AfDB approves $10m SEFA grant to support geothermal drilling program in Ethiopia

The SEFA grant complements existing facilities to mitigate the high risk associated with drilling activities and help attract commercial debt capital to finance the project.

The Board of Directors of the African Development Bank Group has approved a $10 million reimbursable grant from the Sustainable Energy Fund for Africa (SEFA) to support a geothermal drilling program that will add 50 megawatts of renewable energy to Ethiopia's power system.

The Tulu Moye Geothermal Operations PLC(link is external) (TMGO) project entails developing and operating a 50-megawatt power plant in Ethiopia under a build-own-operate transfer structure. The program provides for the second phase of an additional 100 megawatts. On completion, it will be the first large-scale private sector-driven geothermal development and the first Independent Power Producer in Ethiopia.

TMGO is owned by Meridiam(link is external), a Paris-based multinational corporation, and Reykjavik Geothermal(link is external) of Iceland.

The SEFA grant complements existing facilities to mitigate the high risk associated with drilling activities and help attract commercial debt capital to finance the project. This funding is expected to inspire other private sector-driven geothermal projects in Eastern Africa that have struggled to mobilize capital for drilling.

Maxence Mirabeau, CEO of TMGO, commented: "It is essential to be financially supported during the risky drilling period by a key institution. SEFA is a unique solution to unlock geothermal potential in Africa. Not so many can do it! Thank you to the SEFA/African Development Bank team."

João Duarte Cunha, SEFA's Manager, said: "SEFA will play a critical role in supporting geothermal resource assessment and development, which is the riskiest phase of the project, and catalyze investments in the first private power plant in Ethiopia, paving the way for more public-private partnerships in the country's energy sector."

SEFA is a multi-donor special fund working to unlock private sector investments that contribute to providing universal access to affordable, reliable, sustainable, and modern energy services for all Africans.