New facility brings clean and reliable energy to Eastern Africa

Africa and Europe in Partnership A new Geothermal Risk Mitigation Facility will help attract investment for the construction of geothermal power plants in Eastern Africa by partially offsetting the high financial risk prompted by unsuccessful exploratory drilling. A grant totalling €50 million has been made available for this purpose. The signing ceremony took place in Addis Ababa, Ethiopia, on 13 December 2011.

Geothermal energy is a low-cost solution for power generation in the region: the Eastern Africa Rift System offers huge opportunities for the generation of geothermal energy. It has the potential to raise Eastern Africa’s electricity generation capacity from around 4 000 MW to 15 000 MW. It delivers emission-free electricity reliably whatever the weather.

To tap into this affordable and safe source of energy, the new facility will mitigate the risks associated with resource exploration and power development as well as those inherent to investment in power development projects.

The facility is expected to make a significant contribution to improving electricity supply in Eastern Africa, especially for poor populations as well as for small businesses which will benefit from lower energy costs.

It will be hosted by the African Union Commission and provide grants worth 40% of the costs of initial exploratory drilling. Successful developers who secure funding for subsequent phases of power plant construction within 18 months will receive an additional success premium.

The German Government and the EU-Africa Infrastructure Trust Fund have committed €20 million and are co-financing up to €30 million respectively.

Developing access to and promoting the use of clean, modern energy to improve living conditions and protect the environment is part of the objectives for the African energy sector within the framework of the Programme for Infrastructure Development in Africa (PIDA) study. PIDA aims to connect and upgrade infrastructure networks in the fields of transport, energy and ICT.

The outcomes of the study were presented at the extraordinary session of the Conference of Energy Ministers of Africa which took place in Addis Ababa on 15 December 2011.

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