How to Unlock Ethiopia's Renewable Energy Potential and Build a Future that Lasts

The world needs to switch to renewable energy sources in order to fight climate change and make sure energy security. This is a very important chance for developing countries like Ethiopia to use their many natural resources to grow in a good way. Ethiopia has a lot of renewable energy potential, but more than 45% of its people don't have electricity. This is a strange thing about being energy poor. Climate change can cause droughts, which can hurt its grid because it gets 90% of its power from hydropower. Earlier studies looked at Ethiopia's potential for hydropower, geothermal, wind, and solar energy separately. Still, it is important to do a full analysis that includes all sectors within the current policy and investment frameworks. This article goes into great detail about Ethiopia's renewable energy situation. We look at the potential of hydropower, geothermal, wind, and solar energy and come up with policies and investments that will make Ethiopia a regional exporter of renewable energy and provide electricity to everyone by 2030.

We need to stop climate change, make energy safer, and make sure everyone has access to electricity. That's why the world is going through an unprecedented energy transition. The International Energy Agency (IEA) says that in order to meet the Paris Agreement's 1.5 °C target, more than 60% of the world's electricity must come from renewable sources by 2030. This change is both a problem and a chance for developing countries, especially in Africa. They need to figure out how to balance fast industrialization with long-term energy growth.

Ethiopia, which has the second most people in Africa, is at the forefront of this change. Ethiopia's energy needs are growing quickly because its GDP grew by an average of 9% a year from 2010 to 2020 [1]. The country is in a tough spot, though. Even though it has some of Africa's most abundant renewable energy sources, more than 45% of its people still don't have power [2]. This lack of energy slows down economic growth, makes it harder to get healthcare and education, and makes the gap between rural and urban areas even bigger. Ethiopia's energy mix is already 90% renewable, which is a lot more than most African countries that use fossil fuels. This is mostly because Ethiopia has a lot of hydropower [3]. But depending on hydropower has been risky. Droughts that happen over and over again, which climate change makes worse, have caused blackouts and energy rationing. This weakness shows how important it is to have an energy plan that can handle climate change and uses a lot of different sources.

This article talks about Ethiopia's potential for renewable energy and how the country can use its hydropower, geothermal, wind, and solar resources to power everyone, make the country safer, and grow its economy. We also talk about the policy, financial, and technological issues that need to be fixed for Ethiopia to become a leader in renewable energy in Africa. The article talks about Ethiopia's renewable energy options, focusing on four main areas: (1) Hydropower, where the Grand Ethiopian Renaissance Dam (GERD) presents both opportunities and geopolitical challenges; (2) Geothermal energy, which is a stable but underused source with 10 GW potential in the Rift Valley [4]; (3) Wind power, where Ethiopia has the second-highest capacity in Africa but has only developed less than 1% of its 1,350 GW potential [5]; and (4) Solar energy, which is important for rural electrification through decentralized mini-grids and pay-as-you-go (PAYG) systems. The paper also talks about the investments and policies that need to be put in place to speed up Ethiopia's move to cleaner energy. These are public-private partnerships (PPPs), feed-in tariffs, and trade in energy across borders within the African Continental Free Trade Area (AfCFTA). Ethiopia can learn from Kenya's successful geothermal expansion and Morocco's solar projects.

This study asserts that Ethiopia can achieve its goal of universal electricity access by 2030 through coordinated policy initiatives, increased foreign investment, and technological progress, while positioning itself as a renewable energy exporter in East Africa. The study is relevant for policymakers, investors, and development agencies seeking sustainable energy solutions in emerging economies.

There is a lot of academic and institutional talk about Ethiopia's energy sector. It has evolved from initial resource evaluations to contemporary analyses of integrated policy, market, and technological frameworks. This review sorts this body of work into groups based on themes, which makes it easier to see what research gap this study is trying to fill. The first wave of research was mostly about finding out how much renewable energy Ethiopia could make. Wolde-Ghiorgis [6] was one of the first people to write down the country's energy resources in a clear and organized way. He said that there is a gap between potential and development and asked for new policies that would focus on using renewable energy in rural areas. This basic work is always being updated by international groups. The Ethiopian Electric Power (EEP) and the Ministry of Water and Energy (MoWE) regularly publish master plans and national electrification programs [7] that give official government estimates. According to these estimates, hydropower is 45 GW, wind power is 1,350 GW, solar radiation is 5.2–6 kWh/m²/day, and geothermal power is 10 GW.

The Global Wind Energy Council [5,8] says that Ethiopia has the second-best wind potential in Africa, mostly in the Somali and Oromia regional highlands. Their reports list the exact wind corridors and give estimates of the capacity factor, which makes Ethiopian wind projects very competitive. IRENA's reports from 2022 and 2023b also give the most thorough technical assessments of the potential for geothermal and solar energy. IRENA's [9] "Geothermal Development in Eastern Africa" status report looks at how Ethiopia's progress compares to Kenya's. It says that Ethiopia's Corbetti and Tulu Moye fields are geologically similar to Kenya's Olkaria, but progress has been slow because of money and rules. Solargis [10] makes high-resolution solar maps that show that the best places in the country to use photovoltaic (PV) power are in the east and north. This means they work well for both large power plants and smaller, more distributed systems.

