ETHIOPIA – The African Development Bank (AfDB) Group’s Sustainable Energy Fund for Africa (SEFA) has committed US$8 million in mixed financing to support the electrification of rural Ethiopia using solar mini-grids.
This investment, announced recently by the AfDB Board of Directors, will benefit the Distributed Renewable Energy-Agriculture Modalities (DREAM) program.
The funding—comprising concessional loans, grants, and risk mitigation measures—aims to pilot a business model integrating mini-grids with agro-industrial operations at nine sites across Ethiopia.
Through innovative solutions, the DREAM program addresses the intertwined challenges of water, energy, and food security.
According to Daniel Schroth, the AfDB Group’s Director of Renewable Energy and Energy Efficiency, the program exemplifies the transformative impact of partnerships and SEFA’s catalytic role in leveraging private sector investments for energy access.
The initiative, supported by the European Investment Bank (EIB) and developed in collaboration with the Global Energy Alliance for People and Planet (GEAPP), will utilize off-grid solar energy solutions in sectors such as irrigated agriculture and drinking water.
Its implementation involves key Ethiopian ministries, including the Ministry of Irrigation and Lowlands, the Ministry of Agriculture, and the Agricultural Transformation Institute (ATI).
This strategic move is particularly crucial for Ethiopia, a country grappling with drought issues in the Horn of Africa.
The deployment of 200 solar mini-grids under the DREAM initiative is set to empower local communities by providing sustainable energy for productive and agricultural use. SEFA is financing 50% of the project.
Meanwhile, February marked a significant development in Ethiopia’s energy sector when the Petroleum and Energy Authority (PEA) awarded Humanitarian Energy (HumEn) the country’s first-ever commercial mini-grid license.
Owned by the NGO Mercy Corps and Rensys Engineering and Trading, HumEn plans to install a 253 kW solar photovoltaic plant in Sheder, a Somali regional state, to serve refugees and host communities.
This project aligns with Ethiopia’s National Electrification 2.0 Plan and integrates internally displaced persons (IDPs) more deeply into the national social framework.
The granting of this commercial license represents a pivotal moment for Ethiopia’s mini-grid and humanitarian sectors, echoing the broader national commitment to decentralized solutions for electrifying rural areas.
Despite the relatively low access to electricity in rural regions—only 32% according to Power Africa—Ethiopia is setting a regional precedent with its focus on solar mini-grids, which have seen substantial deployment in countries like Nigeria.
The DREAM program is a cornerstone of Ethiopia’s strategy to harness solar energy for agricultural development. It demonstrates the government’s proactive approach to sustainable growth in critical sectors.
It is backed by an array of development partners, including the World Bank, EIB, and AfDB through SEFA, highlighting a concerted multilateral effort to support Ethiopia’s energy and agricultural ambitions.
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