EU funding for additional drilling for Tendaho geothermal project in Ethiopia

As part of an overall project budget of EUR36.1 million for the Tendaho geothermal project in Ethiopia has been supported through the EU-Africa Infrastructure Trust Fund with EUR 7.5 million ($8 million) in 2014, in form of technical assistance and investment grants. Now the project has secured additional funding of EUR 8 million ($8.6 million) for the project from the French Development Agency, Agence Française de Développement (AFD) (AFD).

This additional contribution approved in March 2017 shall be used for exploitation of deep reservoir including the drilling of additional deep wells. The EU-AITF contribution has been structured as an instrument rewarding success, meaning that the grant shall be reimbursed under certain conditions in case the project proves successful.

The main objective of the Tendaho project is to support the economic development of Ethiopia through the development of geothermal, a clean and reliable renewable energy resource therefore enhancing Ethiopian resilience to climate change.

For the Tendaho field, the Government of Ethiopia has set two targets:

• The delineation and initial development of the shallow reservoir allowing in the short term exploitation of the shallow resource at the maximum sustainable capacity, presently estimated to be at least 10 MW;
• The exploration of the deep reservoir by the initial drilling of deep exploration wells. The GoE target is the development in the medium terms of at least 100 MW of generation capacity.

Therefore, the Tendaho geothermal development Project – Phase 1 – has the following three specific objectives:

• The definition of the extnesion of the shallow reservoir by the drilling of up to 6 step-out wells;
• The exploration of the deep reservoir by the initial drilling of deep directional wells to a depth of 2500m;
• Strengthening of EEP and GSE capacities for implementation of geothermal drilling activities.

It is intended that Phase 1 will be co-financed by EU-ITF and AFD through a soft loan. After successful completion of the first production drilling and finalization of the relevant feasibility studies, a Phase 2 will consist in the construction of approximately 10 MW of generation capacities. This phase 2 will be financed by AFD loan.

The ITF Investment Grant will be disbursed together with a loan from the AFD, as lead financier, and will support the rehabilitation of the Kremco rig and the drilling activities. The ITF technical assistance component will be used to complement the joint implementation unit staff and train them for drilling purposes.

Source: EU Commission, EU-ITF