A considerable amount of recent literature investigates the essential paradox of Ethiopia's energy sector: its renewable yet fragile hydropower-dependent infrastructure. Bekele [11] and Williams [12] provide thorough analyses of the direct relationship between climate change-induced variations in rainfall patterns and power crises, as evidenced by the severe droughts of 2015, 2019, and 2023. Their research models future climate scenarios, predicting increased volatility in hydropower output and emphasizing the essential need for diversification.

The Grand Ethiopian Renaissance Dam (GERD) is a big topic of study in both policy and academia. A lot of the writing about it looks at how it affects the countries downstream on the Nile [13], but more and more work is looking at how it affects people in Egypt. Mulat [14] says that GERD's 6.45 GW capacity will make it much easier to get energy and industrialize, but it will also make the system more vulnerable unless it is paired with other sources. The IEA [15] Electricity Market Report backs this up by showing that the drought in 2023 caused a 40% drop in hydropower generation. This made Ethiopia spend hundreds of millions on diesel imports and power rationing. This event has become an example in writing of how dangerous it is to rely too much on one green renewable source.

There has been a lot more research on non-hydro renewables because costs are going down all over the world and Ethiopia has specific needs. Literature on Ethiopian geothermal energy consistently describes it as the ideal complement to hydropower—a stable, baseload, and climate-resilient resource. Matek [4] and IRENA [9] provide thorough technical and economic assessments of the Rift Valley's potential. Mwakirani, et al. [16] is a very important piece of work. Their research on Kenya's Olkaria PPP model is seen as the best way to make geothermal exploration in Ethiopia safer. They explain what made the project successful: a government-led initial resources assessment, shared infrastructure development, and standardized Power Purchase Agreements (PPAs) that attract experienced international developers. The primary issue identified in all studies is the substantial cost and risk associated with exploratory drilling, necessitating government intervention [4,17].

The literature on wind energy focuses on a unique set of problems. The resource is world-class [8], but progress has been slow. Gebreslase [18] and the African Development Bank [19] say that the main problems are: (1) a lack of detailed wind resource data to attract investors; (2) transmission problems, since the best wind sites are often far from the grid; and (3) competition from cheap hydropower, which has historically set a low standard for tariff expectations. The Ashegoda (120 MW) and Adama (153 MW) wind farms are great examples of how to do things right. However, the literature agrees that a more strategic approach to zoning and expanding the grid is needed to unlock the rest of the potential.

Utility-scale systems and decentralized systems are the two main areas of solar research. The literature for utility-scale is still coming out because Ethiopia's large-scale PV sector is still very new. The IRENA [20] and IEA (2022) reports talk about how much cheaper solar PV has gotten all over the world. They say that Ethiopia can now build gigawatt-scale plants with tariffs lower than $0.04/kWh by using auctions. Decentralized solar for rural electrification is the most interesting area of research. GOGLA's [21] work is ground-breaking because it looks at the global off-grid solar market. Their annual reports show us that Pay-As-You-Go (PAYG) solar home systems (SHS) are helping to make solar energy more affordable. Kemenke [22] and Getu & Makeyaw [23] use this framework to look at how PAYG models can help the National Electrification Program 2.0 [7] reach its last-mile connectivity goals in Ethiopia. The acknowledged challenges include consumer awareness, last-mile distribution logistics, and the integration of these systems into larger mini-grid frameworks.

A common idea in the literature is that technical potential doesn't mean much without frameworks that make it easier to use. The World Bank's "Doing Business" reports (and later evaluations of the investment climate) have consistently highlighted issues with regulations. The World Bank [17] says that Ethiopia's process for approving Independent Power Producers (IPPs) is one of the longest in Africa. It takes 2 to 3 years, while it only takes 6 to 9 months in Kenya and Senegal. This is because the government is divided, there isn't one authority for renewables, and old policies favored a state-owned monopoly (EEP).

People know about financial problems just as well. The "Global Landscape of Renewable Energy Finance" report from IRENA [20] says that there is a big gap in project financing for developing countries. This is even worse for Ethiopia because it doesn't have enough foreign exchange and its economy is in bad shape, which makes foreign direct investment (FDI) less likely. Research indicates various methods to address the issue. Getu and Makeyaw [23] say that development partners should set up a separate fund for renewable energy development. The AfDB [24] and the IEA (2022) are two other groups that back using de-risking tools like guarantees (like partial risk guarantees) and selling sovereign green bonds to get money from international capital markets for green projects.

People are talking a lot about feed-in tariffs (FiTs) and auctions as policy tools. A lot of the early writing from ten years ago strongly supported FiTs as a way to get the market going [6]. Recent research, particularly from the IEA [25], indicates a global shift towards competitive auctions, akin to those in Morocco and South Africa, which have significantly reduced costs. Recent research concurs that Ethiopia ought to implement a technology-specific auction system to ensure transparency and minimize costs [20,25].

