Thursday, July 25, 2024
NewsEthiopia eyes tapping South African electricity market in five years

Ethiopia eyes tapping South African electricity market in five years

  • Power purchase agreement with Tanzania near completion

The executives of Ethiopian Electric Power have disclosed ambitious plans to connect eastern and southern African power pools and supply energy to South Africa within five years.

In 2023, reports indicated that South Africa had experienced unprecedented electricity shortages, as the coal plants that generate 85 percent of the nation’s electricity have aged and grown increasingly susceptible to malfunctions.

The South African government recognizes the need for alternatives for electricity generation to reduce its heavy reliance on coal-fired power stations and on coal itself.

The East African Power Pool (EAPP) is a collaborative institution that comprises 14 utilities of 13 countries in the region, established to coordinate cross-border power trade and grid interconnection among members. Its general secretariat is based in Addis Ababa.

The Southern African Power Pool (SAPP) serves much the same purpose and has 17 member states.

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Ashebir Balcha, CEO of EEP, told The Reporter that the state-owned utility company’s five-year expansion plan features ambitions to create a grid connection between the two pools and supply energy to South Africa before the decade is out.

“Combining the efforts of the two pools, we believe we can reach the South African energy market within five years,” said Ashebir.

EEP’s expansion ambitions see it in the final stages of an energy deal with the Tanzanian government. Ashebir disclosed the federal government will have the final say on tariff rates and other important details.

As it stands, the tentative agreement with Tanzania is for 100 megawatts, but the CEO says this could increase. The electricity will be wheeled through the Kenyan grid, and agreements with the Kenyan government have been finalized on both ends of the purchase.

The Tanzanian government will be paying 0.01 USD per megawatt hour (MWh) for the wheeling service Kenya will provide. The construction of the grid infrastructure that connects the two nations has already been completed, according to the CEO.

There is no need to set up a new system of payment with Kenya, as Ethiopia is already supplying its neighbor with 200MW and will use the same infrastructure set to close on the deal with Tanzania, according to Ashebir.

“The grid we use to transfer electricity to Kenya has the capacity to transform a general 2000 MW; 1500 of which could be transferred to Tanzania,” he told The Reporter.

EEP and the Kenyan government concluded an agreement in 2022, stipulating that the supplier transforms 200MW per year for three years, increasing to 400MW after the third year.

“We’re waiting for the government to tell us when to sign the agreement [with Tanzania],” said Ashebir.

EEP is using the Tanzanian market as a stepping stone to realize its goals of providing electricity to South Africa. Tanzania is a member of SAPP.

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