By Benadeta Mwaura - Reporter
Kenya, February 02,2026 - As the world confronts escalating climate risks, from catastrophic floods to prolonged droughts, Ethiopia is emerging as a continental leader in clean energy development and environmental resilience, positioning itself as a “green powerhouse” and a catalyst for regional economic integration.
The strategic energy transformation not only supports Ethiopia’s climate goals but also bolsters its industrial and export prospects, with knock-on impacts across East Africa’s economies.
Ethiopia currently generates more than 90 percent of its electricity from renewable sources, a milestone achieved through decades of investment in hydroelectric, wind, solar and geothermal power infrastructure.
This heavy reliance on clean energy, well above most regional peers, provides Ethiopia with low-cost electricity, enhancing its industrial competitiveness and reducing dependence on fossil fuel imports.
Central to this energy transformation are flagship projects such as the Grand Ethiopian Renaissance Dam (GERD), one of Africa’s largest hydroelectric power facilities, complemented by wind farms, solar parks and geothermal plants that diversify the energy mix and expand capacity.
By securing abundant renewable energy, Ethiopia is laying the foundation for energy-intensive industries, from manufacturing to digital infrastructure, while also improving overall energy security.
Ethiopia’s approach is not limited to power generation alone.
The government’s Green Legacy Initiative, a massive tree-planting and land restoration programme, serves dual purposes: mitigating climate change and protecting critical watersheds that feed hydroelectric dams and agricultural zones.
This initiative enhances ecological balance and supports sustainable agricultural output, which is crucial for food security and export growth.
The impact of renewable energy extends into the transport and industrial sectors. Urban transport systems like electric light rail networks and the promotion of electric vehicles are key parts of Ethiopia’s strategy to reduce carbon emissions and cultivate a modern mobility ecosystem.
In parallel, industrial parks across the country are increasingly powered by renewable energy, cutting operational costs and supporting green industrialisation.
Ethiopia’s clean energy ambitions are already bearing fruit beyond its borders.
Surplus electricity, particularly from large hydropower stations, is increasingly exported to neighbouring countries, including Kenya and Sudan, under regional power trade agreements. These exports help stabilise regional grids, lower electricity costs for importing nations and strengthen economic linkages across East Africa.
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For example, Kenya has increased its energy imports from Ethiopia in recent periods, with cheaper imported power displacing some domestic geothermal generation, a sign of expanding cross-border electricity trade that benefits businesses and consumers alike through lower energy costs.
Ethiopia’s clean-power integration paves the way for broader economic cooperation under initiatives like the African Continental Free Trade Area (AfCFTA) and the emerging Africa Single Electricity Market (AfSEM), frameworks that aim to unify markets, harmonise regulations and deepen intra-continental trade.
For investors and private-sector actors, Ethiopia’s renewable energy leadership presents several opportunities:
Lower Production Costs: Abundant cheap renewable power can attract energy-intensive industries, including manufacturing, data centres and agro-processing, seeking competitive operating environments.
Export Market Expansion: Power exports and regional grid interconnections position Ethiopia as a key energy hub, unlocking revenue streams and strengthening trade ties.
Climate-Linked Finance: With climate finance flows increasingly linked to sustainability metrics, Ethiopia’s green credentials could attract investment from multilateral lenders, green bond markets and institutional investors focused on ESG outcomes.
Renewable Value Chains: Growth in renewable infrastructure can catalyse jobs and supply chains in engineering, construction, maintenance and technology services across East Africa.
Despite impressive progress, challenges remain. Seasonal variability in hydropower output, infrastructure financing gaps and the need for regulatory harmonisation across borders can temper near-term expansion.
Continued investment in diversified renewables and grid resilience, including storage and transmission networks, will be key to scaling impact. More robust regional cooperation platforms could further align grid standards and tariff regimes to optimise cross-border energy trade.
Nevertheless, Ethiopia’s renewable energy transformation, environmental stewardship and regional integration strategy signal a long-term shift toward sustainable economic growth. As it moves toward its 2030 climate resilience goals, Ethiopia’s experience offers insights for other African nations seeking to balance industrialisation with environmental imperatives.