Research is increasingly focusing on the potential for Ethiopia to emerge as a regional power exporter. The Eastern Africa Power Pool's (EAPP) annual reports for 2022 explain the plans for the physical infrastructure that will be needed for cross-border interconnectors. Cervigni's (2023) research shows that Ethiopia's hydropower, geothermal, and wind energy could give Sudan, South Sudan, Kenya, and Djibouti cheap, clean power. This would help the economies of these countries work together better. In general, studies that compare African countries teach us important things. Mwakirani, et al. [16] say that the "Kenyan model" for geothermal development is the most common one used in Ethiopia. Kenya has been successful because the Kenya Electricity Generating Company (KenGen) took on the initial risk of exploration and then worked with private companies to build the country. The IEA [20] also says that Morocco's Noor solar complex is a great example of how to use well-structured auctions and government-backed offtakers to get a lot of money into concentrated solar power (CSP) and PV.

The existing literature provides significant insights into multiple aspects of Ethiopia's energy landscape, encompassing hydropower vulnerability, geothermal potential, and solar pay-as-you-go systems; nevertheless, a considerable gap remains. There is no comprehensive, current analysis that integrates the following components:

A complete view of all renewable energy sources (hydro, geothermal, wind, and solar) within a single framework.

A thorough look at policy and investment barriers, using the most recent reports from the World Bank, IEA, and IRENA (2022–2023) as examples.

A good plan that uses what we've learned from Kenya (geothermal public-private partnerships) and Morocco (solar auctions) to make a clear plan that works for Ethiopia's own political and economic situation.

A clear explanation of how decentralized renewables can help bring electricity to everyone and how they can be used to make a plan for exporting goods to other countries.

This study aims to rectify this shortcoming. It goes beyond separate analyses to give a full evaluation that clearly connects resource potential with modern policy tools and investment models. This gives Ethiopia a real plan for becoming a leader in renewable energy.

What Ethiopia's energy landscape looks like now and what needs to change

There are a lot of good and bad things going on in Ethiopia's energy sector. The rules are changing, demand is rising quickly, the generation mix is unstable, and infrastructure is not evenly spread out. You need to look at a lot of different things closely to figure out the best way to get to a future with sustainable energy.

The rate of electrification in the country has gone up a lot, from 5% in 2000 to about 54% in 2024. This means that more than 60 million people are now connected [2,24]. The government's National Electrification Program (NEP 2.0), which includes both grid expansion and off-grid solutions, is mostly to blame for this progress. But this total number hides big and long-lasting differences. Most cities, about 85% to 90%, have electricity. Addis Ababa is almost completely connected. Only 30 to 35% of rural areas have electricity, on the other hand. This means that almost 55 million people are still in the dark [2]. This gap between cities and rural areas keeps people poor by making it harder for them to get an education (for example, they can't study after dark), making it harder for businesses to be productive (for example, they can't process crops), and making healthcare services less effective (for example, they can't keep medicines and vaccines cold).

There are also big differences between regions, in addition to the divide between cities and rural areas. Some of the most remote and dry areas are Tigray, Afar, and Somali. Historically, less than 20% of people in these areas have had access to services. On the other hand, Oromia and Amhara are more centrally located and closer to the national average [27]. These people who live off the grid still get most of their energy from traditional biomass, like wood, charcoal, and dung. More than 90% of people who live in the country use it to cook and heat their homes. This reliance leads to severe health issues stemming from indoor air pollution (a major cause of mortality in Ethiopia) and environmental degradation due to deforestation and soil erosion (IEA, 2022).

Hydropower accounts for approximately 90% of Ethiopia's installed capacity, which is around 5.3 GW, and an even greater percentage of the energy generated [3,28]. The main part of this system is a series of big dams on the Omo and Abbay (Blue Nile) rivers. Some of the most important operational facilities are Gilgel Gibe III (1,870 MW), Tekeze (300 MW), Gilgel Gibe II (420 MW), Melka Wakena (153 MW), and Fincha (134 MW).

Soon, the Grand Ethiopian Renaissance Dam (GERD) on the Blue Nile will be up and running. With an installed capacity of 6.45 GW, it will more than double the country's generation capacity. This makes Ethiopia look better as a country that uses renewable energy, but it also makes systemic risk much higher. Because the system relies so heavily on hydropower, it is very sensitive to changes in the weather. The El Niño Southern Oscillation (ENSO) has a big impact on Ethiopia's weather, making floods and droughts happen in cycles. The levels in the reservoirs went down a lot during the very dry years of 2015–2016 and, more recently, 2022–2023. The 2023 drought, which was made worse by climate change, cut hydropower generation by 40% - 50%. This caused rolling blackouts across the country that lasted for months, power rationing for industrial customers, and a big drop in economic activity [12,15].

