Political, financial uncertainties hamper investments
The Nordic countries, which have vast experiences on the utilization of renewable energy, offered energy solutions to assist Ethiopia in harnessing renewable energy resources.
The Nordic countries expressed their commitments to share their rich experiences to Ethiopia in a seminar held on Thursday at the Addis Ababa Radisson Blu Hotel. The Embassies of Iceland, Norway, Sweden, Denmark and Finland organized the consultative meeting in collaboration with Nordic Energy Research aimed at heightening the security of the energy supply in Ethiopia by applying successful and sustainable energy solutions from the Nordic countries.
In her key note address Unnur Ramette Ambassador of Iceland pointed out that only 35 percent of the African population has access to electricity and African countries’ prospect of expanding their electricity network is challenging. Ambassador Ramette expressed the Nordic countries commitment through the “Nordic Energy Solutions”, an initiative launched by Nordic Prime Ministers, to assist the development of renewable energy resources in Ethiopia. “Nordic Energy Solutions is committed to share Nordic innovations and technologies to address energy challenges,” she said. “We have a family of Nordic financial institutions Nordic Development Fund, Nordic Environmental Facility Cooperation and the Nordic Investment Bank,” she added.
Ambassador Ramette noted that Nordic companies are pursuing for the export technology and competence. However, she said political and financial risk pose major hurdles to exporting companies.
The Ambassador cited the Icelandic company Reykjavik Geothermal, which is engaged in the development of geothermal power projects in Ethiopia, as a commendable Nordic investment in Ethiopia. However, she stated that many Nordic companies are held back by political and financial uncertainties.
Frehiwot Woldehanna (PhD), state minister at the Ministry of Water, Irrigation and Energy, recognized the partnership Ethiopia forged with Nordic countries. “We as a country share the view that fundamental transformation is needed for securing more sustainable world. Renewable energy will be vital for achieving the sustainable development goal of ensuring access to affordable, reliable, sustainable and modern energy for all,” he said.
The Ethiopian government has launched the National Electrification Program seeking light to all
Ethiopians by 2025 from the current access rate of 33 percent from the national grid and 11 percent off-grid. In September 2019 Denmark and Ethiopia led the Energy Transition track at the United Nations Climate Action Summit in New York. The Scandinavian countries [The Nordics except Finland] doubled their contributions to the Green Climate Fund and supported a new Climate Investment Platform initiative that aims to de-risk energy projects and catalyzing investments in developing countries. “Synergies with the Nordic financing instruments and funding schemes for Ethiopia, such as the African Enterprise Challenge Fund, should be closely considered,” Frehiwot said.
The first independent power producer company in Ethiopia, Reykjavik Geothermal, is developing two large geothermal projects – Corbetti and Tulu Moye – with a total generation capacity of 1,000 MW. Frehiwot said the projects are expected to contribute to transformation Ethiopia’s energy landscape.
The Ethiopian Electric Power is awarding solar and wind farms development projects to independent power producers. Frehiwot said the Danish Energy Agency is providing institutional support in the preparation of the wind tenders by sharing experiences on reliable wind measurements, as well as legal framework and tender management. “Whilst the first fully competitive wind tender is not yet announced, we’re now close to closing the tender of the 100 MW Assela Wind Farm. This project is generously supported by the Danida Business Finance and will be an important bridging-case, proving the feasibility and competitiveness of wind energy in Ethiopia,” he said.
Ethiopia has already began benefiting from Nordic countries experiences on clean energy development. The Danish transmission system operator Energinet is working with the Ethiopian Electric Power (EEP) to share experiences on innovative strategies in the control and operation of power plants with variability.
A Finnish company is designing a new National Load Dispatch Centre, which will help the EEP to manage the power grid and enable higher connection of renewable energy sources. “To unlock the door to expanding the integration of energies, we are looking to the Nordic Solutions,” Frehiwot said.
The Nordic Energy Solutions hopes to assist East African nations in transforming the East African Power Pool into a regional energy trading market system. Nord-pool through the East African Power Pool is inspiring the sector players in Ethiopia on approaches to creating a regional electricity market.
Svend Soyland, senior adviser at Nordic Energy Research, told The Reporter that by transforming the East African Power Pool into a transparent regional electricity trading system, private investments can be attracted. “The East African Power Pool is not yet open. By transforming it into a more transparent electric trading market with fluctuating power tariff more private energy firms could be attracted,” Soyland said. “It took many years to develop the Nordic Electricity Market,” he added.
In a related news Swedish energy firms demonstrated interests in investing in renewable energy development projects in Ethiopia. Moa Lagercrantz, Minister Counsellor, head of political section at the Swedish Embassy in Addis Ababa, told The Reporter that the embassy has noted an increasing interest from Swedish companies in the Ethiopian energy sector. “We have Swedish companies like ABB which have offices in Ethiopia. We want to bring more Swedish companies to Ethiopia-mid sized companies that can offer solar panels, technology, and innovations. That is what we are trying to do,” Lagercrantz said.
The Swedish Embassy is collaborating with the Swedish Trade and Investment Council in promoting the existing business opportunities in Ethiopia. “Ethiopia has a lot to offer,” Lagercrantz said.
Delegates from the public and private sector deliberated on the current challenges and opportunities for securing access to affordable and renewable energy in Ethiopia.
In 2017, the five Nordic Prime Ministers launched a joint initiative under the headline “Nordic Solutions to Global Challenges” aiming to export sustainable solutions to the rest of the world. The Nordic region has an integrated and sustainable energy sector with a variety of renewable energy-sources that mirrors the Ethiopian such as solar, wind, hydro, geothermal and biomass. The Nordic countries believe that Nordic Solutions have a great potential for securing access to clean and affordable energy for millions in Ethiopia, given the abundance of natural energy resources in the country.