US President Barack Obama. Picture: Reuters

Addis Ababa - During United States President Barack Obama’s historic visit to Ethiopia, the Ethiopian government and the US-Icelandic Firm Reykjavik signed a construction agreement on Monday to kick off the first 500 Megawatt (MW) phase of a major 1 000 MV geothermal electricity plant.

It will be boosted by technical and investment expertise from Obama’s two-year-old Power Africa initiative which is meant to spur investment in energy generation.

The $4 billion 1 000 MW Corbetti geothermal plant will sell generate and sell power to the Ethiopian government which will provide it to its citizens. It was one of the first Power Africa projects when a preliminary agreement was signed in October 2013. It has been touted as Africa’s largest geothermal energy initiative and Ethiopia’s largest Public Private Partnership (PPP).

Obama announced Power Africa on his previous visit to Africa two years ago. It aims to give Africans an extra 30 000 MW of cleaner, more efficient electricity generation capacity to light up 60 million new homes and businesses across the continent.

It also aims to expand rural electrification and with access to small scale and off-grid technology.

To date the initiative, according to the US government, has leveraged more than $20 billion in commitments from the private sector for new on and off grid projects in sub-Saharan Africa. The US government has committed to providing more than $7 billion in financial support, loan guarantees and technical support.

On Tuesday, the Ethiopian government and Reykjavik are expected to sign an agreement to launch the second, 500 MW, phase of the geothermal project. The whole project is expected to take 8 to 10 years to complete.

Edward Njorge from Corbetti Geothermal Project said Monday that, after tough negotiations they agreed on all terms, making for a good business deal, while boosting the country’s renewable energy endeavour.

“Ethiopia like other African nations suffer from lack of energy, and its lack stunts development, and its 7 000 MW plus geothermal potential can help in bridging the energy gap”.

Azeb Asnake, CEO of Ethiopia’s state-owned power utility firm (EEP) said the country had embarked on a 25-year master plan in its green growth strategy, and the involvement of the private sector was part of achieving this target. The government hoped to increase power generation capacity from the current 4 200 MW to about 37 000 MW by 2037.

Ethiopia plans to increase its power generation capacity in its ambitious economic plan called Growth and Transformation Plan (GTP II) 2015 to 2020 to 17 300 MW by 2020, with the 500 MW Corbetti Goethermal project being part of the plan.

“Power will make Ethiopia move to middle income status country”

Alfonso E.Lenhardt, acting administrator of the United States Agency for International Development (USAID) said the potential for this energy-endowed country of nearly 100 million people was vast, with energy being the base of societal development, from healthcare to industry.

US Senator Ed Markey of Massachusetts, a previous chair of the Senate committee on energy, believes renewable energy is be a better alternative to fossil fuels such as coal, gas or oil.

“I’m very excited to be part of the US-Ethiopia partnership, and I hope the country moves in leaps and bounds, in Gigabytes in telecom, Gigawatts in electricity” said Markey.

ANA