Improving Conditions for Solar Energy Investment in Ethiopia

14th February 2019

By Kieran Whyte, Partner and Head of the Energy, Mining & Infrastructure Practice, Mike Webb, Senior Associate, Baker McKenzie Johannesburg, and Yibeltal Shiferaw, on secondment from Tadesse Kiros Law Offices (TKLO) in Ethiopia

Project Landscape

The Ethiopian Government recently announced the commencement of a tender for four solar photovoltaic (PV) projects. These four projects are in addition to two Scaling Solar projects which are currently being procured under the IFC’s Scaling Solar Programme. In addition, two separate solar PV projects are expected to be initiated later in the year. Each of these projects will be developed on a public private partnership (PPP) basis. 

The request for proposals (RFPs) for the four projects are scheduled to be released in late April or early May 2019. The RFP for the two Scaling Solar projects is expected to be released to the prequalified developers before the end of February this year. The term of the power purchase agreements (PPA) will be 20 years. 

The below table summarizes the eight pending solar PV projects in Ethiopia: 


Key Challenges 

Following some challenges experienced in previous solar projects, for example the 100 MW Metahara solar project that was awarded to Enel in October 2017, the Government of Ethiopia has agreed to take a more active role in the procurement process in an effort to streamline the implementation of these projects. Some of the key challenges included:

Acquisition of land processes; 

The lack of a “one-stop shop” service for licensing and approvals (meaning that investors in PPPs are required to obtain licences and approvals from different institutions or regulatory bodies, whereas investors outside of PPPs are able to manage this process through a single entity, the Ethiopian Investment Commission); 

Key Interventions 

The following specific interventions by government have been initiated to assist projects with some of these challenges:

Other incentives that may be available for PPP investors, subject to negotiation and agreement with EEP (and other government departments), include: