Ethiopian Regional Energy Bureaus (REBs) promote off-grid energy services, mainly in the deep rural
areas. Even though they support the implementation of energy plans and projects in their states, these
bureaus have no power to influence energy policies and regulations. The primary source of energy law is
the federal government in the form of constitutional provisions and parliamentary legislations. However,
REBs have wide latitude, during implementation of policies and laws, in aligning them to their needs and economic and social contexts.
The objective of this report is to improve the enabling environment for stand-alone solar (SAS) at the regional level in Ethiopia by strengthening regional institutions, in particular REBs, to catalyse the development of the local SAS markets. This report is based on desk-based literature analysis and interviews conducted with multiple stakeholders at the federal level and in the Amhara, Benishangul-Gumuz, Gambella, Oromia, SNNP and Somali regions
A large proportion of the population in all the regions in Ethiopia does not have access to electricity, and the level of financing for importers as well as consumers is not sufficient to meet the demand of over nine million un-electrified rural households. This report concludes that regions in Ethiopia are at different stages of development in terms of access to infrastructure and social institutions. Among the regions covered in this study, Amhara, Oromia and SNNP have relatively more developed infrastructure compared to Benishangul-Gumuz, Gambella and Somali regions. The various stages of development influence specific challenges at the regional level, which include:
- Access to finance: The USD40 million Development Bank of Ethiopia (DBE) credit facility for solar provides loans to microfinance institutions (MFIs) operating in Amhara, Oromia, SNNP and Tigray regions. MFIs in Gambella, Somali and Benishangul-Gumuz regions are not currently benefiting from the facility. The DBE facility only allows MFIs to provide financing for SAS systems, excluding financing for productive use appliances and sharia-compliant financing.
- Quality assurance: Quality certification and verification is handled by different organisations at different levels. Commercial banks need quality certificates to be presented as a requirement to open letters of credit. When products arrive at customs, certificates need to be verified. Ministry of Trade and Industry is responsible for checking imported goods, including solar products, that need to meet mandatory quality standards. Once the product is imported into Ethiopia, REBs must also verify quality certificates when companies want to distribute solar products in their regions through MFIs. The many tiers of validation have created alignment and coordination problems for the smooth flow of solar products.
- Coordination and partnership: No regular communication and coordination between MoWIE and REBs exists on the progress made in off-grid solar (OGS) product distribution or on the planned and ongoing changes in policy and organisational accountability. In addition, REBs do not seek to get the buy-in of other relevant regional bureaus when developing their annual plans in order to align priorities and optimise the use of resources.
- Energy nexus: There are over 26,000 primary schools and 15,000 health posts with no access to electricity. In addition, about 90 hospitals, providing the most comprehensive health services, are still not powered and cannot provide optimum services. There are inadequate policies and regulations to support the adoption of renewable energy technologies to spur economic growth and improve social impact. In addition, inadequate financing for small-holder farmers due to the high-risk nature of products, lack of standards to guarantee the quality of the products, inadequate recognition of gender needs and low off-grid sector skills for local communities, are also key challenges.
- Product tracking: Currently, there is no mechanism to trace products that are imported and distributed in the country. Of particular importance is the lack of a platform to remotely track the operational status of institutional and productive use solar systems installed by donors and the government, including the location of the products.
Communication between the Ministry of Water, Irrigation and Energy (MoWIE) and REBs needs to be strengthened. This will help to identify and address institutional, legal and implementation challenges, as well as to evaluate progress made by each region in meeting the National Electrification Program (NEP 2.0) universal electricity access targets by 2025. Stakeholders’ collaboration and coordination is also crucial in expanding productive use of energy (PUE) for irrigation and agro-processing activities, and electricity access to schools and health institutions.