Achieving universal energy access in Ethiopia

With a population of over 110 million people, and growing per capita electricity consumption, Ethiopia could be a huge market for solar pay-go. Recent research by our partners Power for All identified 5 key recommendations to accelerate access to clean, affordable energy for everyone in the country:

1. Providing quality public information can be a low-cost instrument to reduce informational asymmetries and uncertainties that can often prevent investments from happening. Regional experience in creating publicly available energy access maps – such as the Nigerian Energy Database – could be domestically replicated.

2. Given Ethiopia’s comparative advantage for low-skill manufacturing – and recent successful local and regional experiences – the government should continue to explore the possibility of attracting investments for the creation of an exporting manufacturing cluster of off-grid solar products, that can serve other SSA markets, as well as the Ethiopia market in the medium-term.

3.  Regional electricity access expansion programs have increasingly included facilities for result-based financing (RBF) that competitively award incentives to companies according to their financing requirements: Kenya Off-Grid Solar Access Project (KOSAP) approach towards pay-for-delivery, and Nigeria’s minimum tender for mini-grid development, are two of many regional initiatives that Ethiopia and other countries could seek to learn from.

4. The Market Development Credit Line, an energy-specific credit line, has proven to be very successful in alleviating the foreign exchange constraint for firms and increasing the number of participating private sector companies and microfinance institutions (the two direct beneficiaries of the credit) in the market. Expanding the program for it to meet the current demand for Pico and SHS systems, especially in rural areas, will be necessary to strengthen the sector’s performance.

5. The possibility of using mobile money to provide households with an option to purchase off-grid solar equipment through remittance income can alleviate foreign exchange shortages by providing hard currency. A pilot for a similar project in Rwanda has shown significant potential and should be further explored.