Business Case for Solar PV (Energy) Investment at the Adama Industrial Park

The Government of the Federal Democratic Republic of Ethiopia has been promoting structural transformation of the economy, with the aim of becoming a middle-income country by 2025. The growth trajectory aims to follow an environmentally sustainable growth path for which the Government of Ethiopia (GoE) developed the Climate-Resilient Green Economy (CRGE) Strategy in 2011. The CRGE shows that Ethiopia’s GHG emissions under business-as-usual would increase up to 400 Mt CO2e by 2030 of which the industrial sector is expected to contribute the highest increase in emissions, rising from 4 Mt CO2e in 2010 to 71 Mt CO2e by 2030. However, the government intends to limit its net GHG emissions from all sectors to 145 Mt CO2e by 2030, according to its INDC. As part of the CRGE implementation, the GoE established the Industrial Park Development Cooperation (IPDC) in 2014 with the mandate to champion the construction, management and operation of 17 industrial parks across the country (Five industrial parks are currently operational). This project is aligned with IO2. Increased green growth investment flows which enable partner governments to implement green growth policies. The Adama Industrial Park (AIP) is in Adama township, about 100km from the federal capital, Addis Ababa with an area of 365 hectares of land and the first phase, which has 19 manufacturing sheds, is built on 102 hectares of land. Phase one of AIP is expected to create about 25,000 new jobs and generate about USD40 million in export revenue per year. The park is focused on textile and garment manufacturing, and currently depends on hydro-powered electricity. AIP has a design capacity of 33MW of electricity for full operation. However, only 9MW is been supplied to the park from the national grid due to electricity shortage. Fossil-fuel powered generators are currently in use to meet the energy demand of the industries in the park. The use of diesel-powered generators is not only unsustainable but also not in line with the long-term aim of the CRGE because of the high emissions of GHG.  Therefore, renewable energy alternatives such as solar power could address the park’s electricity requirements.