Ethiopia sent out a loud and clear message to the world with its Climate-Resilient Green Economy Strategy it adopted to be a carbon neutral economy by 2025: future development is to be fueled by greener power. Gosaye Mengistie Abayneh, CEO of Ethiopian Electric Utility (EEU), explains the country’s vast potential for renewable energy, their vision to interconnect African energy supplies, and Ethiopia’s win-win opportunities for its investors.
Could you please discuss the prominence Africa is gaining in the international arena and the regional integration efforts you are carrying out?
Nowadays, Africa is the most favorable continent for investment. There are many reasons for this. Just to mention some, most African countries are the source of raw materials, minerals, and energy resources. They have relatively cheap labor with productive age. There is a very good bilateral relationship and cooperation between governments, which has created a platform to discuss as to how to improve good governance.
Today Africa is on the move. According to the World Bank 2015 Report, out of 10 fastest economies in the world, six of them are in Africa, including Ethiopia, which ranked number one among African countries wanting to grow and modernize their economies.
There is a very good understanding of what the requirements are, and the people want to grow and they want to make peace. Progress of infrastructure, ease of doing business, and technological improvements are important factors that are gaining in the international arena, as well as the regional integration. The center of the global economy has been shifting from the developed to developing economies where Africa is one notable case.
Ethiopia has a very good relationship with all African nations and more specifically with Eastern African countries.
At this time, especially as being a fastest growing economy in the region, neighboring countries are cooperating and learning a lot from us. Some countries of the region were not stable, but now thanks to diplomatic efforts we are on very good terms with our neighbors. For example, we have a very good relationship with Djibouti, Kenya, Sudan, South Sudan, etc. But this didn’t simply come because we are neighbors, but thanks to our government, our people and neighboring countries’ confidence in our cooperation effort which facilitates a lot to address the issues.
Infrastructure is one of these triggering issues. The Ethiopia-Djibouti Power Interconnection has a huge impact beyond interconnectivity, as it was a turning point for the relations of both countries. Same with the positive relationship with Sudan and with South Sudan. We have also recently achieved an agreement with countries such as Uganda, Rwanda, Burundi and Tanzania to interconnect with infrastructure, including electric power. The Ethiopia-Kenya relationship is at an advanced stage because of the highway and the transmission line that is under construction. Once we finish the Ethiopia-Kenya Transmission Line we can interconnect with Tanzania and beyond, followed by the interconnection with South African Power Pool. We can also reach northern Africa through Sudan and Egypt.
Our vision is to interconnect the entire network in the African continent and beyond. This is a very good opportunity for us. There is a very good know-how these days and a very good confidence built among nations, especially among African countries. Africa is on the move; this is Africa’s time.
Prime Minister Hailemariam Desalegn spoke with us about the Climate-Resilient Green Economy Strategy Ethiopia adopted to be a carbon neutral economy by 2025. What message do you think Ethiopia is sending to the international community regarding climate change and green energy generation, especially since the Conference of Parties (COP21) finally achieved a legally binding agreement?
The Climate-Resilient Green Economy Strategy (CRGE), which was first launched in December 2011 in Durban during COP 17, was a big message for the world. The CRGE plans include forest and reforestation, harnessing huge renewable energy resources, changing farming methods, and using new technologies for industries and transport. We have to avoid the past mistakes of others by following the green growth path.
When we see the energy sector, Ethiopia has been following a green growth strategy for years, especially in the energy sector. From the very beginning we were following this path. Even the Ethiopian energy policy issued in 1994 was focused on renewable energy resource development.
At the time when I was working at the Ministry of Water, Irrigation and Electricity, we had already launched the master plans and strategy for wind, solar, hydropower and geothermal power generation. The commitment from the government to develop renewable energies dates back long time ago.
We have recently developed sustainable energy for all the initiatives that are normally focusing on rural electrification and modern household fuels. All our initiatives involving renewable energy are all aligned with our resources and capabilities.
In that regard, Ethiopia is endowed with abundant renewable energy resources; hydropower and geothermal power are estimated to be 45,000MW and 10,000MW respectively. Potential lies in wind, solar (2 million MW according to you, but now only 1% is being used) and biomass too. As your institution is responsible for bulk power purchases, how are you encouraging private sector involvement, and what advantages and incentives would they have?
Our ambition to become a middle-income country by 2025 together with a growing population results in rising demand. Electricity is a major player and the driver of socio-economic development.
There is big room for private investors to come and invest in power in Ethiopia. We have different programs to enhance energy access for our population. One is the universal access program, which we have been launching for almost 10 years. We tried to electrify at least more than 5,000 rural villages and towns, but we still have a lot to do to achieve universal access to electricity.
For this we are following two paths. One is the grid-based extension, and the other is the off-grid or micro-grid solution. Especially for micro-grid and off-grid solutions we can invite a lot of private investors to come and invest in micro hydro stations or in standalone generation options with solar, mini hydro stations, wind, biomass and hybrid. This in addition to the major generation, undertaken by Ethiopian Electric Power, which is our sister company.
On the other hand, we also have to meet the demand of the existing customers. In order to do so we are upgrading our network through smart technologies that will also requite private sector participation. With the aim of acquiring know-how and managerial skills, increased efficiency and enhanced technology transfer, we need to cooperate with partners in the private sector.
We are on the right track. We need a lot of energy to meet our manufacturing ambitions as there are many industrial parks under development, the consumption habits are changing, and the population is growing.
Minister Motuma Mekassa told us you were revising the legal framework to make it more business conducive, so how are you working to engage with investors?
