China builds power and influence in Ethiopia

Ethiopia: Chinese manufacturer Dongfang Electric is tipped to build a 120MW wind power facility at Aysha, in western Ethiopia, with funding from the China Exim Bank.

Chinese manufacturer Dongfang is looking to be a major player in Africa
Chinese manufacturer Dongfang is looking to be a major player in Africa

It is thought likely that a Chinese company will also be awarded a further 60MW at Aysha, again with Exim Bank support, in partnership with Ethiopia's state-owned Metal and Engineering Corporation.

This is in addition to the 51MW already turning at Adama I with Goldwind turbines and 153MW under construction at Adama II, powered by Sany. Both projects were awarded to HydroChina International Engineering Company in a joint-venture with Chinese construction group CGCOC and backed by the Exim Bank. HydroChina also helped draw up Ethiopia's wind and solar energy master plan in 2012.

By contrast, the sole European initiative is the 120MW Ashegoda facility, which French manufacturer Vergnet is currently completing using Vergnet and Alstom turbines, with funding from France. The European Investment Bank has also expressed interest in backing another 120MW at Aysha. The project would then be open to international tender.

China's growing influence in Ethiopia's wind power sector can be attributed to a number of factors. China has been active in Ethiopia for over a decade, particularly in the power sector, and appears to have a very strong relationship with the Ethiopian government, explains Gareth Blanckenberg, industry analyst at consultancy Frost & Sullivan. In addition, China is able to provide competitive funding mechanisms through the Exim Bank and other development banks.

China can offer attractive terms partly because their finance institutions are less constrained than their Western counterparts, adds an industry insider who prefers to remain anonymous.

The Chinese are strategic players, he says, willing to absorb political risk in the interests of gaining a long-term strategic relationship. Given that its domestic market is now oversupplied, China also wants to open up new markets, with the added advantage of being able to demonstrate its technology to a wider global audience.

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