Renewable Energy Procurement in Ethiopia: Overcoming Obstacles in Procurement from Independent Power Producers

Developing countries are increasingly using auctions for the procurement of utility-scale renewable electricity, due to the potential for attracting private investment. However, auction design and implementation can face serious obstacles due to complex context-specific factors.

Using a literature review and primary data from more than 70 interviews and from stakeholder consultations, this study explores the political economy challenges and opportunities facing IPP project preparation, decision-making, coordination and implementation, and risks to investors.

This study also finds fault lines impeding the implementation of IPP projects, including the risk of foreign currency availability and convertibility of Ethiopian birr to expatriate profits. It proposes measures to overcome these obstacles and mitigate risks, to put Ethiopia on course to achieve universal access to electricity by 2030.

Renewable Energy
Seife Ayele, Wei Shen, Tadesse Kuma Worako, Lucy Baker, Samson Hadush