Challenges to investment 

In the 2010s, Ethiopia, with its vast renewable energy (RE) potential, particularly in hydro, wind, and solar power, faced significant challenges in promoting clean energy. Biofuels and fossil fuel sources dominated Ethiopia’s energy supply, representing 93% and 6%, respectively, of the total energy supply in 2010. Ethiopia had complex and overlapping regulatory frameworks for RE and the government agencies that oversaw relevant land, energy, and environmental permitting had difficulty coordinating, given insufficient frameworks and limited institutional capacity. To encourage private investment, Ethiopia needed to streamline the property registration process for renewable energy projects.  

Approach 

In 2013, Ethiopia launched a multi-faceted approach to facilitate coordination between different institutions involved in the property registration process for RE projects, instituting overarching legal and regulatory frameworks and improving coordination between governing institutions. The government implemented Energy Proclamation No. 813/2013 and Ethiopian Energy Authority Establishment Council of Ministers Regulation No. 308/2014 to govern the RE sector, providing a clear legal basis for RE projects.  

The government also moved to standardize land administration under the Ministry of Agriculture and Natural Resources (MOA), which governs large scale investment on agricultural lands via the Ethiopian Agricultural Investment Land Administration Agency (EAILA) and rural investment via the Rural Land Administration & Use Directorate (RLAUD). These efforts helped streamline the process for investment and land registration for RE projects, increasing certainty and reducing timelines for approval.  

The regulations set clear tasks for the agencies governing the energy sector. The Ethiopian Energy Authority (EEA) was made responsible for issuing generation licenses and authorizing the generation of electricity from renewable energy facilities. Independent Power Producers (IPPs) seeking to develop projects in Ethiopia must enter into Power Purchase Agreements with the Ethiopian Electric Power (EEP), the state-owned power generation agency.   

Key Enabling Conditions 

Several enabling conditions contributed to the success of Ethiopia’s coordinated approach. The Ethiopian government's strong commitment to promoting renewable energy and streamlining property registration processes was crucial. The establishment of clear and coherent laws governing land administration and renewable energy development provided a solid foundation for coordination. Investment incentives, such as those outlined in the Ethiopian Investment Proclamation No. 769/2012 and NBE Directive No. FXD/70/2020, facilitated foreign investment and financing for renewable energy projects. International support from organizations like USAID and the World Bank played a vital role in implementing land certification programs and enhancing institutional capacity. Last, effective collaboration between different institutions involved in land and energy administration ensured that processes were streamlined and efficient. 

Impact / Outcomes 

The coordinated approach yielded significant outcomes in streamlining the property registration process and promoting renewable energy projects, while also improving institutional capacity. Improved coordination between RLAUD, EEA, and EEP led to more efficient processing of land registrations and permits for RE projects. As a result, RE’s share of Ethiopia’s total energy supply increased from 1.8% in 2010 to 2.9% by 2021. Following the reforms, Ethiopia launched several large RE projects, including the Ashegoda Wind Farm (120 MW), and secured financial and technical assistance from international donors such as the IFC’s Scaling Solar program (500 MW). In part due to private investment, Ethiopia was also able to achieve broader social goals. For example, the population’s access to electricity expanded from 25.5% in 2010 to 54.2% in 2021.

Additional Sources

• USAID. Ethiopia Land Administration to Nurture Development (LAND) Quarterly Report No 18 July-September 2017. https://pdf.usaid.gov/pdf_docs/PA00N4CV.pdf
• https://www.irena.org/-/media/Files/IRENA/Agency/Statistics/Statistical_Profiles/Africa/Ethiopia_Africa_RE_SP.pdf
• IEA (2023), Energy Statistics Data Browser, IEA, Paris https://www.iea.org/data-and-statistics/data-tools/energy-statistics-data-browser
• IEA (2023), Ethiopia Country Profile, IEA, Paris https://www.iea.org/countries/ethiopia
• IEA (2023), Africa Energy Outlook 2019: Ethiopia, IEA, Paris https://www.iea.org/articles/ethiopia-energy-outlook
• https://www.se4all-africa.org/seforall-in-africa/country-data/ethiopia/
• https://www.land-links.org/2016/05/land-certification-in-ethiopia-lessons-from-usaids-first-completed-land-sector-impact-evaluation/
• https://www.land-links.org/project/ethiopia-strengthening-land-tenure-and-administration-program/
• https://www.land-links.org/project/ethiopia-land-administration-program/
• https://www.afdb.org/fr/documents/ethiopia-ethiopia-renewable-energy-program-phase-i-erep-i-enabling-environment-sefa-appraisal-report
• https://projects.worldbank.org/en/projects-operations/project-detail/P160395
• https://www.worldbank.org/en/news/press-release/2019/05/23/world-bank-group-supports-ethiopia-in-providing-reliable-energy-and-creating-opportunities-for-private-investment-in-the-sector
• https://projects.worldbank.org/en/projects-operations/project-detail/P162607?lang=en
• https://www.lexology.com/library/detail.aspx?g=4252e759-8cf7-4129-919e-4bb75476e3d1