From the perspective of leapfrogging, Ethiopia is by far one of the most promising countries in Sub Saharan Africa. Access to power has almost doubled in the past ten years, and the untapped renewable potential is still extremely high. Thanks to geographical conditions and ambitious government policies, Ethiopia could reach universal energy access through a sustainable energy mix by 2030.
109.23 Mln
the population in 2019
45%
the population with access to power in 2018
8.4%
the GDP growth in 2019
Yet, much remain to done. The excessive involvement of the state in the energy sector hinders fundamental private investments, while Ethiopia still needs to boost internet penetration across the country. While universal energy access is within reach, such process could be much more expensive than in a more open and competitive framework.
Ethiopia’s energy system strongly relies on renewables. Biomass dominates final energy uses, representing more than 88% of the primary energy mix – a sign of the rural economic structure of the country. Modern renewables represent a significant share only when considering electricity generation, which is however almost entirely obtained through renewables sources – this largely thanks to the large hydro power stations which became operational in the past decade.
Potential is very high for almost all sources, from hydro to wind and solar. The significant target for renewables proposed by the government and the absence of viable domestic fossil fuel resources will likely discourage an expansion of fossil generation in the years to come.
6,000 MW
Hydropower potential
7,000 MW to 10,000 MW
Geothermal potential ranging from
22,476 TWh/year
Wind potential up to
23,406 TWh/year
Solar photovoltaic
Decentralised options remain a weak point for Ethiopia’s energy plans. The National Electrification Program (NEP) aims at reaching a 35% share of new connections through off-grid technologies by 2025; however, the highly centralised nature of the Ethiopian energy sector hampers the entry of private players, which would be much needed for small scale solutions.
Yet, decentralised solutions are still key for a country whose rural population is still largely dispersed in farms 1 or 2 hectares from each other, and which would thus have to bear unsustainable costs to extend the grid.
88.9 milion
Rural population
115
People per squared kilometer
The centralisation of the Ethiopian energy sector is also a barrier to the evolution of its energy market. Until 2017, private involvement was practically non-existent, being limited to Engineering, Procurement, and Construction (EPC) contracts for the development of plants that were commissioned and then run by the national company EEPCo. However, the need to attract foreign investment to achieve the ambitious energy targets has led the government to introduce a few, substantial changes to the energy regulations in the past few years. A series of Public-Private Partnerships (PPPs) has anyway been recently finalised and will likely lead to the entry of the first Independent Power Producers (IPPs) in the Ethiopian electricity sector.
Despite government’s efforts in recent years, the penetration of digital systems in Ethiopia is lagging behind when compared to other countries in the continent. In 2019, internet and mobile penetration was significantly lower than neighbouring Kenya or than Ghana.
The government has recently recognised the situation, publishing a detailed strategy to boost the digitalisation of the country, titled “Digital Ethiopia 2025.”
The strategy does not refer directly to energy application of digital measures, yet it focuses on tools which are the backbone for leapfrogging, such as the spread of digital ID and of digital and specifically mobile finance, which could strongly benefit the energy sector.
19%
Internet penetration
41%
Mobile penetration
