Ethiopia-Kenya Electricity Highway
- Reference: P-Z1-FA0-044
- Approval date: 19/09/2012
- Start date: 26/09/2013
- Appraisal Date: 30/06/2011
- Status: OngoingOnGo
- Implementing Agency: KENYA ELECTRICITY TRANSMISSION CO. LTD
- Location: ETHIOPIA AND KENYA
The project involves the construction of an electricity highway between Ethiopia and Kenya consisting of about 1,068 km of transmission line (about 437 km will be in Ethiopia and about 631 km in Kenya) and associated AC/DC converter stations at Wolayta-Sodo (Ethiopia) and Suswa (Kenya) substations with a transfer capacity of up to 2,000 MW in either direction
The project aims at improving the supply of electricity in Kenya and other EAPP countries in the long run by exporting power from Ethiopia. This will result in improved supply of electricity in Kenya and other East African countries in the long run.
The demand for electricity in Africa has steadily risen relative to supply, thus leading to severe power shortages. This situation has been exacerbated by insufficient reforms in the policy, legal, and regulatory environments in the energy sector; underinvestment; and climate change and its effects on hydro-based energy resources, such as the drought ravaging the East African region in particular. Countries such as Kenya, Tanzania, and Uganda do not have regular electricity supplies and have scheduled load-shedding programmes that in some countries stretch over four hours per day. Shorter-term measures to alleviate the situation include recourse to exorbitantly expensive supplies from emergency power generators, which can cost up to USD 20 cents per kWh (or USD 600 million per year for 300 MW of emergency generation capacity). This is jeopardizing the finances of the power sector in East African countries.
On the other hand, the East African region is blessed with a great variety of natural resources concentrated in a few countries. In particular, more than 60% of sub-Saharan Africa's hydropower potential is concentrated in Ethiopia (believed to be about 45,000 MW) and the DRC. The integration of the power systems of the EAPP will facilitate large-scale development of the region's cost-effective and clean energy sources, in particular Ethiopia's large hydropower resources, as a means to address power shortages. Ethiopia currently has an installed capacity of 2,179 MW, which is expected to grow to approximately 11,000 MW by the end of 2016. The development of Ethiopia's hydropower potential and the interconnection of the Ethiopian and Kenyan power systems are key investments for the development of a vibrant power pool in the East African region.
In light of the above, the Bank received an official request from the governments of Kenya and Ethiopia to consider financing this important regional project. The rationale for the Bank's involvement is fourfold:
(i) the Bank has been playing a leading role during the preparation of the project, with the financing of feasibility studies required to make the project bankable, and would therefore position itself as a strategic partner of the East African countries in the power sector;
(ii) the Bank's involvement in the financing has mobilized funds from other development partners in a timely and efficient manner;
(iii) the project will complement the ongoing Interconnection of Electric Grids of the Nile Equatorial Lakes Countries, a Bank-funded regional project that aims at connecting Kenya, Uganda, Rwanda, Burundi and DRC; and
(iv) the project is perfectly aligned with the climate change mitigation and adaptation strategy of the Bank, as it will eventually replace fossil-fueled thermal generation and improve the climate resilience of countries adversely affected by weather changes.
Most people along the transmission line's route earn their livelihoods from crop and livestock production and trade, and the production and sale of charcoal. On the whole, agriculture is the mainstay of the economy. Economic activities outside of farming and livestock keeping are very limited or nonexistent in some localities. Apart from providing direct jobs, the project will provide local populations with access to high-speed ICT connectivity. This will be achieved through the OPGW line linked to the transmission line, which will provide spare capacity for use by local communities.
The direct beneficiaries of the project are households, businesses, and industries in communities located in Kenya, the direct offtaker of the power. The interconnection with Ethiopia will ensure access to reliable and affordable energy to around 870,000 households by 2018; increasing to around 1,400,000 households cumulative by 2022 (of which 18% will be located in rural areas).
In a broader sense, the transmission line will in the long run benefit countries in North, East, and Southern Africa through interconnections from SAPP and EAPP all the way to Egypt and Sudan in the north. The line will make it possible for any of these countries to trade power. In addition to Kenya, other East African countries will see the financial benefits of importing cheaper power from Ethiopia. There will be direct savings in operating and investment costs and reduction in CO2 emissions.
ASFAW Solomon Abebe - ONEC2