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Project

Renewable Energy Development in Ethiopia: overcoming obstacles in procurement from independent power producers

This project aims to understand what policy frameworks need to be established for renewable energy competitive bidding programmes to be effective in Ethiopia. It is designed to draw lessons from Ethiopia’s experience of IPP initiatives and from other countries’ renewable energy auction programmes. It will specifically answer questions around barriers and opportunities for private sector participation:

  • What is the history and performance of IPPs in energy and other sectors?
  • Are there transferrable lessons from other countries in incorporating private sector participation? How can these be adapted to the Ethiopian context?
  • What barriers and constraints are faced during planning, engineering, procurement, construction, and decommissioning of energy projects?
  • Are there adequate skills available in Ethiopia to design, build, and operate energy projects? How does the capacity gap get addressed?
  • What are the key agendas of the private sector actors involved in IPPs in Ethiopia, and what levels of risk are acceptable for them?

The team will provide a historical review and analysis of IPP activity, focusing particularly on the country’s recent past projects and will conduct a comprehensive review of Ethiopian government policies, legal frameworks and programme documents on IPPs. This will be complemented by in-depth interviews with energy regulators, utilities, grid companies, and other state and quasi-state actors directly involved in the renewable energy policy processes.

The combination of interviews and document analyses will help to reveal the power dynamics and dominant narratives around regulatory choice and policy process in renewable energy activities. The team will also examine private actors’ risk appetite and perception on renewable energy projects, and their business strategy in the Ethiopian market.

The team will also compare the Chinese and South African RE-IPP experience and explore their implications for Ethiopia. These two countries are highly relevant; both are fast-growing economies that adopted renewable energy auction programmes to kick-start their renewable energy sectors; many of their renewable energy projects are located in remote and underdeveloped areas where the private sector was previously reluctant to invest; and both countries’ auction programmes have also produced mixed results with notable successes and setbacks. Securing a better understanding of these enabling and disabling factors will provide critically important learning for Ethiopian energy regulators and researchers.

The findings will enable the team to bring together existing knowledge, evidence, and data, and to identify key policy challenges and existing capacity gaps among central and local policy stakeholders. The key mismatches between policy goals, policy means, and policy outcomes will be assessed. Key institutional constraints and barriers will be identified, as well as the key ways in which these can be overcome. Participatory methods will be used to facilitate policy learning and change via capacity building training programmes.

The intended impact of this project is to improve the design and implementation of IPP projects to promote the renewable energy sector in Ethiopia. Key deliverables will be concrete recommendations in the form of policy briefs to be presented to EEP, MoWIE, and other energy policy stakeholders, including Ethiopian Electric Utility (EEU).

The Applied Research Programme on Energy and Economic Growth (EEG) is led by Oxford Policy Management. The programme is funded by the UK Government, through UK Aid.

Project details

start date
1 January 2019
end date
31 December 2020
value
£249756

Partners

About this project

Region
Ethiopia

People

Image of Seife Ayele

Seife Ayele

Research Fellow

Image of Simon Jeavons

Simon Jeavons

Senior Project Support Officer

Image of Wei Shen

Wei Shen

Research Fellow

Recent work

Past Event

Renewable Energy Procurement from Independent Power Producers in Ethiopia

Recognising the importance of a robust procurement framework to attract private investment into the infrastructure sector, including energy, in 2017 the Government of Ethiopia introduced the Public–Private Partnerships policy. From 2018, several non-hydro renewable energy projects were...

16 November 2021

Opinion

Energising renewable electricity procurement in Ethiopia

Ethiopia’s electricity coverage and per capita consumption are among the lowest in sub-Saharan Africa – only 44 per cent of over 110 million Ethiopians have access to electricity. Yet Ethiopia aims to reach 100 per cent energy access by 2030 and meet the UN Sustainable Development Goal:...

Image of Seife Ayele

Seife Ayele & 2 others

10 February 2021