The government of Ethiopia has signed implementation and power purchase agreements (PPAs) with two private-sector investors for two geothermal electricity generation plants with a combined capacity of 1 000 MW.

The two plants – Corbett, to be developed by Corbett Geothermal, and Tulu Moye, to be developed by a joint venture comprising Meridiam and Reykjavik Geothermal – will have a combined price tag of $4-billion.

According to State-owned Ethiopia Electric Power (EEP), the two plants will transform the provision of clean and reliable power and catalyse further investment in the country, thus boosting economic growth.

The plants, to be located in the Oromia region, some 250 km from the capital, Addis Ababa, will not only be the first privately financed geothermal independent power producers (IPP) in Ethiopia, but also only the second in sub-Saharan Africa.

Extensive studies have shown the Oromia area to host one of the best geothermal resources in the world.

“Corbetti is a truly landmark project for Ethiopia, being the country’s first independent power plant to sign a PPA and the first large-scale project to harness Ethiopia’s valuable geothermal resource,” says Corbett Geothermal CEO Steve Meyer.

The Corbetti plant is expected to sell electricity to the Ethiopian government at the equivalent of US0.075/kW, which is said to be the lowest rate in East Africa.

The agreements signed with the Ethiopian government cover an eight-year construction period and a 25-year operating period, after which ownership of the facilities will revert to EEP.

Ethiopia, sub-Saharan Africa's fastest-growing economy, boasts over 10 000 MW of geothermal potential that the country is determined to harness to complement its 50 000 MW of hydropower potential.

The country is investing heavily in hydropower plants, with the flagship being the $4.7-billion Grand Renaissance Dam project, which will generate 6 450 MW.

Currently, the country has 4 300 MW of installed power generation capacity, and projects with a total capacity of over 9 000 MW are at various stages of construction. Others with a combined capacity of over 3 000 MW are at the preparatory stage.

“The signing of the geothermal agreements is a significant step for EEP (and will help us realise0 our strategic vision of being the regional leader for power generation and export in East Africa,” notes EEP CEO Azeb Asnake.

Under its ambitious 2015-2020 development plan, Ethiopia plans to increase power generation to 17 000 MW.