The African Development Bank has welcomed a decision by the Trust Fund Committee of the Clean Technology Fund (CTF), one of two funds within the Climate Investment Funds (CIF), to extend a $10 million concessional senior loan for the development of the 50MW Tulu Moyo Geothermal Power Plant project in Ethiopia.
The project is seen as a critical step to the East African country’s drive to harness sustainable and resilient energy resources to support its economy and livelihoods.
With this investment, CTF becomes the first geothermal Independent Power Producer (IPP) in Ethiopia.
“We welcome the participation of CTF in this project. These concessional resources will be instrumental in helping the country to diversify its energy mix by facilitating the deployment of renewable energy technologies while supporting Ethiopia in meeting the targets under its National Electrification Plan 2.0,” said Anthony Nyong, the director of climate change and green growth at the Bank.
The project entails the design, construction, commissioning and operation of a 50MW geothermal power plant under a Build, Own, Operate and Transfer (BOOT) scheme, and marks the first phase of the Ethiopian government’s plan to build a cumulative generation capacity of 150MW by 2024.
The project will include a sub-station and an 11km transmission line.
Antony Karembu, the principal investment officer and renewable energy specialist at the African Development Bank, noted that as the first geothermal Independent Power Producer in Ethiopia, CTF will leverage climate finance options in mobilising private sector operators for the project.
The project is expected to curb greenhouse gas emissions by over 10 million tons CO2 equivalent over its lifetime, and will create around 600 jobs Karembu said.
CTF will catalyse the deployment of renewable energy technologies in Ethiopia and will underpin future investments into the sector as first-mover risks are reduced and compliance requirements are better understood to all market participants, stated Leandro Azevedo, the principal climate finance officer and CIF coordinator at the African Development Bank.
The CTF funds will be drawn from the Dedicated Private Sector Programme III designed to provide risk-appropriate financing for high-impact, large-scale private sector projects in clean technologies.