Expectations for solar PV in Ethiopia have increased significantly over the last few months, with formal discussions taking place over a PV tender. However, the government's recent declaration of a state of emergency, which is set to last for six months, might scare already weary investors.
Ethiopia’s minister of water, irrigation and electricity Motuma Mekassa told this year’s Africa Energy Forum in June that the country is going to tender 5200 MW of solar PV installations. He didn’t offer more details; however, the news was also confirmed, in a separate speech, by U.S. President Barack Obama’s coordinator for Power Africa and Trade Africa initiatives, Andrew Herscowitz. Herscowitz told the Africa Energy Forum that he expects Ethiopia to finally organize the solar tender in the coming months. Ethiopia’s power system is largely reliant on hydropower, accounting for 98% of its electricity generation. However, the state-led industrial boom and the country’s growing economy has led to the government laying plans to expand its infrastructure, including energy generation. A diversification strategy for Ethiopia’s energy mix is currently on the table, including solar, wind and geothermal projects. The selection of generation technology is based on cost analysis of the supply options.
GHGI help
Another interesting development this week was the Global Green Growth Institute (GHGI), an intergovernmental institution for the promotion of green growth headquartered in Seoul, South Korea, pledging to support Ethiopia's green economic development. The GHGI and Ethiopia’s government have reached an agreement to share mutual experience and create institutional capacity that will enable them to measure and register pollutants, with the institute allocating more than US$ 100 million to implement the initiatives.
GHGI Director-General Frank Rijsberman said that although the institute assists many countries to develop green projects and to withstand climate change, “the beneficiary countries do not realize projects designed to withstand climate change as they are unable to secure the finance at the proper time.”
State of emergency
The same criticism can be aimed at renewable power projects as well. Financing is one of the major issues in developing renewable energy projects in Africa, together with numerous other issues such as land, and unclear regulatory environments.
One way to work through these obstacles is to build partnerships, said Herscowitz at the Africa Energy Forum. A sentiment echoed by leading speakers at Bloomberg New Energy Finance Summit in London last week. International institutions and businesses are trying to build partnerships will local stakeholders in Africa. Trust, which is paramount for Africa's renewable power success, takes time to develop.
However, the road to renewable power development in Ethiopia appears to be under threat, following the declaration of a six-month nationwide state of emergency at the beginning of October. The government says this is the result of months of unrest, while the prime minister added that "vital infrastructure, businesses, health and education centers, as well as government offices and courts have been destroyed."
Protesters claim that the demonstrations are in response to human rights violations and the government's authoritarian approach to development, which has often received international criticism too.
Both the government and the opposition both admit that more than 500 people have been killed since November 2015, as a result of the unrest in the country.
These developments are likely to strike further anxiety into already weary investors. Investors prefer stable, predictable environments, and even if they decide to take risks the price of doing business is not going to come down, even if technology becomes cheaper. This might very well be the reason that we have yet to see the Ethiopian PV tender. Read more here
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