Federal Democratic Republic of Ethiopia Ministry of Water and Energy Scaling - Up Renewable Energy Program Ethiopia Investment Plan (Draft Final) January 2012 TABLE OF CONTENTS Table of Contents ..................................................................................................................................................................... ii List of Figures and Tables ................................................................................................................................................... iii List of Abbreviations ............................................................................................................................................................. iv Proposal Summary ................................................................................................................................................................... v I. Country Context .............................................................................................................................................. 1 The Energy Sector in Ethiopia ............................................................................................................................................ 1 Institutional Structure and Capacity ............................................................................................................................... 7 II. Renewable Energy Sector Context ........................................................................................................... 9 Analysis of RE Options........................................................................................................................................................... 9 Barrier analysis ...................................................................................................................................................................... 11 Government Plans and Strategy for the Sector ......................................................................................................... 13 III. Program Description .................................................................................................................................. 20 Selection of Programs for SREP Funding ..................................................................................................................... 20 Evaluation of candidate projects ..................................................................................................................................... 26 Environmental Impact Assessment Governance System ...................................................................................... 28 IV. Financing Plan and Instruments ............................................................................................................ 30 Sources of Financing ............................................................................................................................................................ 30 V. Additional Development Activities ....................................................................................................... 32 VI. Implementation Potential with Risk Assessment............................................................................ 35 VII. Monitoring and Evaluation ...................................................................................................................... 37 VIII. Annexes ......................................................................................................................................................... 41 Annex 1: Investment Projects........................................................................................................................................... 42 Annex 2: Ethiopia Absorptive Capacity ........................................................................................................................ 64 Annex 3: Stakeholders Consultations............................................................................................................................ 66 Annex 4: SREP Co-Benefits ................................................................................................................................................ 73 Annex 5: Investment Plan Review ................................................................................................................................. 76 Annex 6: MDB Request for Payment of Implementation Service Costs and Request for Project Preparation Grant .................................................................................................................................................................. 77 ii LIST OF FIGURES AND TABLES Figure 1: Power Demand and Supply ............................................................................................................... 3 Figure 2: Hydro Projects Unit Generation Cost ............................................................................................ 4 Figure 3: Output Overview .................................................................................................................................. 5 Figure 4: Unit Generation Cost by Source Type ............................................................................................ 6 Figure 5: Government Structure for the Energy Sector ............................................................................. 8 Figure 6: SREP Institutional Setup.................................................................................................................. 39 Table 1: Financing Matrix .................................................................................................................................. vii Table 2: Channeling of SREP Resources ...................................................................................................... viii Table 3: 2010/2011 GC Energy Consumption by Tariff Category .......................................................... 2 Table 4: Current and Future Generation Composition of the Power System ...................................... 5 Table 5: Electricity Tariff since 2006 ............................................................................................................... 7 Table 6: Barriers for Renewable Energy Development............................................................................ 11 Table 7: Evaluation Matrix ................................................................................................................................ 27 Table 8: Financing Matrix .................................................................................................................................. 30 Table 9: Indicative Expected Timeline for MDB Approval of Project Preparation Grants and Investment Projects .................................................................................................................................... 31 Table 10: Recent and Ongoing Projects/Initiatives in RE and energy access ................................... 32 Table 11: Program Level .................................................................................................................................... 36 Table 12: SREP Ethiopia Results Framework .............................................................................................. 37 Table 13: M&E System Management .............................................................................................................. 40 iii LIST OF ABBREVIATIONS AFD French Development Agency SCS Self-Contained System BADEA Arab Bank for Economic Development of SNNPR Southern Nations Nationalities and Africa Peoples Region COOPI International Cooperation (Italy) SNV Netherlands Development Organization CRGE Climate Resilient Green Economy SREP Scaling-up of Renewable Energy Program CSA Central Statistics Agency USD United States Dollar EC European Commission EIB European Investment Bank EEA Ethiopian Electricity Agency EEPCO Ethiopian Electric Power Corporation EPA Environmental Protection Authority GEF Global Environmental Facility GHG Green House Gas GoE Government of Ethiopia GSE Geological Survey of Ethiopia GTP Growth and Transformation Plan GWh Giga Watt hour HoA-REC/N Horn of Africa – Regional Environment Centre and Network HV High Voltage INBAR International Network for Bamboo and Rattan ICS Interconnected System IP Investment Plan LED Light Emitting Diode LV Low Voltage MoFED Ministry of Finance and Economic Development MoM Ministry of Mines MoWE Ministry of Water and Energy MW Mega Watt NBPE National Biogas Program of Ethiopia NGO None Governmental Organizations OPEC FID Organization of Petroleum Exporting Countries – Fund for International Development REF Rural Electrification Fund RET Renewable Energy Technologies REES Rural Electrification Executive Secretariat iv PROPOSAL SUMMARY Objectives 1. Driven by accelerating socio - economic growth and development, Ethiopia is experiencing increased energy consumption and unmet demand for the last 7 years. In this regard, the major objective of the energy sector during the existing 5 year Growth and Transformation Plan period (GTP) and beyond is to meet the demand for energy in the country by providing sufficient and reliable power supply that meets international standards at all times. This objective will be achieved by accelerating and completing the construction of hydroelectric power and other renewable energy generation projects, expanding and strengthening