Green growth powered by the earth's core
In 2011, the Government of Ethiopia (GoE) released its Climate Resilient Green Economy (CRGE) Strategy aimed at harnessing carbon-neutral growth to achieve middle-income status by 2025. This ambitious goal will be achieved by seeking a fivefold increase in renewables energy generation over five years, and doubling again to achieve an additional 77TWh by 2030. This will transform the domestic power market and fuel Ethiopia’s economic development. In 2012, just 27% of the population had access to power, whilst Ethiopian firms reported an average of 5.6 power outages a month resulting in losses equivalent to 3% of sales. In addition to allowing more of the population to have access to electricity, these generation targets will enable the GoE to reduce dependency on imported fossil-fuels and, coupled with energy efficiency initiatives, generate surplus power for export through planned interconnectors. Such export will improve Ethiopia’s balance of payments by billions of dollars by 2030.
Ethiopia is well placed to achieve carbon-neutral growth; with ~90% of current electricity supply generated from hydro sources. However hydropower supply is vulnerable to changes in rainfall patterns. Since 1965, Ethiopia has experienced 15 multi-year droughts (not including the current one) and US Geological Survey climatologists estimate rainfall has declined by 15-20% since the mid-1970s. To improve the reliability of Ethiopia’s electricity system, and its resilience to climate change, the Ethiopian Ministry of Water and Energy intends to increase installed geothermal capacity from 7.3MW (in 2012) to 1,000MW by 2030, such that at least 10% of Ethiopia’s energy will be generated from non-hydro renewable energy sources.
Ethiopia’s geothermal potential has long been recognised. A series of geo-scientific studies, begun in 1969, identified sixteen areas in the Ethiopian Rift Valley with sufficient potential to generate electricity. In the 1980s, exploration wells were drilled at Aluto Langano and in 1998 the GoE funded the construction of a 7MW power plant.
Situated in the Corbetti Caldera 250km south of Addis Ababa, Corbetti Geothermal (‘Corbetti’) will be a pioneering project: it is situated on a greenfield site, will prove a new geothermal resource, and not only be the first privately financed geothermal IPP in Ethiopia but also only the second in sub-Saharan Africa. To manage the early stage development risks and costs associated with being a pioneer, Corbetti will be developed in multiple phases. The first phase, wholly equity funded, will drill up to 6 exploratory wells and build a 10MW power plant. This initial phase will demonstrate the viability of the geothermal resource and the Power Purchase Agreement (PPA), enabling the project to raise further investment. The second phase will raise debt financing to drill a further 9 – 13 wells and construct a 50-60MW commercial-scale power plant and facilities. If successful, subsequent phases could see Corbetti increase its installed capacity to 500MW, mobilising approximately US$2 billion in foreign direct investment over the next 8-10 years.
Being jointly developed with Berkeley Energy, with the Africa Renewable Energy Fund, Iceland Drilling and Reykjavik Geothermal.