Addis Abeba — In early September 2025, two significant events took place in Ethiopia: the inauguration of the Grand Ethiopian Renaissance Dam (GERD) and the second Africa Climate Summit (ACS2). The celebration of the GERD's inauguration alongside the ACS2, a precursor to COP30, serves as a timely reminder of hydropower's often-overlooked role in the clean energy conversation.
During the Summit, Ethiopia presented the GERD as a compelling example of a homegrown, African-led solution to the climate crisis and a symbol of the continent's commitment to clean energy and sustainable development.
Yet, once the spotlight faded, Ethiopians were confronted with the familiar reality: severe outages, rising fuel and electricity costs, and unreliable power quality that damages devices and constrains daily life. Amid these high-profile moments and starkly contrasting realities, one question persists: how can Ethiopia move beyond celebrating generational milestones to actually delivering power that fuels industries and drives economic growth?
Hydropower's promise vs. Ethiopia's power crisis
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The GERD has an installed capacity of more than 5,000 MW and a projected annual output of 15,700 GWh. However, it still has a long way to go in ensuring Ethiopia has sufficient and affordable electricity to support sustained economic growth. While Ethiopia has some of the lowest electricity tariffs in the region, its grid is still plagued by outages that drive up costs for commercial consumers. In 2019, the Energy for Growth Hub estimated these additional costs at nearly 300% of electricity prices for industrial customers. Poorly planned load-shedding events further compound the problem, causing significant economic losses by failing to meet demand.
The recently released Ethiopian Energy Outlook reports that at least 25% of the country's installed generation capacity is inactive due to maintenance issues and hard currency shortages. According to Ethiopian Electric Utility's own statistics, large-scale users experience an average of 39 interruptions per month, lasting a total of 21 hours. Earlier this year, the capital experienced severe outages, with over 25,000 problems recorded.
Addressing Parliament in July 2025, Prime Minister Abiy Ahmed disclosed the necessity for a nationwide overhaul of the power transmission infrastructure. He indicated that the frequency of power outages is expected to improve significantly upon the completion of this essential maintenance work on the transmission lines.
Research across Asia and Africa shows that unreliable power undermines productivity, disrupts production, and cuts revenue. It all adds up to more expensive everyday goods, life, and economic activities, ultimately suppressing growth. In Ethiopia, where unreliable and unaffordable power remains a major drag on growth, none of these problems can be solved by simply adding capacity.
Will GERD benefit everyone?
Early beneficiaries of the GERD may not necessarily be local citizens. Amid the celebrations, overly optimistic political claims that the dam will supply power to the entire country are widespread--misleading the public and obscuring the actual decision-making process. Some reports alleged that a portion of the dam's output could be allocated to crypto-mining data centers.
While this may be lucrative in the short term and useful for financing, these operations create few jobs and can easily relocate when prices are no longer favorable. Evaluating the public value of such offtakers is particularly challenging in a context where power procurement lacks transparency.
For Ethiopia's genuine development, celebrations around the GERD must first focus on translating megawatts into meaningful progress."
With Ethiopia scoring just 3 out of 10 on power purchase agreement transparency, we should ask serious questions about whether public funds are indirectly subsidizing crypto activity instead of supporting demands with broader and more lasting economic benefits.
Moving from megawatts to reliable, affordable electricity
For Ethiopia's genuine development, celebrations around the GERD must first focus on translating megawatts into meaningful progress. Ribbon cuttings and large project inaugurations are easy to celebrate, but electricity is ultimately a means to a developmental end. Even with the GERD coming online and the country entering the wet season, businesses and households continue to face prolonged blackouts, damage to appliances, increased costs from backup power, and broader economic losses. Celebrating generation projects alone is therefore misleading; it obscures the true cost of unreliable power and prevents effective diagnosis and solutions. The metric must shift from megawatts added to income generated, jobs created, and living standards improved through reliable, affordable electricity.
Equally important is the demand for transparency in power procurement and a clear evaluation of offtaker trade-offs. Would GERD's output be better allocated to local factories, sold into the regional power pool, or directed toward more strategic demand centers, such as battery manufacturing? What are the terms and prices of the crypto-related agreements, and could Ethiopia secure more advantageous alternatives? Is the country prioritizing rapid foreign currency inflows over careful consideration of long-term trade-offs? A lack of transparency in these decisions ultimately increases debt, delays projects, and discourages investors and credible offtakers. It also squanders the opportunity to make deliberate policy choices regarding which demand centers to prioritize, why, and for how long.
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Power contract transparency can change that--and the first step is for Ethiopia to publish its existing power purchase agreements, with key terms disclosed, so demand choices can be properly evaluated and debated.
GERD's real test lies in delivering growth
The Ethiopian people are already enduring so much: civil war and insecurity, displacement, hunger and aid withdrawal, inflation, soaring costs of goods, rising property taxes, debt restructuring, and now escalating electricity prices paired with worsening power reliability. In such times, it matters to celebrate wins--and GERD is certainly a big one.
But we must keep our eyes on the prize: energy is only valuable when it drives growth, and growth is the foundation for a climate-resilient country and continent. That means the measure of success cannot stop at megawatts added--it must include the policies, demand decisions, the procurement terms, and the reliable service that turns power into jobs, income, and better lives, with leaders held accountable for delivering them. AS
Editor's Note: Meron Tesfaye (Ph.D.) is an Ethiopian-born engineer, energy expert, and senior policy analyst at the Energy for Growth Hub. She focuses on advancing energy solutions and policies that deliver jobs and economic growth in emerging economies. Meron can be reached at [email protected]
