April 6 , 2019
By BERHANE HAILEMARIAM( FORTUNE STAFF WRITER )
A new bill that eases registration and licensing processes for geothermal development companies has been submitted to the Council of Ministers for approval.
Drafted by the Ethiopian Energy Authority last year, the draft regulation categorises the resource into two sections depending on the capacity of energy. Grade one is a geothermal resource that is able to generate electric power, while Grade two is used for agricultural, industrial, medical and recreational purposes.
The bill has also identifies three types of licenses for geothermal developers. Reconnaissance is the first stage in licensing that is granted for two years and is non-renewable. The exploration license allows developers a five-year exploration window that can be renewed for two year-long terms. Wellfield development licenses are the final license issued and allow for 25 years worth of production concession options that can be extended.
Ethiopian Electric Power, the Ministry of Water, Irrigation, & Energy, regional energy bureaus, environmental bureaus and revenues bureaus, foreign companies and donors have been involved in drafting the bill.
The regulation follows a 2016 proclamation that moved the sector from the then Ministry of Mines to the Ethiopian Energy Authority. The Authority has since formed a new directorate, the Geothermal Resource Development License & Administration Directorate, with sole responsibility to oversee the sector.
The overall process of developing the geothermal resource is unique, according to Tesfaye Kassa, director for the Geothermal Resource Development Licensing & Administration at the Authority.
"Unlike other explorations, geothermal is capital intensive but runs with a minimal cost as a sustainable source of energy," said Tesfaye
Even though Ethiopia began exploring geothermal power generation in 1969, only 10 companies have been licensed so far. The country has a potential of generating 10,000MW of electric power from geothermal sources, according to estimates from field studies.
Two of the licenses have been given to Ethiopian Electric Power for developing geothermal resources at Aluto Langano and Alalobat at Tendaho in Oromia and Afar regional states, respectively.
The Geological Survey of Ethiopia has completed a surface survey for well drilling that will start to generate 70MW at Aluto Langano and 100MW at Tendaho's three sites, Dubti, Alolabat and Ayrobera, according to Solomon Kebede, director of Geothermal at Geological Survey.
The Geological Survey has also identified 24 sites across the Rift Valley with the potential of generating geothermal energy.
Tulu Moye Geothermal Operations and Corbetti Geothermal have signed power purchase agreements (PPA) with Ethiopian Electric Power. The two companies are expected to start drilling soon and eventually generate 500MW of energy each.
OrPower Twelve Incorporated is in the exploration stage with four licenses and is currently negotiating with EEP to sign a PPA. OrPower operates at Boku, Oromia, Dofan, Afar and Wolaita Sodo and Wondo Genet in the southern regional state. Another UK-based firm, Cluff Geothermal Plc, is also in the exploration stage in Amhara, Afar and Oromia regional states and is in negotiation with EEP for a power purchase agreement.
Reykjavik Geothermal Consulting, an Icelandic Company, is also licensed to explore geothermal energy at Abaya near Wolaita. It has begun negotiations with EEP to sign a PPA.
Tigabu Atalo, a power and energy consultant with over a decade of experience in the power industry, says that the sector is risky, capital intensive and requires advanced technology.
"Considering this, the law should have included attractive incentive packages," Tigabu said.
PUBLISHED ON Apr 06,2019 [ VOL 19 , NO 988]
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