A climate for solar power: Solutions for Ethiopia’s energy poverty

This policy brief examines the role of off-grid solar energy in Ethiopia's rural electrification efforts under the Growth and Transformation Plan (GTP II). While solar adoption has grown, the document identifies significant policy, financial, and administrative barriers that hinder private sector investment and the availability of high-quality equipment.

• The Government of Ethiopia has established specific off-grid solar targets for 2020 under the Growth and Transformation Plan (GTP II), aiming for 3.6 million lanterns, 400,000 solar house systems, and 3,600 solar photovoltaic (PV) systems for government service centres, schools, and rural health centres.
• Solar lantern dissemination is significantly higher than that of solar home systems because lanterns are cheaper and do not require professional installation. Data from the Development Bank of Ethiopia shows that approximately 80% of solar products imported using the Bank's finance facility were lanterns.
• There is a significant disparity in government resource allocation between on-grid and off-grid electrification. In 2008, the on-grid Universal Electricity Access Program had a budget of US$45 million and over 2,000 employees, while the off-grid Rural Electrification Fund (REF) had only four employees and a government budget of US$45,000.
• Importation of solar equipment is hindered by a lack of streamlined processes and unclear jurisdictions among multiple agencies, including the Ministry of Trade, the Ethiopian Energy Authority, and the Ethiopian Revenues and Customs Authority. This results in testing periods of approximately 47 days, often while goods remain on trucks, leading to high demurrage costs.
• Financial constraints for solar energy include limited foreign currency availability, which can cause import delays of three months or more, and high interest rates. Total interest rates for loans can reach 16% when commercial bank guarantees are added to Development Bank of Ethiopia loans.
• The document recommends five key government actions to unlock investment: sharing grid expansion plans to reduce private sector uncertainty, streamlining imports via a 'Green Line' customs mechanism, creating incentives for local manufacturing, enforcing quality standards, and supporting affordable financing like pay-as-you-go models.

APA

Lakew, H., Hailu, B., Hailu, T., & Carter, S. (2017). A climate for solar power: Solutions for Ethiopia’s energy poverty. Climate and Development Knowledge Network. https://cdkn.org/sites/default/files/files/Ethiopia-Solar-Power-PB_for-web.pdf

Chicago

Lakew, Hilawe, Beza Hailu, Tesfaye Hailu, and Suzanne Carter. A climate for solar power: Solutions for Ethiopia’s energy poverty. Climate and Development Knowledge Network, 2017. https://cdkn.org/sites/default/files/files/Ethiopia-Solar-Power-PB_for-web.pdf.

Wikipedia

{{cite report |last1=Lakew |first1=Hilawe |last2=Hailu |first2=Beza |last3=Hailu |first3=Tesfaye |last4=Carter |first4=Suzanne |title=A climate for solar power: Solutions for Ethiopia’s energy poverty |publisher=Climate and Development Knowledge Network |date=December 2017 |url=https://cdkn.org/sites/default/files/files/Ethiopia-Solar-Power-PB_for-web.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{lakew2017climate, author = {Lakew, Hilawe and Hailu, Beza and Hailu, Tesfaye and Carter, Suzanne}, title = {{A climate for solar power: Solutions for Ethiopia’s energy poverty}}, institution = {Climate and Development Knowledge Network}, year = {2017}, month = dec, url = {https://cdkn.org/sites/default/files/files/Ethiopia-Solar-Power-PB_for-web.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }