The Clean Technology Fund (CTF), managed by the Climate Investment Funds (CIF), has extended a $10m concessional senior loan for development of the 50 MW Tulu Moyo Geothermal Power Plant project in Ethiopia.

The CTF approved the loan on April 20, 2020 for the project, which is seen as a critical step to the East African country’s drive to harness sustainable and resilient energy resources to support its economy and livelihoods.

With this investment, CTF becomes the first progressive geothermal Independent Power Producer (IPP) in Ethiopia.

Anthony Nyong, Director of Climate Change and Green Growth at the African Development Bank, said: “We welcome the participation of CTF in this project. This concessional resource will be instrumental in helping the country to diversify its energy mix by facilitating the deployment of renewable energy technologies while supporting Ethiopia in meeting the targets under its National Electrification Plan 2.0.”

The project entails the design, construction, commissioning and operation of a 50 MW geothermal power plant under a Build, Own, Operate and Transfer (BOOT) scheme, and marks the first phase of the Ethiopian government’s plan to build  cumulative generation capacity of 150 MW by 2024.

The project will include a sub-station and an 11 km transmission line.

Antony Karembu, Principal Investment Officer and Renewable Energy Specialist at the African Development Bank noted that as the first progressive geothermal Independent Power Producer in Ethiopia, CTF will leverage climate finance options in mobilizing private sector operators for the project.

The project is expected to curb greenhouse gas emissions by over 10 million tonnes CO₂ equivalent over its lifetime, and will create around 600 jobs, Karembu said.

CTF will catalyze the deployment of renewable energy technologies in Ethiopia and will underpin future investments into the sector as first-mover risks are reduced and compliance requirements are better understood to all market participants, Leandro Azevedo, Principal Climate Finance Officer and CIF coordinator at the African Development Bank, said.

The CTF funds will be drawn from the Dedicated Private Sector Program III designed to provide risk-appropriate financing for high-impact, large-scale private sector projects in clean technologies.

Through its Clean Technology Fund (CTF), CIF is globally investing more than $5.4bn to build and scale up low-carbon technologies that help developing countries prevent long-term greenhouse gas emissions.

Supported by co-financing in excess of $46bn, as of December 2018 CTF initiatives are on track to install nearly 24 gigawatts in clean energy capacity, save some 10,330 gigawatt-hours per year, and reduce annual carbon dioxide emissions by 64 million metric tons.