For example, the Corbetti Geothermal Project will be a model for the private sector to come and invest. This has been Ethiopia’s first Independent Power Producer and for this purpose we are now almost finalizing the geothermal law that will help other private investors to come. The regulatory reforms will be backed by different supporting schemes and incentives to facilitate the investment from the private sector. The Corbetti Project is a big success; no country is developing in this magnitude with the private sector. They can start with 500MW, but ultimately it will generate up to 1,000MW in geothermal energy. It is a massive investment.
We are working in other renewable energy resources too, where we can engage the private sector such as solar and wind generation. We are not looking at what others did in the past like the feed-in tariffs; instead we are looking into competitive auctions or competitive bidding processes. We are considering other options that can benefit the private sector and our country, and be a win-win situation.
We are learning from other countries like South Africa and Kenya regarding feed-in tariffs for renewable energy development; they started to develop them but they have also used other options like auction and competitive bidding. Feed-in tariffs are normally long-term subsides for the investors; they have a big impact. When you look at Spain, in the past most utilities have faced financial problems because of the feed-in tariffs. We don’t want to repeat the same mistakes. We are looking for a win-win solution that can benefit both, the investors and the country. There are many companies coming to invest in this country so we have to create a favorable climate to attract capital inflows.
Now that you mention the Corbetti Project, the biggest geothermal project in Ethiopia, how important is the energy source diversification?
That is the most important issue. Previously, we were depending on hydropower, but because of climate change we have to diversify our energy sources. That’s why we are looking for energy resources and energy mix in our strategy. That is one of our major energy policies. Especially in the dry season, where we cannot rely on hydropower, wind power generation is the best alternative. Recently we started working on biomass, dry waste, solid waste and cogeneration from sugar plantations as additional renewable resources.
The country’s flagship project, the Grand Ethiopian Renaissance Dam, could turn Ethiopia into Africa’s water powerhouse with its 6,000MW. The World Bank estimates Ethiopia could earn $1 billion a year from electricity exports. What impact are you expecting, both for Ethiopia and its neighboring countries, once in full operation?
The Grand Renaissance Dam has an impact for Ethiopia because this is the biggest hydropower plant in Africa. It is not only our pride but also the pride of other African countries. Even the Program Infrastructure Development for Africa (PIDA), developed by the African Union, has recognized the Grand Renaissance Dam as one of its flagship projects.
It also helped us to strengthen our relations with neighboring countries such Sudan. They are re-heightening the Roseires Dam because of the Grand Renaissance Dam, as they will get additional water so they can use it for irrigation and other purposes.
We don’t use the water for irrigation; we only store the water for hydropower and we will reduce the evaporation when we store the water in our gorge . The dam will create additional water for the downstream countries, including Sudan and Egypt, so it’s a win-win solution. It will also help our community to get out of poverty.
What message would you like to send from the Ethiopian Electric Utility to tell industry captains, decision makers and major investors EEU is ready to help you?
We are ready to serve them; one of our missions is to supply sustainable energy for our customers. We are working very hard to supply uninterrupted energy for their purposes. We have different customers, but our primary customers are industrial customers. The customers who are engaged in export industries will have their own dedicated line, which is a very good opportunity. Even the existing ones have their own substations, especially for those who need more than 10MW of energy capacity.
As we are publishing in the UK and, as your Ministry of Foreign Affairs says, your relationship is “among the most dependable, mature and mutually beneficial relations”, where would you like to see more collaboration?
We have a very good relationship with the UK. The UK is the most dependable partner in fighting against poverty. The country is number one in expanding developmental support for social services, such as education and health. I can say there is a very good relationship especially in the energy sector, including drafting the energy and water climate-resilient strategy.
We already had cooperation in our energy policy revision, and it was from a UK ministry. Their expert was in our office and we worked together and they helped us to revise our energy policy. There are also other initiatives, but the UK was the first country to recognize our Climate-Resilient Green Economy Strategy and supported it. The UK and Norway were the first two countries that recognized and even put a fund to implement this strategy. At that time the UK was the first to support and to act.
These are the major cooperations that I can remember in the energy sector, but I know the UK is the leading country supporting Ethiopia in many ways according to the statistics I have. In the future we will have a lot of investment areas in our energy sector, especially to access our rural pool, our population, and to supply our big customers. We need a lot of intervention. For this I want to invite UK investors and the UK government to help our country. It should be a win-win situation; it is an investment opportunity and both countries enjoy good cooperation.
You are an energy economist and were former Director of the Energy Study and Development Department in the Ministry of Water, Irrigation and Energy. A few months ago you were appointed as CEO of the Ethiopian Electric Utility. What is the vision you are bringing to the EEU?
I took over from the Indian leadership, which was a management contractor for the last two years. Our major assignment at this time is to remove all the governance issues or service delivery problems in our utility. We have to make this utility the best organization to serve our community with sustainable and renewable energy. We are working very hard to change the mindset of our employees and the management team.
We have our normal annual plan, but that annual plan has to be fulfilled with a different mindset, with different preparation and with different thinking. Now we are working on the mindset of our employees. We can’t deliver our plan with a normal way of doing things; we have to be a game changer for this socioeconomic development. Everybody has to understand this vision. So we are working hand in hand with every manager and every department because we have more than 20,000 employees including the temporary workers. We have our own strategy on how to share our new vision with every individual in the organization. Everybody has its own contribution to fulfill our target, that’s why we are we are doing our best so that every employee in our company embraces our vision.
We understood that the power supply is one of the main challenges of economic development, so we have to change that; we have to be a main driver, not a main problem.