Gilgel Gibe III Dam Plant On The Omo River In Wolaita Ethiopia
Ethiopia Powers Up East Africa: A New Era of Regional Energy Integration
Nairobi, Kenya – July 2, 2025 – In a significant leap forward for regional energy integration, the Kenya Electricity Transmission Company Limited (KETRACO) successfully completed trial runs last week, in June 2025, to test its network’s capacity to safely evacuate 100MW of electricity from Ethiopia to Tanzania. This activation of the Kenya-Tanzania interconnector means that power is now flowing from Ethiopia, through Kenya, and into Tanzania, marking a major milestone in fostering a more connected and energy-secure East Africa.
A Historical Journey: Ethiopia’s Hydroelectric Ambition
Ethiopia, often referred to as the “Water Tower of Africa” due to its abundant river systems, has long harbored ambitions of harnessing its vast hydropower potential to drive its own development and become a regional energy exporter. This vision dates back decades, with the establishment of the Ethiopian Electric Light & Power Authority (EELPA) in 1956, which later evolved into the Ethiopian Electric Power (EEP).
The cornerstone of Ethiopia’s hydroelectric prowess lies in its series of monumental dam projects. Historically, dams like the Gilgel Gibe III Dam on the Omo River have been pivotal. Commissioned in 2015-2016, the Gibe III dam boasts an installed capacity of approximately 1,870 MW, significantly boosting Ethiopia’s power generation capabilities. It was envisioned that a substantial portion of its output would be designated for export to neighboring countries, including Kenya, Sudan, and Djibouti.
However, the most ambitious and transformative project, the Grand Ethiopian Renaissance Dam (GERD) on the Blue Nile, has truly positioned Ethiopia as a regional power giant. Construction on GERD began in 2011 and it is set to be the largest hydroelectric power plant in Africa, with an ultimate planned installed capacity of 5,150 MW. While controversial due to its impact on downstream Nile riparian countries, the GERD has progressively come online, with turbines being commissioned in phases from 2022. As of early 2025, GERD’s operational capacity had surpassed 1,550 MW, and more turbines are expected to be fully operational soon, further increasing its output.
These hydroelectric ventures are not merely about domestic supply; they are central to Ethiopia’s strategic goal of becoming a major electricity exporter and a hub for the Eastern Africa Power Pool (EAPP), an initiative connecting 13 countries for cross-border energy trading.
Connecting the Grids: The Path to Regional Integration
Ethiopia’s journey towards large-scale electricity exports began with bilateral agreements. For years, Ethiopia has been supplying electricity to its immediate neighbors. For instance, it has provided power to Djibouti and Sudan for nearly a decade.
The expansion to Kenya has been a more recent, yet critical, development. Following the completion of a high-voltage transmission line between the two nations, Kenya began importing 100MW from Ethiopia in December 2023, escalating to 200MW in 2024 under a long-term Power Purchase Agreement (PPA) between Kenya Power and EEP. This influx of clean, renewable hydropower from Ethiopia has become a significant component of Kenya’s energy mix, reducing reliance on other sources and contributing to grid stability.
The latest breakthrough, the flow of Ethiopian power to Tanzania via Kenya’s grid, signifies a new era of multi-country energy trade. This remarkable feat leverages Kenya’s robust transmission infrastructure, specifically the 400kV Suswa–Isinya line, which serves as a crucial conduit. From Suswa, the power seamlessly integrates with the newly energized Kenya–Tanzania interconnector, which links Singida in central Tanzania through Babati and Arusha to the border town of Namanga, connecting to Kenya’s grid. The successful trial runs, which saw the power load on the line increase from 225MW to 262MW, underscore the technical readiness and reliability of this regional energy corridor.
Benefits Beyond Borders
The implications of this enhanced regional energy integration are profound:
- Enhanced Energy Security: Countries like Kenya and Tanzania can diversify their energy sources, reducing vulnerability to localized generation failures and ensuring a more stable supply.
- Economic Integration: The cross-border power trade fosters stronger economic ties and allows countries with surplus energy to generate revenue, while those with deficits can access affordable, clean power. KETRACO, for instance, is expected to earn substantial wheeling tariffs for facilitating the transit of Ethiopian power to Tanzania.
- Sustainable Development: Ethiopia’s hydropower, a clean and renewable energy source, contributes to reducing reliance on fossil fuels across the region, aligning with global climate goals.
- Reduced Power Shortages: For nations facing power deficits, accessing Ethiopia’s surplus electricity helps bridge the gap, supporting industrial growth, rural electrification, and overall economic activity. Tanzania, in particular, plans to utilize this imported power to address shortages in various regions.
- Regional Energy Hub: Kenya’s role as a transit country solidifies its position as a key player and potential regional energy hub, opening new avenues for investment in its power sector.
This collaborative effort, supported by various development partners including the World Bank, African Development Bank (AfDB), French Development Agency (AFD), and the European Investment Bank (EIB), is a testament to the vision of the Eastern Africa Power Pool. It paves the way for further interconnection, with plans to eventually link the energy systems of East and Southern Africa, creating a truly integrated continent-wide power market.
Ethiopia’s Growing Energy Revenue Stream
Ethiopia has consistently increased its earnings from electricity exports over recent years. This growth is directly linked to the commissioning of new hydropower projects, particularly the phased operations of the Grand Ethiopian Renaissance Dam (GERD), and the expansion of its transmission network to more neighboring countries.
Here’s a detailed breakdown of Ethiopia’s electricity export revenue:
- Fiscal Year 2023/2024: Ethiopia’s electricity export revenue reached approximately $140 million. This marked a 16% increase from the previous fiscal year.
- Target for Fiscal Year 2024/2025: Ethiopian Electric Power (EEP) has set an ambitious target to generate over $260 million in energy export earnings for the current fiscal year. This target reflects the anticipated increase in power generation from operational GERD turbines and expanded export markets.
Revenue Breakdown by Country (Historical and Projected):
Ethiopia’s electricity exports have historically focused on its immediate neighbors, with new markets continuously opening up.
- Sudan and Djibouti: These two nations have been consistent long-term importers of Ethiopian electricity.
- In the 2021/2022 fiscal year, Ethiopia earned $95.45 million from electricity exports to Sudan and Djibouti combined. Of this, approximately $54.66 million came from Sudan (for 1,109 GWh) and $40.78 million from Djibouti (for 600 GWh).
- More recently, in the first half of the current Ethiopian fiscal year (leading up to March 2025), EEP announced earning over $61 million from electricity sales to Djibouti, Kenya, and Sudan. During this period, Djibouti contributed $17.16 million for 274.2 GWh.
- Over an 18-month period up to the end of the Ethiopian fiscal year in July 2023, Ethiopia had earned over $1 billion from electric power exports to its neighboring countries, including Sudan, Djibouti, and Kenya.
- Kenya: Imports from Ethiopia began in December 2023, with 100MW, increasing to 200MW in 2024. The long-term Power Purchase Agreement (PPA) between Kenya Power and EEP is expected to generate up to $100 million annually for Ethiopia from sales to Kenya alone. In the first half of the current Ethiopian fiscal year, Kenya imported 654.9 GWh of electricity from Wolaita Sodo Ethiopia.
- Tanzania: With the successful activation of power flow from Ethiopia through Kenya to Tanzania in June 2025, a new revenue stream is opening up. While specific annual figures for direct sales to Tanzania are yet to be fully established and reported for a complete fiscal year, initial estimates suggest that the project connecting Ethiopia to Tanzania could generate approximately $200 million annually through electricity trading, which would encompass the wheeling charges through Kenya and the direct sale to Tanzania. KETRACO, the Kenyan transmission company, stands to earn up to KES 24 billion (approximately $180 million based on current exchange rates) from the Ethiopia-Tanzania power exports within the first three years, indicating the significant value of this transit.
Future Projections and Diversification:
Ethiopia is keen on further expanding its electricity export market. Plans are underway to extend trade to Somaliland and South Sudan, leveraging the existing Ethiopia-Kenya power transmission line for the latter. The country aims to more than double its electricity exports from 2,803 GWh to 7,184 GWh by 2030.
The revenue generated from these exports is crucial for Ethiopia’s economic growth, providing much-needed foreign currency and diversifying its economy beyond traditional agricultural exports.
It also allows Ethiopia to maximize the utilization of its vast hydroelectric assets, which otherwise might be underutilized if solely dependent on domestic demand. Beyond the strategic advantages of energy security and regional cooperation, Ethiopia’s expanding electricity exports are a significant source of foreign exchange revenue, bolstering its economy and contributing to its national development goals.
Ethiopia’s journey from a nation with vast untapped hydropower to a formidable regional energy exporter marks a pivotal moment for East Africa. The successful flow of Ethiopian power through Kenya to Tanzania, a feat made possible by strategic investments in colossal dams like GERD and robust transmission infrastructure, underscores a new era of energy cooperation.
Beyond fostering greater energy security and reducing reliance on fossil fuels across the region, these exports are translating into substantial economic gains for Ethiopia, injecting vital foreign currency into its economy.
As Ethio Insight observes, this burgeoning energy trade not only solidifies Ethiopia’s role as a regional powerhouse but also paves the way for a more interconnected, sustainable, and prosperous East Africa. The ripple effects of this integration are set to power development and stability for millions across the continent.
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