The government had to use expensive diesel-powered generation plants to make up for this. It costs a lot of money to make electricity from diesel, about $0.25 to $0.30 per kWh. This is 5 to 6 times more than making electricity from hydropower, which costs $0.05 to $0.06 per kWh. Ethiopian Electric Power (EEP), the national utility, had to spend hundreds of millions of dollars on fuel imports in 2023 because of this emergency measure. This hurt the country's foreign exchange reserves and made its budget deficit worse [2,28]. Ethiopia also had to buy power from its neighbors Djibouti and Sudan, but only in small amounts because they couldn't connect to each other very well. This shows that Ethiopia is not self-sufficient, even though it has a lot of resources.

The Ethiopian electricity transmission and distribution network is very big, but it has some big problems that make it hard to use. Most of it is run by Ethiopian Electric Power (EEP) and Ethiopian Electric Utility (EEU). The national grid has 90,000 kilometers of distribution lines and 18,000 kilometers of transmission lines. The majority of the transmission lines operate at 230 kV and 400 kV. But it doesn't reach everywhere; most of it is in the north and center of the country, and the big lowland areas in the east and south are still mostly unconnected [24]. One of the biggest problems is that the system loses a lot of money, both technically and non-technically, about 15% - 17% of the time. Overloaded transformers, old switchgear, and long, inefficient distribution lines in rural areas are to blame for technical losses. Utility companies have a harder time staying in business because they lose money from things like bad metering, billing problems, and electricity theft. This means they have less money to spend on upkeep and growth [17,29].

It costs too much to extend the grid for rural electrification. For communities with few people and little initial energy demand, it can cost more than $8,000 to $10,000 per kilometer in rough terrain. This means that a purely grid-based approach to getting 100% access is not cost-effective, so we need to rely more on decentralized renewable energy solutions [7]. The grid's design and operation are not yet optimized to handle variable renewable energy (VRE) inputs from large-scale solar and wind farms. This is because the grid isn't balanced because it doesn't have enough smart grid technologies, automation, or energy storage systems [23].

The policy and regulatory environment is still a big problem for investment and development, even though things are getting better. The government used to own and control the energy sector. The government has let Independent Power Producers (IPPs) work since 2013, but it has been a slow and hard process. The process for approving IPP projects is notoriously protracted, taking an average of 2-3 years from proposal to financial close, compared to 6-9 months in more agile markets like Kenya or South Africa [17]. The government is made up of different groups, like the MoWE, EEP, EEU, Ethiopian Investment Commission, and National Bank. It can be hard to get all of them to agree on something because their deadlines and responsibilities are not always clear.

Getting land for energy projects is another big problem. Geothermal exploration in the Rift Valley and wind farm expansions are just two examples of projects that have been put on hold because of complicated land tenure systems, conflicts with local communities, and bad compensation systems [4,8]. But financing is probably the biggest problem. The state-owned utilities can't spend much on capital improvements and have trouble with tariffs that don't cover their costs. The country doesn't have enough foreign currency, which makes it hard for international investors to get their money back home. There isn't enough local debt capital with terms long enough for energy projects. Ethiopia has a lot of potential for green finance, but it hasn't used international climate funds like the Green Climate Fund or issued a lot of sovereign green bonds yet. Geothermal development is especially hard because exploratory drilling needs a lot of money up front, which is a big risk of failure that makes private investors less likely to invest unless there are strong public risk-sharing mechanisms [16,20]. Not as many people talk about it, but the lack of skilled workers is just as big of a problem. The energy sector is growing quickly, but the number of people who can work in it is not growing as quickly. There aren't enough skilled engineers and technicians for new technologies like geothermal drilling, solar PV installation and maintenance, grid modernization, and energy efficiency. Vocational schools and colleges still aren't producing enough graduates with the skills that businesses need in the real world. This "skills gap" could put a stop to big plans and force us to hire expensive foreign experts [23] (Table 1).

This comparison shows that Ethiopia is in a special place. It has a 90% share of renewable energy, which is higher than that of most African countries and is impressive. It is a big problem that it doesn't use a lot of different renewable technologies, though. Kenya, on the other hand, has built a successful multi-technology renewable system. The grid system in South Africa is stronger and more industrialized than it used to be, and the country has made a lot of progress in integrating utility-scale wind and solar through its successful auction programs. Ethiopia has two problems: it needs to quickly make electricity more widely available, and it also needs to change the way it makes electricity so that it lasts longer. To do this, it needs to fix the long-standing problems with its infrastructure, finances, and rules that were talked about above.

Ethiopia's untapped potential for clean energy

Ethiopia has a lot of renewable energy resources, and they are so big that they could make the country a world leader in green energy and the main force behind decarbonization in the Horn of Africa. This section goes into great detail about this huge potential, talking about specific projects, technological problems, and the exact reasons why this wealth hasn't been used yet.

Hydropower: Not just the GERD Monolith

Most people think that Ethiopia could produce 45 GW of hydropower. But new basin-wide studies that use advanced digital elevation models and flow data show that the potential could be as high as 60 GW in the best possible development scenarios [17,27]. At the moment, only about 4.5 GW (10% of the conservative estimate) is working. The Grand Ethiopian Renaissance Dam (GERD) is the main focus. It is more than 90% finished and has begun testing its first turbines. But only looking at big dams makes climate vulnerability worse. A diverse portfolio is the key to the future of Ethiopian hydropower:

The main mega-dam for baseload and export is GERD. It was built to make power, keep the area from flooding, and make sure there is enough water. It should make 15,692 GWh of energy every year. The Koisha Dam on the Omo River, which will be 2.1 GW, is the next big project.

Cascade and Run-of-River (ROR) Projects for Resilience: We really need to move toward smaller, cascaded systems and ROR projects. These projects have much smaller reservoirs, which means that less water is lost to evaporation and fewer people have to leave their homes. Also, they are less likely to be hurt by droughts that last for years. Some places where this kind of development could happen are the Genale Dawa III (254 MW), Halele Werabesa (422 MW), and Border (1,200 MW) projects. They could all add more than 2 GW of capacity that is more stable [28].

Pumped Storage Hydropower (PSH) for Grid Stability: It will be very important to keep the grid stable as more solar and wind power plants come online. PSH would work great on the land in Ethiopia. Preliminary feasibility studies have identified several sites, including a potential 1,000 MW facility near the Tis Abay waterfalls, which could serve as the country's extensive battery, storing excess solar energy during the day for use at night [9].

Geothermal: The sleeping giant of the rift valley

The East African Rift System includes the Ethiopian Rift Valley. Some experts say that it could have more than 15 GW of geothermal potential [4,9]. This is Ethiopia's most important energy security asset because it is a clean, baseload, and climate-resilient power source that can run at 90% - 95% capacity. Still, the pilot Aluto Langano plant has only reached 7.3 MW of capacity, which is less than 0.1% of what it could be. The development is mostly in high-temperature fields (>200 °C), which are great for making electricity:

One of the biggest calderas in the world is Corbetti Caldera. It is to the south of Addis Ababa. Estimates of resources suggest a range of 500 to 1,000 MW. Corbetti Geothermal PLC, a partnership between Berkeley Energy and Iceland Drilling, has finished exploring and signed a 500 MW PPA. The project is now in the last stages of getting the money it needs to be fully built.

Tulu Moye is next to the Corbetti field and is thought to be able to produce 150 MW of power. Tulu Moye Geothermal Operations S.A., Meridiam, and Reykjavik Geothermal are all working hard to drill and hope to have 50 MW of power by 2026.

The Aluto Langano (70 MW more than the pilot), Dofan (200 MW), and Abaya (100 MW) fields are all very promising. People are also looking into the Dallol and Danab fields in the Afar region.

The main problems are still the high capital intensity and risk of the first phase of exploration. Drilling one exploratory well costs between $5 million and $7 million, and there is a 20% to 40% chance that it will fail. This necessitates a public-private partnership (PPP) framework wherein the government or other public entities assume the risk of initial exploration, as evidenced by successful implementation in Kenya [16].

Wind power: An important resource for the world

Ethiopia has the second biggest wind energy potential in Africa, and it is also of world-class quality. The GWEC [8] number of 1,350 GW is only a guess. The technically feasible potential is thought to be between 30 and 50 GW, which is still a lot [5,18]. This is because of land use restrictions, distance to the grid, and wind class. The resource is mostly found in these corridors:

The Somali Regional State Corridor is made up of the areas around Aysha, Dewele, and Shinile. The average wind speed at 100 m is more than 9.5 m/s, and the capacity factors are more than 50%.

The South-Eastern Corridor (Oromia) is made up of areas around Mega, Yirgalem, and Negele, where the wind blows at speeds of 8.5 to 9.0 m/s.

The Tigray Corridor is the area around Mekele and Adigrat, where speeds are between 7.5 and 8.5 m/s.

The Ashegoda (120 MW), Adama I (51 MW), and Adama II (153 MW) farms together can produce 324 MW of power. They are building the Assela wind farm, which will have 100 MW of power. The difference between potential and developed capacity is, according to some, the biggest of any resource. Some of the biggest problems are the need for accurate, bankable wind resource measurements, the high costs of building transmission lines to remote, high-wind areas, and the need for a set of rules that takes into account the fact that wind and solar generation profiles work well together.

Solar energy: The key to making everyone able to use it and giving them more options

Ethiopia gets between 5.2 and 6 kWh/m²/day of solar radiation. The Afar, Somali, and Oromia areas get the most, up to 6.5 kWh/m²/day. This is a lot more than the average for many European countries that use solar power (for example, Germany uses 2.9 kWh/m²/day) [10]. The solar contribution to the grid is still very small (<1%). There are two possible results:

Utility-Scale Solar PV: The technical potential for ground-mounted PV is huge, with estimates of over 50 GW. The Metehara PV plant, which is 250 MW, is the first big project to be built. The "Solar Energy Development Roadmap" has helped the government find and rank places where solar energy can be developed. Some of these places are in Afar (Logya, 500 MW), Somali (Fafan, 300 MW), and Oromia (Babile, 200 MW). The Levelized Cost of Energy (LCOE) for large-scale solar in Ethiopia is now very low, between $0.035 and $0.055 per kWh. This is the cheapest way to add new generation capacity [20].

