Reykjavik Geothermal and Iceland Drilling Sign Agreement in Ethiopia Skip to content

Reykjavik Geothermal and Iceland Drilling Sign Agreement in Ethiopia

An agreement has been signed between Ethiopian Electric Power (EEP) and Corbetti Geothermal Plc, whose investors include Reykjavik Geothermal, Berkeley Energy, and Iceland Drilling. The agreement was announced in a July 30 press release form the US Embassy in Addis Ababa. This is Ethiopia’s first independent power purchase agreement and includes up to 500 megawatts of clean geothermal power from the Corbetti geothermal source.

In addition, negotiations are underway for EEP to sign a Heads of Terms agreement with Reykjavik Geothermal to develop an additional 500 MW in the Tulu Moye and Abaya areas. Combined, these two agreements could generate as much as 1,000 MW in new power for Ethiopia, sufficient power for up to two million households.

The projects, expected to be completed in the coming eight to ten years, are an investment of about USD 4 billion (EUR 3.6 billion), making them the largest independent geothermal power production investment in Africa to date. They are part of President Barack Obama’s Power Africa initiative, aiming to increase substantially electricity access in Sub-Saharan Africa.

During a press conference July 27 in Addis Ababa, President Obama called the Corbetti project a great example of how important a role the private sector can play in the development of the electricity sector and others for economic growth. He said the access this gives to electricity in the country helps to open the market to developing Ethiopia’s other huge renewable sources.

Founded in 2013, Power Africa has been key in facilitating negotiations between the Ethiopian government and the private sector, both in terms of funding and legal issues.

Michael Philipp, Chairman of Reykjavik Geothermal expressed his gratitude for the commitment of the Ethiopian government and the executives of Ethiopia Electrical Power to finalize this historic agreement. “The impact of the U.S. Power Africa program cannot be underestimated,” he stated, for it has “significantly reduced the cost of equity funding for major energy infrastructure projects in Africa, such as Corbetti, by raising the profile of energy investments in Africa to the institutional investment community in the U.S. and around the world.”

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