Ethiopia's Clean Power Initiative Gains Traction

Ethiopia is making strides in its efforts to enhance access to renewable electricity and promote electric mobility, receiving renewed support from European partners. Recent investments from the UK and the EU are aimed at improving transportation infrastructure, upgrading power transmission systems, and expanding electrification in rural areas. The latest financial backing aligns with Ethiopia's broader strategy to leverage hydropower for electricity generation, aiming to reduce fuel imports, boost industrial growth, and accelerate the transition to electric vehicles. The UK has pledged $5 million in debt financing to Dodai, an electric mobility company based in Addis Ababa, as part of a $13 million Series A funding round. This investment is intended to facilitate the expansion of electric motorbikes and the establishment of battery-swapping infrastructure. Dodai focuses on assembling electric motorbikes and operates battery-swapping stations tailored for delivery riders, commuters, and small transport operators. Currently, the company has deployed over 2,000 electric motorbikes and employs around 100 individuals. Its expansion plan aims to increase the number of battery-swapping users to 3,000 and establish 30 stations in Addis Ababa within the next year, with a longer-term vision of reaching 30,000 users and 1,000 stations before expanding to other African cities. The UK investment, facilitated through British International Investment, seeks to reduce urban mobility costs and lessen reliance on petrol. For Ethiopia, transitioning to electric transport is not merely a climate initiative but also an economic imperative, as the country spends billions annually on fuel imports, a significant burden amid foreign exchange shortages and infrastructure demands. Ethiopia has been proactive compared to many African nations in electrifying its transport sector. In 2024, it prohibited the import of petrol and diesel vehicles, introduced tax exemptions for electric vehicles, and promoted local assembly to generate employment. Currently, approximately 115,000 electric vehicles are in operation within a national vehicle fleet of about 1.5 million, with government targets set to increase this number to 500,000 by 2030. Despite these advancements, the transition to electric mobility faces challenges. Charging infrastructure is predominantly located in the capital, and power outages continue to disrupt households and businesses. Additionally, long-distance electric transport remains challenging outside major urban areas, with only about 100 charging stations available, falling short of the 2,300 stations targeted by authorities. Support from the European Union is primarily directed toward enhancing the electricity network necessary for Ethiopia's green energy ambitions. The RISED Ethiopia programme, backed by the EU and other partners, aims to modernize the national transmission system managed by Ethiopian Electric Power. This initiative includes automating substations, deploying optical fiber along power lines, establishing a secure National Load Dispatch Centre, upgrading interconnectors with Kenya and Djibouti, and supporting renewable energy projects from independent producers. A significant milestone was reached in September 2025, when a €120 million agreement was signed in Addis Ababa under the RISED framework. The overarching goal is to minimize transmission losses, enhance reliability, strengthen digital connectivity, and prepare the grid for a more diverse renewable energy mix, including wind and geothermal sources. The UK has also contributed to Ethiopia's transmission expansion through Gridworks, a government-owned investor in African electricity networks. In February, Gridworks signed agreements totaling approximately $400 million to develop two power transmission projects, marking the first public-private partnerships in Ethiopia's electricity transmission sector. One project aims to connect the Somali region to central and northeastern grids, while the other will support wind and solar development in the northeast and improve connections with Djibouti. These investments are crucial, as Ethiopia's electricity generation capacity is increasing at a faster rate than its distribution capabilities. The Grand Ethiopian Renaissance Dam, inaugurated in 2025, is projected to more than double the country's electricity output, with an installed capacity exceeding 5,000 megawatts. However, nearly half of households still lack grid access, and factories continue to experience power reliability issues. Ethiopia's green energy initiative is also linked to its regional aspirations. Enhanced interconnectors could enable Addis Ababa to export more electricity to neighboring countries, generating foreign currency through power sales. Kenya, Djibouti, and other neighboring nations stand to benefit if Ethiopia can stabilize its domestic supply while expanding cross-border capacity. Private investors are closely monitoring whether reforms can keep pace with the growing demand. Ethiopia has begun to open segments of its state-controlled economy to foreign capital, yet investors still encounter currency restrictions, regulatory delays, and security concerns in certain regions. Electric mobility companies also require clear regulations regarding vehicle standards, battery safety, import duties, and recycling practices.

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