Ethiopian Electric Power Corporation (EEPCo) and Reykjavik Geothermal signed an agreement to construct a 1,000 MW geothermal power plant over the next eight to ten years with an investment of estimated 4 billion USD here last Wednesday.
Reykjavik Geothermal has planned to develop the geothermal project, claimed to be Africa's largest in two phases. The construction of the first phase which is 500 MW will take place after financial closing expected in 2015 and will take approximately three and half years to complete. Full commissioning is expected be at the end of 2018. The first phase is proposed to be built inside the Corbetti Caldera, which is located in the central Main Ethiopia Rift, close to Shashemene.
The Corbetti concession is located in a densely populated area, with good road access and at the heart of the national electric grid.
Speaking on the signing ceremony, EEPCo CEO Mihret Debebe said : “This project will make Ethiopia's power generation more reliable, secure, flexible and competitive to industries, hydro processing and other service and commercial sector users.”
According to the CEO, the project is a new model for developing large scale power projects in Africa that it integrates the Ethiopian expertise for electrical power generation, Iceland's geothermal technical knowledge and the US financial and structuring expertise.
"This project will set a new benchmark for large scale projects financed by the private sector and will help Ethiopia unleash its full energy potential," he added.
Mihret also said geothermal power plants offer alternative energy for power hungry growing industries in the country. Projects of such scheme are strategic in terms of meeting the market demand for the coming decades.
Reykjavik Geothermal Power Project Founder, who is also Co-founder of Allana-Potash, Nejib Ababiya said that 25 per cent equity financing and 75 per cent debt financing is assumed for the total cost of 4 billion USD to complete the project. “The total cost of the first phase which is 500 MW, is estimated at 2 billion USD and is expected to become operative in 2018. The subsequent phase is expected to follow in 2021,” he added.
Reykjavik Geothermal , the main pillar of Corbetti Geothermal Power Ltd. was founded in 2008 by one of the world's most experienced geothermal development teams. It is a development company that specifically identifies and targets high quality geothermal resources in combination with undeserved power markets.
Corbetti Geothermal Power Project preliminary work and feasibility studies have been completed with very positive results and exploration drilling is expected to start in 2014.
The Company has already invested over 4 million USD for geothermal exploration licenses, geological feasibility surveys, environmental and Social Impact Assessment and Environmental Management Plan.
The company acquired geothermal exploration licenses covering an area of more than 650sqm. An area of 200sqm, in which temperatures reaching up to 350°C has already identified.
Since the rapidly growing Ethiopia economy requires sustainable power, the market demand is high. The shortfall in the power sector has been identified as a major impediment to the continued growth of the country. The untapped geothermal resources of the country are plentiful and accessible. The project ties with country's ambitious plan to become a carbon -neutral economy by 2025.
The government has also planned to increase power production in the country by 2030 to 25,000 MW of renewable power, where 1,000 MW are expected to come from geothermal resources.