African Energy Partnerships and the Evolution of Energy Policy and Law in Ethiopia: Legal Pathways to Regional Integration and Sustainable Power

Abstract

This paper explores the nexus between African regional energy partnerships and the legal and policy framework governing Ethiopia’s energy sector. As Africa seeks to overcome chronic energy poverty while transitioning to clean power, regional collaboration is essential. Ethiopia stands at the center of this transformation due to its abundant renewable energy resources, progressive energy diplomacy, and active participation in continental initiatives such as the Eastern Africa Power Pool. The paper critically examines the legal instruments, institutional structures, and strategic plans that define Ethiopia’s energy landscape, while evaluating their alignment with Africa’s broader energy integration and climate resilience goals. It argues that Ethiopia’s evolving energy laws and partnerships offer a replicable model for balancing national development with regional solidarity.

⸻ Keywords: Ethiopia, energy law, African energy partnerships, renewable energy, energy policy, regional integration, Eastern Africa Power Pool, energy governance, climate law, sustainable development.

1.     Introduction

 Africa faces a paradoxical energy crisis: it is rich in renewable resources yet remains energy poor. The International Energy Agency (IEA) reports that over 600 million Africans lack access to electricity, and the continent’s per capita energy consumption is among the lowest globally, highlighting a significant development gap (International Energy Agency, 2022). As African countries increasingly turn to regional energy integration to address these gaps, Ethiopia has emerged as a pivotal player in the transition toward clean, reliable, and interconnected power systems. The country’s commitment to leveraging its significant renewable energy potential, particularly hydropower, places it at the forefront of this regional shift (World Bank, 2021). This paper situates Ethiopia’s energy policies and laws within the wider context of African energy partnerships, examining how legal and institutional reforms are shaping the country’s role in regional electricity trade, climate resilience, and sustainable development. By analyzing the country's legislative and strategic frameworks, this work provides a balanced and critical assessment of Ethiopia’s journey toward becoming a regional energy hub and the legal pathways it is creating for sustainable development. This analysis is crucial given the complex interplay between national sovereignty, regional commitments, and global climate imperatives.

2. African Energy Partnerships: A Legal and Strategic Overview

2.1 Regional Power Pools and Continental Frameworks

 Africa’s energy partnerships are institutionalized through a range of regional and continental mechanisms that provide a legal and strategic foundation for cross-border cooperation. These include the Eastern Africa Power Pool (EAPP), which promotes power generation and interconnection among East African countries, and similar bodies like the Southern African Power Pool (SAPP) and West African Power Pool (WAPP) (African Union, 2015). These regional power pools operate under specific legal frameworks and Memoranda of Understanding that facilitate the exchange of electricity, harmonize technical standards, and promote infrastructure development. The African Union’s Agenda 2063 and the Africa Renewable Energy Initiative (AREI) further underscore the continent’s commitment to sustainable energy development by providing a high-level policy vision for a unified energy market (African Development Bank, 2017). Moreover, the Program for Infrastructure Development in Africa (PIDA) prioritizes the construction of critical cross-border energy infrastructure, viewing it as a cornerstone of continental economic integration (New Partnership for Africa's Development, 2012).

These mechanisms collectively form the backbone of Africa’s energy future, providing the necessary legal and institutional environment for large-scale energy projects that transcend national borders.

2.2 Ethiopia’s Regional Energy Diplomacy

 Ethiopia has strategically positioned itself as a continental energy hub, leveraging its vast renewable capacity, particularly in hydropower, geothermal, and wind, to export electricity to neighboring countries (Ethiopian Electric Power, 2023). This approach is a key component of its foreign policy and economic strategy. A landmark example of this is the Ethiopia–Kenya High Voltage Direct Current (HVDC) Interconnector, a project developed under the auspices of the EAPP and financed by institutions such as the World Bank and the African Development Bank, which aims to facilitate regional power trade and improve energy security (World Bank, 2021). Ethiopia’s active involvement in the EAPP, the Common Market for Eastern and Southern Africa (COMESA), and various climate-linked platforms signals its commitment to aligning national energy development with regional obligations and global climate frameworks (COMESA, 2019). This diplomatic engagement is supported by bilateral and multilateral agreements that define the terms of energy trade, infrastructure sharing, and technical cooperation, demonstrating a proactive and forward-thinking approach to energy governance (United Nations Economic Commission for Africa, 2019).

 3. Energy Policies in Ethiopia: Evolution and Objectives

3.1 National Energy Policy (1994)

 Ethiopia’s first National Energy Policy, adopted in 1994, laid the groundwork for the country’s energy sector development in the post-Derg era (Ethiopia, 1994). Its primary objectives were to expand access to electricity, particularly in rural areas, develop indigenous energy resources to reduce reliance on imported fossil fuels, and encourage energy efficiency and private sector participation. While pioneering for its time and successful in guiding the initial stages of electrification, the policy now falls short of addressing contemporary energy challenges and opportunities (International Growth Centre, 2020). It does not contain provisions for emerging technologies like green hydrogen, smart grids, or the complexities of a just energy transition, which are now central to global energy discussions (International Renewable Energy Agency, 2021). The policy's limitations highlight the need for a comprehensive revision to align with modern energy demands and global climate goals.