Distributed and off-grid solar: This is the most important thing to do to make sure everyone can use it. Pay-As-You-Go (PAYG) Solar Home Systems (SHS) are now the most common way to get basic lighting and phone charging in tier 1 and 2 electrifications. Companies like d. and SunFunder Light has sent out hundreds of thousands of units. GOGLA [21] says that the market is growing by more than 25% every year. The best choice is solar mini-grids, which can power groups of homes and useful things like rural clinics, schools, and small businesses. They can be a mix of solar and diesel, or solar, wind, and batteries. Ethiopia can build more than 2,000 mini-grids to help people who live in remote areas. The AfDB-funded "National Electrification Program 2.0" wants to build 200 pilot mini-grids by 2026 [7].

Synthesis: A portfolio of renewable energy sources working together

The real potential lies not in examining these resources individually, but in leveraging their synergies (Table 2).

A diverse mix has strategic advantages, like making systems more reliable. Geothermal energy, for example, provides a steady supply of energy all day and night. Hydropower reservoirs can be used to store energy and meet peak demand. Wind generation is often highest at night, which works well with solar. The national grid is strong and can handle problems because it has so many different types of power. Second, economic optimization lowers the overall cost of electricity by using the cheapest resource available at any given time. For example, solar energy during the day, wind energy at night, or hydro/geothermal energy for baseload. This makes businesses more competitive. Finally, Ethiopia's export revenue, which comes from a variety of surplus generation capacity, makes it a reliable energy exporter to Sudan, South Sudan, Kenya, and Djibouti through the Eastern Africa Power Pool (EAPP). This is important for the country's foreign exchange [30]. To turn this integrated potential into a reality, the next sections will talk about how to solve the problems of grid modernization, strategic investment, and regulatory reform. The issue is not the resource base; rather, it is the environment that facilitates possibilities.

Ways to put money into renewable energy and make rules for the future

We need to change our policies and get a lot of money to work together to make Ethiopia's huge potential for renewable energy into a real, climate-resilient energy system. This section gives a detailed, multi-level plan of actions that goes beyond general suggestions to include specific tools, changes to institutions, and a sequence of actions.

A full change in the rules and policies

The current maze of rules is the main thing that stops people from investing. A root-and-branch reform is needed to make the environment clear, efficient, and good for investors. A Renewable Energy Development Authority (REDA) is a strong, centralized, one-stop-shop agency that makes the whole process of investing in renewable projects easier. REDA would combine the different jobs of the MoWE, EEP, EEU, and Ethiopian Investment Commission. It would be responsible for doing project pre-feasibility and land banking, running competitive auctions, coordinating environmental and social impact assessments (ESIAs), and being the only place to get all permits. The goal is to cut the time it takes to get approval from 2 to 3 years to less than a year [17,23]. As part of the modernization of the legal and tariff system, the Renewable Energy Act will also be passed. This will give us a stable, long-term legal basis instead of old laws. This law should make it clear that IPPs can use the grid, that renewables should be given priority in dispatch, and that there should be clear rules for banking and wheeling. Change the way large-scale solar, wind, and geothermal projects are run from a state-run model to a competitive reverse auction system. Just like the successful models in Morocco (MASEN) and South Africa (REIPPPP), this will lower costs through competition and make sure that everything is clear. The first auctions should be for specific technologies, like a 500 MW solar round or a 300 MW wind round, to make a diverse portfolio [20,25]. The national utility also needs to have a tariff structure that reflects costs. These subsidized tariffs are bad for the economy and stop private investment because they make it hard for EEU to be a reliable buyer. The utility's finances and creditworthiness will get better if tariffs are changed in stages and low-income households get direct subsidies.

Making investments safer and getting money to flow

The estimated $40 billion needed by 2030 won't be enough from public funds alone. We need to use a complicated mix of public, private, and international climate finance, with a focus on using public money to lower risk and attract private investment. By 2025, the government should issue Ethiopia's first sovereign green bond. This will help the government and set up a clear framework that follows international standards like the ICMA Green Bond Principles. The money should be used to build strategic transmission infrastructure and a fund to lower risk. To help with this, it might be a good idea for Ethiopian banks to issue corporate green bonds that can be used to lend money to projects that use renewable energy [31-35].

The National De-risking Facility will help raise money through the sale of sovereign green bonds, concessional loans from development partners like the World Bank and AfDB, and climate finance from the Green Climate Fund. This facility would offer a variety of tools, such as Partial Risk Guarantees (PRGs) that protect against political risks like currency inconvertibility and transfer restrictions, which are big worries for foreign investors; Viability Gap Funding (VGF), which gives capital grants to make pioneering projects (especially geothermal) financially viable until economies of scale are reached; First Loss Capital, which takes a junior equity position in projects to attract senior commercial debt; and Tapping into Carbon Markets, which lets Ethiopia's renewable projects earn carbon credits under Article 6 of the Paris Agreement. If developers register their projects with systems like VERRA or the Gold Standard, they can sell Emissions Reduction (ER) certificates and make more money. This helps the project's money situation. The government needs to set up a strong national carbon registry and authorization framework for this to happen [2]. Foreign Exchange Solutions also needs to set up a separate forex escrow account for IPPs to deal with the important forex shortage. Some of the money that Ethiopia makes from selling electricity to other countries (like GERD to Sudan) and from paying domestic tariffs in ETB could go into this account. Then, this money would be used to make sure that there is enough foreign exchange to pay off debts and send profits back home to investors in renewable energy.

