Work started on the Grand Ethiopian Renaissance Dam (GERD) in 2011. In contrast to most infrastructure projects on the continent, the hydroelectric project was financed domestically – including the purchase of bonds by ordinary Ethiopians.

During last year’s rainy season, Ethiopia finished filling the dam’s reservoir, a vast expanse of water roughly the size of Greater London. On 25 August, Prime Minister Abiy Ahmed announced that four of the dam’s 13 turbines are now turning and generating electricity. Another three or four could be online by December.

The GERD is already supplying 17% of the national grid’s power, says Andualem Siae, a senior executive at Ethiopian Electric Power (EEP), the state energy provider.

The total installed capacity of the dam will be 5,150MW of electricity – double the amount of hydropower produced by Ethiopia in the last 70 years. That makes it by far the largest hydroelectric plant in Africa. By contrast, the next biggest, Egypt’s Aswan dam, also on the Blue Nile, has a total capacity of 2,100MW.

Importance of the dam to Ethiopia’s economy

In his 25 August address, Abiy emphasised the importance of the dam to Ethiopia’s economic development. “Overall we are experiencing a fascinating chapter in our history,” he said. The remarks were part of a promotional video showing shots of the hulking concrete dam towering over the Nile and engineers still hard at work.

The main transmission line connecting the plant to Ethiopia’s national grid was completed in 2019. Another high-voltage line connecting Ethiopia’s grid to Kenya’s was completed in 2021, allowing the GERD’s power to be exported across the border. Currently, Ethiopian exports already supply 11% of the power Kenyans consume. This amount is set to double by next year, ahead of schedule.

In total, 9% of the power produced by the GERD will be exported to neighbours. The rest will be consumed domestically. The main goal of the GERD is getting power into homes that lack it, Siae tells The Africa Report.

“We’re committed to providing electricity to all citizens,” he says.

Ambitious power plan

Ethiopia’s power plan, published in 2019, set an ambitious target for universal electrification by 2025. Since then, however, the proportion of Ethiopia’s 120 million population with power has only increased from 44% to “around 50%”, says Siae. He cites the Covid-19 pandemic and the 2020-2022 Tigray war as factors that derailed the plan. The new target for universal access to electricity is 2030.

Currently, there are huge regional disparities in electricity access. Around 95% of Ethiopians in cities have electricity, whereas only 5-10% of those in rural areas have power. Even then, supply is erratic and unpredictable: less than 5% of the population has uninterrupted power access every 24 hours. This is mainly due to distribution line failures, caused by trees blowing other and mechanical faults.

Achieving universal electrification will be challenging. In his 25 August address, Abiy said insurgents hampered the transportation of cement, turbines and other materials for the dam’s construction, necessitating large-scale deployments by the federal military.

“This dam was not only built using the resources of all Ethiopians but also with their blood,” Abiy said.

Ethiopia is currently battling ethnic-based rebellions in Amhara and Oromia, its two biggest regions, as well as smaller insurgencies in the Benishangul-Gumuz region, where the dam is located. This insecurity has rendered large areas no-go zones for civil servants and will likely impede the construction of the pylons, substations and transmission lines needed to get power into people’s homes, causing further delays to universal electricity access for the fast-growing population.

Then there is the huge capital investment required to set up this infrastructure across Ethiopia, a vast mountainous country with a predominately rural population.

“We still need to work on this,” says Yilma Seleshi, professor of hydrology at Addis Ababa University. “You can see the difficulties – our terrain is very tough and people live in a very scattered way, so connecting them all is a challenge.”

Expensive solutions

An initial $6bn is required to electrify Ethiopia using a mixture of “on-grid” and “off-grid” solutions, such as mini-grids powered by solar and wind, according to the national power plan. The government will then need to find a further $8bn to extend the grid into “deep rural” areas where homes are 2.5-25km away from the existing line. These sums dwarf the roughly $5bn the GERD itself cost to build.

It is not clear where this money will come from. The line to the Kenya border cost $1.2bn and was financed by the World Bank, the African Development Bank and the French Agency for Development. Further requests will no doubt be made to multilateral partners. The government also hopes to raise funds domestically.

Work has already been completed to upgrade existing parts of the grid and install high-voltage transmission lines in major cities. But Ethiopia is mired by its worst economic crisis for generations. The Tigray war destroyed $26bn of infrastructure, much of which is yet to be repaired or replaced, and inflation is running at 27%.

A historic drought and other conflicts have also taken a toll. After defaulting on its only international bond last year, Ethiopia secured a $3.4bn IMF bailout package in July. This deal will help the rollout of market-based reforms aimed at boosting government revenues, but these will take years to bear fruit.

Meanwhile, domestic power demand is growing. Electrifying the whole population would currently require 6,000MW. By 2030, average hourly demand is projected to reach 15,000MW. Despite having a total installed capacity of 5,150MW, the GERD will only be able to deliver an hourly average of 2,000MW.

“Even if you have the GERD, it is not enough,” says Yilma. “Other dams are needed.” Yilma fears the power produced by the GERD could be gobbled up by power-hungry industries in Addis Ababa, rather than being used to help electrify the countryside.

“Many companies are interested in opening manufacturing plants in Addis,” says Yilma. “They can take half of the GERD’s power immediately.”

Hydropower

Ethiopia currently has 14 hydropower plants. More are being built, including the Koysha plant on the Omo River (2,130MW) and the Tams dam in the Gambela region (2,100MW). Yilma raises the possibility of building “three or four” other dams on “well-known sites” along the Blue Nile, upstream with the GERD.

This would rankle Egypt. Nearly all of its 112 million people rely on the Nile waters, Egypt has long seen the GERD’s construction as an existential issue and has even threatened to bomb it. Several rounds of protracted negotiations over the dam’s operation have failed to yield an agreement. These talks would be complicated further if other dams were included.

For its part, Ethiopia insists it has the right to exploit its natural resources and argues the GERD would benefit downstream countries by regulating the flow of the river.

These resources are plentiful. Ethiopia’s rivers could provide a total of 45,000MW of power if fully exploited – more than enough to meet every citizen’s needs, says Siae from EEP. Currently, they deliver only 10% of this. In addition to being green, hydropower is cheap: electricity from the GERD will only cost consumers $0.03 per kilowatt hour, half the price of wind and 10% the cost of a diesel generator.

The country is well-positioned to become a green energy superpower. The challenge is finding the funds for this infrastructure and stabilising the country so it can be built.