3.2 National Electrification Program (NEP I & II)

 The National Electrification Program (NEP), launched in 2017 and updated as NEP 2.0 in 2019, represents a significant evolution in Ethiopia’s energy strategy, aiming for universal energy access by 2030 (Ministry of Water, Irrigation and Energy, 2019). The program adopts a comprehensive approach that integrates both grid expansion and off-grid solutions, recognizing the limitations of a purely centralized system. It is a coordinated effort involving the government, development partners, and the private sector, designed to accelerate the pace of electrification while leveraging off-grid innovations such as solar home systems and mini-grids (World Bank, 2021). The NEP's emphasis on a public-private partnership model and its focus on a decentralized approach to rural electrification demonstrate a progressive shift in policy thinking, moving beyond traditional  infrastructure-led development to a more flexible and market-oriented framework (International Growth Centre, 2020).

3.3 Climate-Resilient Green Economy (CRGE) Strategy

 The Climate-Resilient Green Economy (CRGE) Strategy, launched in 2011, is a cornerstone of Ethiopia’s national development agenda, with the energy sector identified as a key pillar for achieving net-zero emissions by 2030 (Federal Democratic Republic of Ethiopia, 2011).

This strategy encourages hydropower-led development and investments in other renewable energy sources while aligning national growth with global climate commitments under the Paris Agreement (United Nations Framework Convention on Climate Change, 2015). By prioritizing clean energy, the CRGE links economic growth directly to environmental sustainability, positioning Ethiopia as a leader in climate-conscious development (International Growth Centre, 2020). This strategic framework has provided a strong impetus for the development of large-scale renewable projects, such as the Grand Ethiopian Renaissance Dam (GERD), and has guided the country’s participation in international climate forums.

4. Legal Instruments Regulating Ethiopia’s Energy Sector

4.1 Energy Proclamation No. 810/2013 (as amended by No. 1097/2018)

 Energy Proclamation No. 810/2013, as amended by Proclamation No. 1097/2018, is the primary legal instrument governing the generation, transmission, distribution, and regulation of electric power in Ethiopia (Federal Negarit Gazeta, 2018). This proclamation establishes the legal basis for licensing procedures, tariff regulation, quality standards, and, critically, the entry of the private sector into the energy market. It also establishes the Ethiopian Energy Authority (EEA) as the principal regulatory body with a mandate to ensure fair competition, consumer protection, and the promotion of a stable energy supply (Federal Negarit Gazeta, 2013). This legislation is a significant step toward creating a modern and transparent regulatory environment, though its implementation and enforcement require continuous strengthening to attract and retain private investment (International Growth Centre, 2020).

4.2 Geothermal Resources Development Proclamation No. 981/2016

Recognizing the vast potential of geothermal energy, Proclamation No. 981/2016 was enacted to provide a specific legal framework for its exploration and development (Federal Negarit Gazeta, 2016). This law establishes a clear licensing process, environmental protection safeguards, and provisions for community engagement, thereby creating a more predictable and secure environment for both domestic and foreign investors. The proclamation is a testament to the government's strategic focus on diversifying its energy mix beyond hydropower and harnessing its unique geological advantages (Ethiopia Geothermal Sector Roadmap, 2017). It also addresses some of the legal and regulatory gaps that had previously hindered the development of geothermal projects, demonstrating a targeted approach to sectoral challenges.

4.3 Public-Private Partnership Proclamation No. 1076/2018

The Public-Private Partnership (PPP) Proclamation No. 1076/2018 was a landmark legal reform designed to enhance investor confidence in infrastructure development, including in the energy sector (Federal Negarit Gazeta, 2018). This law clarifies procurement rules, defines risk-sharing mechanisms, and establishes a clear framework for dispute resolution, addressing key concerns that often deter large-scale private investment in developing economies. Its direct implications for energy sector financing are profound, as it provides a legal basis for private companies to participate in the construction and operation of power generation plants and transmission lines (International Finance Corporation, 2019). The PPP Proclamation is a crucial legal tool for mobilizing the significant capital required to meet Ethiopia’s ambitious energy goals.

4.4 Environmental and Climate Legislation

The Environmental and Social Impact Assessment (ESIA) Proclamation No. 1317/2025, which replaced Proclamation No. 299/2002, plays a critical role in ensuring that energy projects do not compromise environmental or social well-being (Federal Negarit Gazeta, 2025). This updated legislation requires a more rigorous and comprehensive assessment of the environmental and social impacts of proposed energy infrastructure.

