Ethiopia Energy Sector Opportunities

With its enormous hydroelectric capacity and potential for wind, solar and geothermal, Ethiopia has one of the cleanest power grids in the world. Currently, Ethiopia has approximately 5,250 MW of installed generation capacity with plans to increase its power generation capacity to 17,000 MW in 10 years—both to serve its growing domestic demand and to export to other African countries.  The growing supply and demand for clean energy, combined with recent and regulatory changes, has created new opportunities for U.S. businesses in the power sector.   

Only about half of Ethiopia’s 120 million population is connected to the grid.  For the past few years, the Government of Ethiopia (GOE) has been gradually increasing electricity access for its population by expanding its transmission network and encouraging power generation through public-private partnerships (PPPs) and power purchase agreements with independent power producers. 

To that end, recent regulatory changes have sought to make foreign investment more attractive.  These include a 2018 law that opened the door for foreign companies to enter PPPs on power projects, and a 2023 law (Directive No. FXD/86/2023) that seeks to guarantee foreign currency convertibility for dividend repatriation and loan repayments in the power generation sector. This law also allows the use of offshore bank accounts to settle payments – thus reducing current complications that arise from forex shortages in Ethiopia. The Directive, entitled “Offshore Account Opening and Operations for Strategic Foreign Direct Investment Projects” may be found at this link: https://nbe.gov.et/wp-content/uploads/2023/09/fxd-86-23.pdf.  

Moreover, the GOE’s recent efforts to connect its power grid to the Eastern Africa Power Pool and Southern Africa Power Pool will only serve to broaden the market for Ethiopian energy even further. 

Together, these developments have created opportunities for renewable energy generation, transmission, and distribution equipment and solution providers. 

U.S. companies, including energy sector firms, have a strong worldwide reputation for their innovative technologies, quality products and services, and after-sale service, and are well-positioned to compete in the Ethiopian market.

To learn more, contact Yemesrach Kassu, Commercial Specialist Email: yemesrach.Kassu@trade.gov