ET08 Green growth governance – Business Case for Solar PV (Energy) Investment at the Adama Industrial Park

At a Glance

Strategic Outcomes SO3 Increased access to sustainable services
Start Date Q1  20190101
End Date q4 20191231
Funding Source Earmarked, Core
Actual Budget (USD) 91,750
Budget Percentage 95%
Actual Expenditure (USD) 87,172
Status Active
GGGI Share (USD) 52,160
Poverty and Gender Policy Markers
Name of Client (Lead/Prime implementer if GGGI is part of a consortium)
Participating Organization (Funding/donor)
Name of consortium members, if any IPDC, EEU, EEP, Ministry of Finance, Ministry of Energy
Thematic Area
  • Sustainable Energy
  • Solar Energy
GGGI Project Code : ET08
Project Manager and Staff +

Project context, objectives and description

The Government of the Federal Democratic Republic of Ethiopia has been promoting structural transformation of the economy, with the aim of becoming a middle-income country by 2025. The growth trajectory aims to follow an environmentally sustainable growth path for which the Government of Ethiopia (GoE) developed the Climate-Resilient Green Economy (CRGE) Strategy in 2011. The CRGE shows that Ethiopia’s GHG emissions under business-as-usual would increase up to 400 Mt CO2e by 2030 of which the industrial sector is expected to contribute the highest increase in emissions, rising from 4 Mt CO2e in 2010 to 71 Mt CO2e by 2030. However, the government intends to limit its net GHG emissions from all sectors to 145 Mt CO2e by 2030, according to its INDC. As part of the CRGE implementation, the GoE established the Industrial Park Development Cooperation (IPDC) in 2014 with the mandate to champion the construction, management and operation of 17 industrial parks across the country (Five industrial parks are currently operational). This project is aligned with IO2. Increased green growth investment flows which enable partner governments to implement green growth policies.

The Adama Industrial Park (AIP) is in Adama township, about 100km from the federal capital, Addis Ababa with an area of 365 hectares of land and the first phase, which has 19 manufacturing sheds, is built on 102 hectares of land. Phase one of AIP is expected to create about 25,000 new jobs and generate about USD40 million in export revenue per year. The park is focused on textile and garment manufacturing, and currently depends on hydro-powered electricity. AIP has a design capacity of 33MW of electricity for full operation. However, only 9MW is been supplied to the park from the national grid due to electricity shortage. Fossil-fuel powered generators are currently in use to meet the energy demand of the industries in the park. The use of diesel-powered generators is not only unsustainable but also not in line with the long-term aim of the CRGE because of the high emissions of GHG. Therefore, renewable energy alternatives such as solar power could address the park’s electricity requirements.

The overall objectives of the project are:

  • To conduct a technical and economic assessment to evaluate the solar PV investment, including elements such as evaluation of the least cost power supply options, asses interconnection arrangement and complaint of AIP with T& D grid codes of Ethiopia Power Authority (EEA); and the long-term (at least 20 years) energy production yields from the proposed solar PV system.
  • To review energy laws, energy policies and draft PPP law to identify and evaluate the bottleneck to the regulatory framework and industrial setup for delivery of reliable power supply to the industrial park; and evaluate energy supply options and the reliability of the existing power supply systems, considering the ongoing projects of EEP and EEU; identifies operational structure/modality and O&M agreements.

Type of services provided, and results achieved

Impact: Development of sustainable and zero emission industrial parks increased.

Outcome: N/A

Project Outputs completed in 2019: Feasibility Study and Business case for Solar PV Investment at Adama Industrial Park. The Report of Feasibility Study is available.

i. Green Growth Policies: N/A

ii. Green Investments:

  • Advisory outputs for inform NFVs, bankable projects or investment proposals: Bankable Project – Report of a feasibility Study on Solar PV energy supply at Adama Industrial Park. The study concluded that the project is bankable, and an investment proposal was developed to catalyze investment in solar energy supply at Adama industrial park. The study concluded on a breakeven tariff of USD 0.6 cents per kilowatt hour based on the market price at the time of the study, but the cost of solar energy technology is going down worldwide. The bankability of this project is estimated to reach up to USD 15M.

iii. Capacity Building and Knowledge Products: N/A

Number of staff provided

Project Manager: Innocent Kabenga

Dauda Suma, Dereje Senshaw, Ida Demmellash, Milite Gebreselassie, Nardos Desta, Winnie Wong