Ethiopia To Install 1GW Worth Of Geothermal Power

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May. 28 2019, Updated 5:35 p.m. ET

Ethiopia is adding 1,000 megawatts worth of geothermal power plants over the next four years with a $4 billion price tag. Two plants, Corbetti and Tulu Moye, will be run by a privately-owned utility in the country. It’s a move that will thrust Africa’s second-most populated country into a geothermal leader, which is a very attractive renewable energy in the area.

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Both power plants will be located 124 miles south of Ethiopia’s capital, Addis Ababa, and the same geothermal farm. Split into a capacity of 500 megawatts each, the first one will be completed in 2018 with the second phase coming online in 2021. The Ethiopian government wants the country to become carbon neutral by 2025.

Reykjavik Geothermal, an American-Icelandic development company for the renewable energy, will be funding three-fourths of the project with the other $1 billion being borrowed. Reykjavik’s headquarters are in Iceland with offices in Ethiopia’s capital and in New York City. The company is now owned by United States investors.

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According to Phys.org, Ethiopia has the potential to host three gigawatts of geothermal energy. This is the country’s first foray into the geothermal market. Ultimately, Addis Ababa has set a goal to reach over 17 gigawatts of renewable energy capacity, including hydropower and wind sources. At the moment, they have 4.3 gigawatts.

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"No doubt the success of this effort will have a significant impact in the country's future economic well-being," Azeb Asnake, CEO of Ethiopian Electric Power, told Reuters. Energy produced by the new geothermal power plants will be used locally and exported to surrounding countries in Africa.

Gudmundur Thoroddsson, CEO of Reykjavik, believes that a geothermal renewable resource is ideal for Ethiopia. Oil prices fluctuate greatly in the region and the weather is extremely unreliable. Geothermal energy, produced by heat from the Earth that’s contained in rocks and fluids, is much more reliable and very clean. 

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However, geothermal energy isn’t the best option for renewable power. There can be very high upfront costs, installing them poses surface instability risk, and they use a lot of water. However, Reykjavik is a company that pursues installing geothermal solutions in undeveloped countries and Ethiopia provides a great spot for its generation.

The geothermal project will likely face less resistance than the $4.1 billion Grand Renaissance Dam. Expected to generate up to six gigawatts at full capacity in the next decade, others in Egypt have voiced their concerns over slowing down the Nile River. After the first 25 years of operation of the geothermal power plants, ownership will move over to the EEP.

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