Ethiopia - Power Sector Reform, Investment, and Modernization in Ethiopia Project : Additional Financing

Overview & Synopsis

The development objective of the Power Sector Reform, Investment and Modernization in Ethiopia (PRIME-1) for Ethiopia is to strengthen and expand the electricity network and enable renewable energy generation in Ethiopia. The additional financing responds to urgent reliability and capacity constraints in Addis Ababa caused by rapid demand growth, overloaded substations and lines, and limited redundancy that lead to frequent outages, suppressed connections, and productivity losses; it also addresses a gap left by earlier prioritization decisions that did not include the city’s transmission rehabilitation. The Bank will work on rehabilitating and upgrading the Addis Ababa transmission network through construction of new substations, upgrading existing substations, reconductoring, and installing overhead and underground lines; integrating network redundancy and advanced monitoring and fault detection; and embedding climate resilience with reinforced structures and standards to reduce outage risks from floods and other hazards. In parallel, Green Climate Fund cofinancing will support upstream geothermal site preparation through drilling and resource confirmation and provide technical assistance for policy and planning, transaction support, and renewable energy park and grid resilience studies, including the development of new technical standards and training across key government entities. The project intends to reduce load shedding and outage frequency, cut technical losses toward about three percent by 2030 and further by 2040, enable an estimated 398 megawatts in new customer connections and support peak load growth from 2.34 gigawatts to 3.8 gigawatts by 2030 and 5.6 gigawatts by 2035, improve utility financial performance in high-revenue areas, enable at least 20 megawatts of renewable energy capacity with direct support, and contribute to lower greenhouse gas emissions. By stabilizing supply and improving grid readiness, the operation is expected to enhance service for households and public facilities, support job creation and firm productivity—particularly for micro, small, and medium sized enterprises—and strengthen conditions for private investment by independent power producers.