Ethiopian Electric Power and Corbetti Geothermal Plc have signed Ethiopia’s first independent power purchase agreement for the 500 MW first phase of the Corbetti geothermal power project in Ethiopia.
Investors in the Corbetti geothermal project include Reykjavik Geothermal, Berkeley Energy, and Iceland Drilling.
Ethiopian Electric Power is also in negotiations to sign a heads of terms agreement with Reykjavik Geothermal further detailing a previous agreement to develop an additional 500 MW in the Tulu Moye and Abaya areas. Together, these two agreements have the potential to generate up to 1,000 MW in new power for Ethiopia, enough to provide power for up to two million households.
American company Reykjavik Geothermal has been working over the last several years laying the groundwork for developing projects at all three geothermal locations. Once completed over the next 8-10 years, the total investment is expected to be approximately US$4 billion, making these projects collectively Africa’s largest ever privately-funded independent power investment to date.
These geothermal projects are part of President Obama’s Power Africa initiative which seeks to increase electricity access in sub-Saharan Africa by 30,000 MW and 60 million connections.
During a press conference Monday with Ethiopia's Prime Minister Hailemariam, President Obama noted that the Corbetti project demonstrates how the private sector can play an important role in the development of the electricity sector and others key for economic growth. The signing of the power purchase agreement for 500 MW and the anticipated signing of the heads of terms for a second 500 MW are both critical initial steps for the long-term development of these catalytic projects.
President Obama stated:
"We're working to unlock Ethiopia's potential for geothermal energy with the nation's first private sector energy agreement. This will help the government meet its ambitious goal of significantly increasing access to electricity across Ethiopia and help open the market to developing Ethiopia's other vast renewable energy sources."
Michael Philipp, Chairman of Reykjavik Geothermal commented:
"We are very grateful for the commitment of all the senior ministers of the Government of Ethiopia and the executives of Ethiopia Electrical Power to finalize this historic agreement. The impact of the U.S. Power Africa program cannot be underestimated. In addition to the direct assistance that Power Africa gave to the Ethiopian negotiating teams, this initiative has significantly reduced the cost of equity funding for major energy infrastructure projects in Africa, such as Corbetti, by raising the profile of energy investments in Africa to the institutional investment community in the U.S. and around the world."