 By strengthening the EIA process, the law reinforces Ethiopia’s Climate-Resilient Green Economy (CRGE) ambitions and its international commitments under agreements such as the Paris Agreement (Federal Democratic Republic of Ethiopia, 2011). The integration of environmental considerations into energy law is a balanced approach that seeks to ensure sustainable development and mitigate the negative externalities associated with large-scale projects.

5. Institutional Landscape of Ethiopia’s Energy Sector

The institutional landscape of Ethiopia’s energy sector is characterized by a mix of policy-making, operational, and regulatory bodies. The Ministry of Water and Energy (MoWE) serves as the primary policy-making organ, formulating national energy strategy and coordinating its implementation (Ministry of Water and Energy, 2023). Below it, Ethiopian Electric Power (EEP) is responsible for the generation and transmission of electricity, managing the country’s large-scale power plants and the national grid (Ethiopian Electric Power, 2023). Ethiopian Electric Utility (EEU) handles the distribution of electricity to end-users and is responsible for service delivery and billing (Ethiopian Electric Utility, 2023). Finally, the Ethiopian Energy Authority (EEA) acts as the independent regulator, with a mandate to license operators, set tariffs, and monitor compliance with quality and safety standards (Federal Negarit Gazeta, 2013). These institutions are increasingly tasked with balancing the imperatives of rapid growth, effective regulation, and climate resilience in an evolving energy ecosystem. A critical challenge lies in ensuring clear separation of roles and responsibilities to avoid institutional overlap and enhance efficiency (International Growth Centre, 2020).

6. Challenges and Reform Priorities

Despite significant progress, Ethiopia’s energy sector faces several critical challenges that require urgent reform. The 1994 National Energy Policy, though historically important, is now outdated and lacks provisions for a modern energy transition, creating a policy vacuum in areas such as green hydrogen and digital energy technologies (International Renewable Energy Agency, 2021). Institutionally, there is a need for clearer regulatory clarity between the Ministry of Water and Energy (MoWE), the Ethiopian Energy Authority (EEA), and other bodies to avoid overlap and improve governance. Financial sustainability is also a major concern, as cost-reflective tariffs and innovative financing mechanisms are limited, posing a risk to the long-term viability of energy sector institutions (World Bank, 2021). Furthermore, while Ethiopia has made strides in regional energy export, its transboundary legal frameworks are often weak, with many energy export agreements lacking enforceable dispute resolution and equitable benefit-sharing provisions. This creates investment uncertainty, which continues to deter large-scale private investment. To address these issues, efforts are underway to draft a new national energy policy that aims to harmonize legal instruments, enhance institutional coordination, and create a more attractive investment climate.

7. Ethiopia in African Energy Law and Trade Frameworks

Ethiopia’s growing role as a regional energy partner has profound legal implications that require careful consideration. The country is bound by treaty obligations under various bilateral and regional energy trade agreements, which necessitate a coherent legal framework for managing cross-border electricity flows and disputes (United Nations Economic Commission for Africa, 2019). Furthermore, Ethiopia's participation in the Eastern Africa Power Pool (EAPP) and its eventual integration into the African Continental Free Trade Area (AfCFTA) require a degree of regulatory convergence, particularly in areas like energy tariffs, standards, and dispute resolution mechanisms (AfCFTA Secretariat, 2022).

 To attract foreign direct investment, Ethiopia must also strengthen its investment protection regimes, ensuring legal predictability and recourse for international investors (International Finance Corporation, 2019). Finally, the country’s commitment to a green transition necessitates climate-aligned legal reforms, particularly in renewable energy law, emission standards, and the promotion of clean technology (International Renewable Energy Agency, 2021). A coherent legal framework is therefore vital to Ethiopia’s credibility as a regional energy partner and is a prerequisite for it to fully benefit from African-wide integration and the global green transition.

Conclusion

Ethiopia’s energy policies and laws are in a state of dynamic evolution, adapting to the demands of a rapidly changing national and continental energy landscape. As a key player in African energy partnerships, Ethiopia is building legal and institutional mechanisms that enable sustainable, inclusive, and export-oriented energy development. While challenges persist, the country’s integrated approach—combining renewable energy development, legal reform, and strategic regional diplomacy—offers a compelling model for energy governance in Africa. This model is underpinned by a series of legal and policy documents that, despite some limitations, provide a clear pathway toward a more interconnected and sustainable energy future. For Ethiopia to fully realize its potential as a regional energy hub, it must prioritize the modernization of its legal frameworks, the creation of an investment-friendly regulatory environment, and the harmonization of its laws with cross-border legal frameworks. These steps are crucial to building a resilient and prosperous energy sector that serves not only national development goals but also the broader objectives of African regional integration and sustainable power.

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