News Column

World Bank Steams Ethiopia With U.S. $200 Million Geothermal Loan

June 5, 2014

Mikias Merhatsidk

The Geothermal projects to be financed are expected to diversify the energy sources of the country

The World Bank's board of directors, based in Washington DC, US, has approved 200 million dollars of credit for the Ethiopian government, in what is expected to be the last project financing for the year, to develop its potential geothermal sites at Aluto and Alalobad, in the rift valley of Afar Regional State, on Thursday, May 29, 2014.

The loan will be financed by the International Development Association (IDA) and Scaling-up Renewable Energy Program (SREP) of the World Bank trust fund.

The SREP, which was established to scale up the deployment of renewable energy solutions and expand renewables' markets in the world's poorest countries, is a targeted program of the Strategic Climate Fund, which is one of the two funds within the framework of the Climate Investment Funds. SERP aims to pilot and demonstrate the economic, social and environmental viability of low carbon development pathways. And Ethiopia is among the eight pilot countries.

"In addition to providing energy security, the project will support Ethiopia's efforts to build a climate change resilient green economy, by developing renewable energy sources with low carbon emissions," said Guang Zhe Chen, the World Bank country director for Ethiopia.

The finance, which will be employed to support the Geothermal Sector Development Project of the country, is envisioned to help fulfill the increasing demand for electricity by tapping into the substantial geothermal energy potentials, according to the official website of the Bank.

The project that will be implemented in two phases will develop the two geothermal sites:-Aluto and Alalobad and help establish an institutional framework for geothermal development during its first phase. During its second phase, electricity will be generated using the steam resources developed and identified in the first phase.

The Power generated from the geothermal plants will provide electricity directly to the grid and allow more households and businesses to connect at affordable rates. It will also provide energy to existing commercial consumers currently affected by the energy ration from insufficient generation capacity, according to the Bank. Total geothermal resource potential in Ethiopia is found in the Great Rift Valley and is estimated to be over 500Mwe according to the geological survey of Ethiopia.

The integrated energy policy of Ethiopia envisages electricity generation installed capacity of more than 20,000Mw by 2020 and it is mainly to be generated from renewable sources. The country has power generating capacity amounting to over 60,000Mw: 45,000Mw of hydropower, 10,000Mw of wind energy and 5,000Mw of geothermal energy. But the current power generation stands at 2,000Mw.

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Source: AllAfrica

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