Danida Business Finance (DBF) of the government of Denmark, for the first time ever, committed close to 200 million dollars for Asella Wind Farm which will generate 100MW of electricity.
DBF has already approved the loan request made by the Ministry of Finance & Economic Cooperation (MoFEC), and the two countries are in the process of signing an agreement, according to Bezuneh Tolcha, public relations director at the Ministry of Water, Irrigation & Electricity (MoWIE).
Half of the financing will be in the form of a grant by DBF while it plans to cover the balance from the private sector or Danish banks.
The wind farm will be located approximately 150Km south of Addis Abeba on the edge of the Rift Valley. The farm is expected to have between 36 and 67 turbines placed close to Itaya town in the Oromia Regional State.
Ethiopian Electric Power (EEP) completed a feasibility study including an environment and social impact assessment (ESIA) of the farm at Assela, which will be the fourth large-scale wind farm next to Ashgoda (120MW), Adama I (51MW) and II (153MW) and Ayisha (300MW), located in the Tigray, Oromia and Somali regional states, respectively.
Besides these, an off-grid local private energy company, Ethio Resource Group (ERG), started generating 9.5KW of electricity from its six turbines in Menz Gera Midir wereda, North Shoa Zone, in the Amhara Regional State.
African Development Bank (AfDB) has financed 1.8 million dollars for a detailed and comprehensive feasibility study for the project and also for wind measurement. It will also fund the grid connection and a substation at an estimated cost of 10 million dollars.
“The site was selected for its wind power potential in the region with estimated average wind speeds greater than eight metres a second at 50m above the ground,” reads MoFEC’s finance request to DBF.
The farm is expected to produce 330,000KWh annually – the equivalent of electric power supply to approximately half a million people at less than 0.11 dollars a KWh.
Before the end of the second edition of Growth and Transformation Plan (GTP II), Ethiopia targets to boost its power generation to 17,000MW from various sources, including 1,224 MW from wind. The government also plans to increase its utility customers from 2.3 million to seven million by 2020.
The process of approval is expected to take a year. Once approved by the parliament, the country can start the implementation, according to Bezuneh.
“As Denmark will be the financier, only Danish companies will participate in the bidding process,” said Bezuneh.
Once functional, the 10-year operation and maintenance contract is expected to create jobs for 70 people.
Even though the country has a potential of generating 1.3 million megawatts from wind, 45,000MW from hydropower, and 10,000MW from geothermal power, about 96pc of electricity, 4200MW, comes from hydropower.
“Unfortunately, Ethiopia is solely dependent on hydropower which is risky during bad weather. The country needs security to maintain the energy supply,” said Tigabu Atalo, power and energy consultant with over a decade of experience.
Renewable energy is costly to develop but with lower operational costs in the long run, according to Tigabu. But costs can be further reduced through competition among developers and by improving the bureaucracy, often criticised for being slow, complicated and expensive according to him.
“New ways of financing and payment models need to be encouraged,” said Tigabu.
In this aspect, Ethiopia is making efforts to develop renewable energy sources, partnering with private businesses. A few months ago, Enel Green Power and Orchid Business Group agreed with the government to set up the first private solar power generation plant in Metehara with the capacity to produce 100MW of electricity.
Corbetti geothermal, with the capacity of generating 1,000MW, is also in the pipeline to feed electricity to the national grid as the power purchase agreement deal has already been signed.
Further attempts were also made a month ago, after the approval of a new proclamation which extended the construction period for private developers from two years to between three and five years depending on the type of the project.
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