Strategies for development that are unique to technology

There are problems with each renewable technology that need specific policy solutions.

Geothermal: Make the most of the Kenyan PPP Model. The government should be in charge of the first resource assessments and the first high-risk exploration wells, which should be done through the proposed REDA or EEP. Once a resource is confirmed, private developers who are experts in that area are invited to bid on the construction and operation of the power plant. This model, which was perfected at Olkaria, directly addresses the main risk of exploration that stops investment [16].

Solar and wind: Focus on integrating and hybridizing with the grid. The government should pay for and require research on how to use variable renewable energy (VRE). This includes spending money to strengthen and expand the grid so that high-potential wind corridors in the Somali region can connect with solar sites in Afar; testing battery energy storage systems (BESS) at key substations to deal with intermittency; and giving incentives to hybrid power plants (like solar-wind, solar-diesel-battery) for off-grid mini-grids to make them more reliable and cheaper.

Distributed renewables for rural electrification: Start a Mini-Grid Acceleration Program that gives developers standard, pre-approved technical designs, easier permits, and financing based on results (for example, $/customer connected).

Begin a PAYG Solar Tax Holiday. For the next 5 to 10 years, you don't have to pay import duties or value-added tax (VAT) on certified SHS and their parts. This will bring prices down for the end user and speed up market penetration [21].

Bringing regions together and making markets

The idea that Ethiopia could become a regional power exporter is a big reason why renewable energy is growing so quickly. It will be easier to do this if we speed up the building of important cross-border transmission interconnectors, like the Ethiopia-Kenya High Voltage Direct Current (HVDC) line, which is needed to send geothermal and wind power to a market that needs a lot of power. It is also very helpful to make sure that the rules and standards for the grid in the Eastern Africa Power Pool (EAPP) are the same as those in other countries. This will make it easier to trade electricity across borders. Furthermore, active engagement in the African Single Electricity Market (AfSEM) initiative, leveraging anticipated export revenues as collateral, is crucial for securing financing for domestic generation projects [19,21].

Growth of people and institutions

Policies don't work if people can't follow them. So, it's important to start a national program to teach people how to use renewable energy. Partner with universities (like Addis Ababa University, Arba Minch University, and all the other universities in the country) and vocational colleges to develop specialized classes in geothermal engineering, solar PV technology, grid management, and energy economics. It looks good to set up special training centers at important project sites, like in the Rift Valley for geothermal. The goal should be to train and certify 10,000 technicians and 2,000 engineers by 2030 [23]. This will really help the country move toward a Golden Age. Most importantly, fund post-doctoral research programs and partnerships with top institutions in Iceland (geothermal), Denmark (wind), and Germany (solar) to help build local research and development (R&D) capacity. Ethiopia must implement policy reforms and strategic investments to establish itself as a leader in renewable energy.

A plan for Ethiopia to be the first country to use renewable energy

Ethiopia needs a ten-year plan that runs from 2025 to 2035 and is broken down into three ambitious phases in order to become a leader in renewable energy. By 2030, the main goal is to make the country a green energy economy that can handle climate change and give everyone access to electricity. By 2035, it will be the biggest exporter of renewable energy in East Africa. The main ideas that will guide this change are diversification, decentralization, strategic investment mobilization, regional integration, and growth that includes everyone.

The first phase, which will last from 2025 to 2028, needs to be all about getting things ready for quick growth. We need to pass a full Renewable Energy Act and set up a strong, streamlined Renewable Energy Development Authority (REDA) during this important time. This will make it easier for investors to find what they need. The government should also hold the first auctions for solar and wind power, change the tariffs in stages to help utilities' finances, and issue Ethiopia's first sovereign green bond to start a national de-risking facility. Getting the Corbetti and Tulu Moye geothermal fields financially closed, starting up the Metehara solar and Assela wind farms, and starting a faster "Light for All" program that uses decentralized solar to connect millions of new customers are all important steps in this phase of the project. We will use real Key Performance Indicators (KPIs) to see how well this phase goes. These include raising the national electrification rate above 70%, getting more than $3 billion in private investment commitments, and increasing non-hydro renewable capacity to over 2 GW.

