A drop in water levels in Ethiopian dams has led to electricity rationing in its domestic and industrial sectors, according to the Minister for Water and Electricity, Seleshi Bekele. The water shortage has led to a power deficit of 476 megawatts at the Gibe 3 Dam, which accounts for approximately one-third of Ethiopia’s electricity generation of 1,400megawatts. In the Tekezé hydroelectric plant, low water levels caused mechanical problems, which have only just been rectified after several months. The facility will soon be able to supply 150 MW, but it is not clear when it will be fully restored.
For most consumers in Ethiopia, this will mean that the electricity supply will be reduced to shifts of a few hours a day (although a few key industries will be exempted from the cuts). Ethiopia has been forced to suspend sales of electricity to Sudan and will also reduce supply to Djibouti by 50 per cent, which will represent a loss of income of US$82 million ($118 million) for the Ethiopian Government.
Ethiopia sees itself as the “water tower of Africa”, as its rivers hold a massive hydropower potential of up to 45,000 MW of electricity, which is enough to meet the electricity demands of most of sub-Saharan Africa. In Africa, only the Democratic Republic of Congo has greater hydropower potential. Ethiopia currently gets 90 per cent of its energy from 14 hydropower plants and the country is continuing to expand the sector. Several hydropower projects are being developed and expanded (including the controversial Grand Ethiopian Renaissance Dam), which together will have a capacity exceeding 6,000 MW. Despite its impressive potential, however, Ethiopia’s current rates of electrification are poor, with around 70 per cent of Ethiopians still living without electricity. This, of course, poses problems for the country’s economic and social development.
Ethiopia’s recent rapid economic growth has both contributed to, and necessitated, the growth of its power generation capacity. Although Ethiopia is still the fifteenth-poorest country in the world, it has made impressive progress towards poverty reduction and economic development over the last decade. Growth has averaged nearly 11 per cent per year since 2004 and the country had one of the highest rates of poverty reduction in sub-Saharan Africa over the same period. Ethiopia has also increasingly looked to manufacturing and industry as the drivers of growth, instead of agriculture, although progress on that front has faced significant constraints. Creating and sustaining industry requires large amounts of electricity and the industrial sector has been the main beneficiary of Ethiopia’s increasing power supply.
While Ethiopia’s growth has been remarkable, the country faces several economic challenges. Ethiopia’s levels of debt pose a particularly high risk of debt shock. Beijing has slowed its levels of investment as a result, forcing Addis Ababa to look elsewhere for financing. Export growth has slowed, placing foreign exchange reserves under stress, while unemployment rates are high. Economic growth has also slowed, due to civil unrest and political uncertainty, which must also be addressed.
While they will not be the only factor, electricity shortages will not help Ethiopia to overcome its economic hurdles. Addis Ababa hopes to encourage industrialisation to create a sustainable economic model, but that will require substantial amounts of electricity. While hydropower provides the bulk of its power, Ethiopia must diversify its energy sources to secure the power it needs to continue to grow. Climate change is predicted to increase the number of droughts in the region, with droughts now occurring every three to five years. Ethiopia has enormous wind power potential, however, and the costs of wind power technology have fallen significantly. While some wind power projects have been built, Ethiopia should consider investing more in non-hydro sources of power, to prevent blackouts from constraining growth. This would also allow it to continue exporting power to its neighbours.