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Ethiopia Hydropower Investments Q1 2017

 

 

 

Ethiopia Hydropower Investments Q1 2017

 

Capital continues to pour into Ethiopia’s already well-developed hydropower sector, with ambitious private concessions joining a spate of large state projects.

Two British firms, Contingent Technology and Globeleq, have jointly bid on the 257MW Genale Dawa VI plant, the fourth hydroelectric project in the Genale Dawa River basin (with two projects having focused on irrigation). The $850 million bid is backed by the UK’s CDC Group and Norway’s Norfund and would be the first privately-managed hydroelectric plant in the country: under the terms of the bid, the firms would operate the plant under private ownership or in a PPP for up to 25 years.

Genale Dawa VI would not be the first Ethiopian venture the firms have been involved in. Contingent currently manages the Reppie Waste Energy Project in Addis Ababa, and the pair have also jointly bid for the Metehara Solar PV Project, Ethiopia’s first private solar venture.

Contingent and Globeleq are entering a crowded sector, with several public ventures coming through the pipeline. In December Gilgel Gibe III, a $1.57 billion project, was officially inaugurated with a nameplate capacity of 1,870MW. Work by Italy’s Salini Impregilo started in 2006 but was delayed until China EXIM Bank agreed to take care of 60% of the project’s cost, with Ethiopia footing the rest.

Gilgel Gibe III will soon be joined by Genale Dawa III, also in the Genale Dawa basin. Work by Italian contractor Salini Costruttori on the publicly-owned project is nearing completion, with electrical and mechanical work now underway. Launched in 2011, the $451 million project was jointly financed by the Ethiopian Government and the Industrial and Commercial Bank of China, who put forward 40% and 60% respectively. Once completed, the project will generate 254MW, taking Ethiopia’s total installed capacity to 4,260MW.

These projects will be dwarfed by Africa’s soon-to-be largest hydroelectric project, the $4.8 billion Grand Ethiopian Renaissance Dam, on the Nile River. The project is due to be operational by the end of the year, six years after construction began, with a nameplate capacity of 6,450MW which was revised up this month.

These projects, alongside projects such as the $1.7 billion 2000MW Koysha dam on the Omo river, will help the Ethiopian government meet its target of 17,346MW worth of installed capacity by 2020. Hydropower is currently slated to provide the bulk of the country’s output, with Ethiopia’s hydroelectric potential estimated at roughly 50,000MW. While the rising domestic demand in the 95 million-person country will account for much of the new generation. The country already exports power to neighbouring Kenya, Sudan and Djibouti, however completion of upcoming projects will allow it to fulfill strategical export commitments to Tanzania, Rwanda, South Sudan, Yemen and the wider Middle East.

The influx of capital into the country’s dams have helped it rise to become the fifth largest foreign investment destination for renewable energy on the continent last year, with more than $100 million going towards hydro, solar and wind projects.

 

Asoko Sector Brief - Ethiopia Hydropower Investments Q1 2017 - Asoko Insight

 


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