The second phase, which will take place from 2029 to 2031, will build on this base and focus on deep diversification and the difficult integration of variable renewables into the national grid. During this time, the first big geothermal plants will be built, and the first round of solar and wind projects will be sold at auction. A new Green Grid Code will be needed to keep the system stable, and battery storage on a large scale will need to be tested. The Ethiopia-Kenya HVDC interconnector will be a big step forward in this phase. It will let Ethiopia export a lot of renewable energy for the first time and make it stronger in the region. By the end of this phase in 2030, Ethiopia should have reached its goal of providing electricity to everyone, built more than 10 GW of non-hydro renewable capacity, cut its annual CO2 emissions by more than 5 million tons, and set up a strong 500 MW geothermal baseload.

The last phase, which runs from 2032 to 2035, is meant to keep Ethiopia at the forefront of new technologies and a regional center for green energy. The main part of a carbon-neutral power system will be the fully diversified and resilient grid, which will have 10 GW of solar and wind power and 5 GW of geothermal power. This extra clean energy will not only help the Eastern Africa Power Pool meet long-term export contracts, but it will also help start a green hydrogen economy that will export fertilizer and make it for use at home. Building large-scale pumped storage hydro will also help keep the grid in balance. When this strategic roadmap is done, Ethiopia will be able to export more than $1 billion worth of goods every year, create more than 200,000 jobs in the renewable energy sector, and make Addis Ababa a center for clean energy finance and innovation in the region.

There needs to be a strong implementation framework and proactive risk management to make sure that this complicated roadmap works. The Prime Minister should head a high-level National Energy Council that is in charge of governance. This will make sure that all ministers work together. REDA will be in charge of running things on a daily basis. A public dashboard that shows all KPIs will make sure everything is clear and honest. There are a lot of big risks that need to be actively managed, like political instability, macroeconomic instability, social unrest, and climate change itself. You can do this by getting all parties to agree on policies, setting up a working forex escrow system for investors, making programs that share benefits with the community, and building infrastructure that can handle climate change. With this steady and coordinated approach, Ethiopia can use its huge natural resources to make energy security, economic growth, and regional leadership last. Ethiopia's renewable energy could not only help the country become more industrialized, but it could also help make East Africa a clean energy corridor. It's time to do something now.

This study provides a comprehensive analysis and strategic framework for Ethiopia's transition to renewable energy; however, it is crucial to acknowledge its inherent limitations, which concurrently delineate a robust agenda for future academic and practical inquiry. The outcomes and projections articulated in this document are primarily constrained by their reliance on secondary data obtained from international organizations and national reports, in conjunction with the authors' imperative for prompt action on the issue. These sources are reliable, but they might have different ways of doing things, how often they update, and how they apply to different situations. This could cause biases or gaps that make it harder to accurately assess resources and predict the economy. The suggested paths are based on what has worked well in other parts of the world and what has worked well for other people in the region. But they depend on political stability, a healthy macroeconomy, and policies that are always being put into action. All of these things change all the time and are hard to predict over the course of ten years. The analysis also works on a macro level, which means it might miss smaller details like land tenure disputes in certain areas, social acceptance in certain communities, and environmental effects that are very specific to a certain area that could change the project's feasibility and timelines.

This energy vision has a big problem: it won't work unless all areas have stable and safe governments. The government has a lot more to do than just make energy policy. Its main job is to keep the country and its people safe. Ongoing conflicts and instability in some areas make it very hard to build and run large-scale energy infrastructure. This could make investors less likely to put money into projects, mess up supply chains, and make deadlines later. The most important criticism and the most important thing that needs to happen before the whole switch to renewable energy is that the government needs to do more to keep the country safe. This means that we should have open conversations about the real reasons for regional conflicts, follow the law, and make sure that all communities are safe. Without a safe and stable environment, the huge public and private investments needed for this energy change are very vulnerable, and the main goals of universal access and economic growth are still out of reach. Because of this, the government needs to change to a governance model that puts human security, open institutions, and a stable environment that is good for long-term capital investments ahead of political expediency.

Consequently, these limitations reveal numerous essential and interconnected avenues for future investigation. Future research should prioritize the acquisition of high-fidelity, primary data through extensive, site-specific feasibility studies for hybrid renewable systems, particularly in Ethiopia’s remote and conflict-prone regions, to generate detailed data essential for reducing investment risks and guiding implementation strategies. There is an urgent need for advanced, multi-sectoral economic modeling that goes beyond simple cost comparisons to look at the full range of social, economic, and political effects of the energy transition. This includes its potential to promote peace or, if not managed well, to make resource-based conflicts worse. This includes precise projections of job creation, GDP growth, public health enhancement, and the impact of distributed versus centralized generation models on national security. Furthermore, comprehensive research is essential to develop and assess novel financial and governance mechanisms tailored for fragile and emerging state contexts. This includes making good blended finance models that include peacebuilding metrics, setting up local currency guarantee facilities, making frameworks for community equity participation, and putting in place third-party monitoring protocols for projects in high-risk areas to make sure that benefits are shared fairly and openly. The most important area for future research is to create integrated frameworks that connect energy planning with conflict sensitivity and stability operations in a way that makes sure that the search for a renewable future helps rather than hurts the basic goals of national security, social cohesion, and sustainable development for all Ethiopians.

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