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Ethiopian Cogeneration Technology Manufacturing, Financiers and Policy Study Report,

By

Eng. Amare Hadgu


EXECUTIVE SUMMARY

The aim of the study is to review the cogeneration sub-sector in Ethiopia with specific focus on the potential for local manufacture of cogen equipment spare parts in the country. The cogeneration industry in Ethiopia has significant potential for job creation, diversification of national energy supply thus increasing energy security as well as provision of an additional revenue stream for the country's agricultural and industrial sectors. The cogen sector could also be an important source of decentralized electricity generation which can, in turn improve local and national grid stability.

The first chapter provides a brief background of the energy sector in the Eastern African region and Ethiopia, in particular. The chapter emphasizes on the abundance of energy resources found in Ethiopia and the need of expand their exploitation while ensuring their efficient use. Cogeneration is noted to be one of the options that would allow use of local energy resources while ensuring efficient energy resource use as it allows the generation of two forms of energy (electricity and heat) from the same fuel source. The study indicates that the ambitious sugar industry development programs in Ethiopia can ensure sustainable feedstock for the cogeneration industry.

The second chapter provides a brief overview of the local manufacturing sector in Ethiopia as well as examines, in some detail, key manufacturing companies in the country. It identifies available producers and local manufacturers of cogeneration spare parts in the country. Few spare parts in the boiler and handling system are locally manufactured. The survey establishes that Ethiopia's Growth and Transformation Plan is taking the manufacturing industry in the right direction. One of the notable developments is the establishment of the Metals and Engineering Corporation (METEC) which is tasked with spearheading design and commissioning of manufacturing industries and expanding as well as enhancing engineering technological capabilities.

Chapter 3 focuses on the existing and potential sources of finance for local manufacture of cogen spare parts in the country as well as the reasons and challenges why some financial institutions have been slow in expanding financing renewable energy investments. The study notes that most financing institutions prefer sectors perceived to be low risk - a profile that the cogen sector is yet to establish within Ethiopia.

Chapter 4 discusses policy options that can promote local manufacture of cogen spare parts in Ethiopia and measures that will encourage investment in the local manufacture of cogeneration spare parts in Ethiopia. The study establishes that Cogen for Africa Project has been beneficial in promoting favorable cogen policies in Ethiopia through the engagement of various local experts at different stages of implementation. The study ends with a chapter summarizing key findings and recommendations on the way forward.

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