Reykjavik Geothermal signs deal for large Ethiopian project

Reykjavik Geothermal signs deal for large Ethiopian project Corbetti Caldera, Ethiopia (source: Reykjavik Geothermal)
Alexander Richter 25 Oct 2013

Following earlier news on the planned Corbetti project in Ethiopia, Reykjavik Geothermal now reports having signed a 25 year PPA and contracts with the Ethiopian government for the development of up to 1,000 MW on this site about 200 km south of the country's capital Addis Ababa.

Following news earlier this month about the ambitions plans of Ethiopia to build up to 1,000 MWe in geothermal power generation capacity in the coming years, the government of Ethiopia now announces having signed a deal with Icelandic Reykjavik Geothermal.

Under the agreement, Reykjavik Geothermal is to build the plant in two different stages of each 500 MW with an overall planned capacity at the end of 1,000 MW.

The investment cost is expected to be around $4 billion for the Corbetti project, which will be build inside the Caldera of Corbetti, which is located around 200 km south of the capital of Addis Ababa. Geoscientists believe this site to be one of the world’s most promising geothermal sites.

As in many geothermal projects, it is planned to build up the plant in many steps. A first 10 MW plant is expected to be operational by 2015, to be then ramped up to 100 MW in 2016 and 500 MW by 2018. The second phase of the project is then expected to be generating by 2021.

So far the project has secured funding for the first phase of exploration drilling. After results from the exploration drilling, the company expects a financial close on the remaining funds needed to develop the first phase of the project by the end of December 2014 or early 2015.

According to the news, the “Ethiopian Electric Power Corporation (EEPCO) has agreed a deal to buy energy from the Corbetti plant for the next 25 years.

Signing Ceremeny, October 24, 2013 (source: Ethiopian TV)

The agreement was the result of two years of negotiations between Reykjavic Geothermal, EEPCO and the Ethiopian government. The Corbetti Geothermal Project will be the Ethiopia’s first independent power project and the largest geothermal plant in Africa, according to Reykjavik Geothermal chairman Michael Philipp. Gudmundur Thoroddsson, CEO of Reykjavik Geothermal, adds that the Corbetti Project will be one of the lowest cost and most technologically advanced geothermal facilities in the world.

The company will build and operate the plant, and will work with local partner Rift Valley Geothermal. The project is being supported by Power Africa, an initiative launched by US president Barack Obama to provide 10,000 MW of cleaner, more efficient electricity in six priority countries in sub-Saharan Africa.

“This will be a significant step for EEPCO in realising our strategic vision of being the regional leader for power generation and export in East Africa. We believe Ethiopia has over 10,000 MW of geothermal potential which provides base load power and is a perfect complement to our over 50,000 MW of hydropower potential,” says Ethiopian deputy prime minister and EEPCO chairman Michael Debretsion.

Interest in Ethiopia’s geothermal potential is high. In September the Icelandic International Development Agency (ICEIDA) signed a deal with the Ethiopian government for geothermal exploration.”

Source: TCE Today, Reuters