PPAs signed for US$4 billion geothermal projects in Ethiopia

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Ethiopian Electric Power (EEP) has signed power purchase agreements (PPAs) with Corbetti Geothermal Power regarding two 500 MW geothermal projects in the Main Ethiopian Rift Valley that require a total investment of US$4 billion.

Corbetti is an Ethiopian project company sponsored by Reykjavik Geothermal, Iceland Drilling Company, the Berkeley Energy-managed African Renewable Energy Fund and InfraCo Africa. Ethiopian mining entrepreneur Nejib Biya initiated the project in 2009, with Reykjavik Geothermal joining in 2011.

The company has been awarded 25-year concessions, after which the two plants will be transferred to the government.

The first project is located in the Corbetti caldera of the Main Ethiopian Rift Valley, 250km south of Addis Ababa. It will be developed in multiple phases. The first phase will be wholly equity funded and will involve drilling up to six exploratory wells and constructing a small power plant. Drilling is expected to commence next year.

The objectives of the second phase are to raise US$250 million of debt financing to drill a further 9-13 wells and construct a 50MW commercial-scale power plant and facilities. If successful, the plant will produce up to 520 MW and mobilise over US$2 billion in foreign direct investment over the next eight to ten years.

The second plant will be located in the Tulu Moye caldera, 100km south east of Addis Ababa. It will also be developed in two phases. The first will have a capacity of up to 100 MW, the second between 100 MW and 500 MW. It was reported by local press in August this year that Meridian, an American investor, will finance the project.

Corbetti Geothermal Power has received financial backing from the US Power Africa programme, the African Development Bank (AFDb), the European Investment Bank and the Geothermal Risk Mitigation Facility (GRMF), among other public and private investors.

Construction of both plants is scheduled to be finished in eight years. Corbetti is hoping to starting feeding power into Ethiopia’s national grid in late 2019 or early 2020. It will be the first privately financed geothermal independent power producer (IPP) in the country and the second in sub-Saharan Africa.