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Supporting geothermal development in the Tendaho region in Afar / AFD
Since 2008, AFD has been accompanying the public electricity utility — Ethiopian Electric Power (EEP) — in developing renewable energies in the country. In July 2014, a 9 million euros concessional loan (AFD) combined with a 7.5 million euros grant (EU-Africa Infrastructure Trust Fund) were allocated to the Ethiopian Government, in order to develop the geothermal activity in the Tendaho area.
Context

Ethiopia’s renewable energy potential is among the highest in Africa. It is estimated at over 50 GW (wind, hydro and geothermal energy mostly), with less than 4.2 GW exploited as of early 2017. The increase in power generation of the last decade has been entirely based on hydropower.

However, the Ethiopian authorities are now aiming to diversify their power generation sources.

The search for alternative energies has focused on geothermal energy but it has yet remained unsuccessful. Indeed, Ethiopia is facing inherent difficulties related to geothermal energy development: it requires prior exploration phases backed by thorough scientific expertise and major financing before actually being able to produce electricity at a geothermal power plant. This capital-intensive energy with deferred returns thus needs major public investments in its initial development phases.

Description

The Tendaho Area — a volcanic region located in the south of the Afar — has witnessed the most advanced geological exploration that was led in the country since the end of the 1970s.

This project aims to bring a conclusion to these activities, in order to make available an exploitable resource. The Ethiopian Electric Power (EEP) and the  Geological Survey of Ethiopia (GSE) have set two objectives for the development of the field, whose specificity lies in the coexistence of a superficial and deep reservoir:
1. The delineation and the development of the superficial reservoir (600m deep) in order to allow a sustainable exploitation with a capacity of an estimated 10MW,
2. The exploitation of the deep reservoir (up to 2,500m deep) by drilling wells at great depths.

The aim of the project is to support the Ethiopian economic growth by developing geothermal energy (a source that is reliable and lowcarbon) and thereby to improve
its capacity for climate change adaptation.

Impacts

The exploitation of a low-carbon geothermal resource contributes to the development of this sub-sector, which is still poorly controlled in Ethiopia. It focuses on hydropower dams that have stronger environmental and social impacts.

Given Ethiopia’s dependency on hydropower, the diversification of energy sources will help the country to adapt to climate change — even if these geothermal resources will be developed later on (medium-term).

The project, aiming to meet the domestic and regional demand, will also contribute to the Ethiopian economic growth by developing a new power generation capacity in
the medium-term.

In a context where the Ethiopian State is banking on electricity exports to East African Power Pool countries to bring foreign currency to the country, the project will likely contribute (indirectly) to improving the inflow of foreign currencies.

07/04/2015
Project start date
Sectors
Tendaho
Location
9 000 000
EUR
Financing amount
Ethiopian Electric Power
Beneficiaries
EU-Africa Infrastructure Trust Fund (EU-ITF)
Co-financiers