly the old ones are poorly maintained. Although
the plan to rehabilitate the major power plants, substations
and transmission lines are included in the growth and transformation plan
which will expire at the end of 2015, most are either at the early stages or
less than sufficient to increase the overall efficiency. This maintenance
deficit may be an attractive business opportunity for businesses or investors
particularly who wish to come with their own initial finances, and provided the
government levels the operating ground in advance. The energy
loss in Ethiopia is believed to be higher compared
to the international average.
Service Provision
The government sources claimed that the electricity coverage reached to 55 percent though other independent sources suggested a much lesser figure. Even with the larger estimate there is still half way to go to fully electrify the country. Equally important is the quality of service. In spite of increasing production power outage particularly on peak hours is becoming. While the lowest electricity tariff rating in the continent is an important incentive to businesses in particular and the economy's production in general, providing sufficient power at all times have been an issue which requires immediate attention.
Tigabu Atalo
Power and Energy Practitioner, and
Experienced Projects Manager
For Further Information, the Publisher of This Article is Also Available On ;
https://www.linkedin.com/in/tigabuatalo/;https://twitter.com/tigabu99; https://www.facebook.com/tigabu.atalo;
Email, tigabu99@gmail.com; tigabuatalo@yahoo.com
Thoughts, feedbacks, comments and suggestions about the post are all welcomed and appreciated!
No comments:
Post a Comment