Auction-based renewable electricity procurement has the potential to attract private investment and lower prices, but its design and implementation can be challenging. Based on Ethiopia’s past five years’ experience, this presentation addresses the practical and theoretical challenges of governing renewable electricity procurement through independent power producers (IPPs). It builds on socio-technical transition studies and political economy analysis to explore factors impeding the design and implementation of IPP projects, including the shortage of foreign currency and convertibility of Ethiopian birr to repatriate profits. It also brings new perspectives in the form of incomplete contracts and holdup problems to the analysis and interpretation of the evidence. The key challenge, it argues, lies in long term contract arrangements, involving uncertainties over future events. It proposes policy recommendations and theoretical solutions.
Seife Ayele is a Research Fellow at the Institute of Development Studies, Brighton, UK. He is a development economist, with over 25 years’ experience in research, teaching, and development practice. His work focuses on renewable energy, agriculture and agribusiness development, and enterprise development and employment. He is the principal investigator of the study Renewable Energy Procurement in Ethiopia: Overcoming Obstacles in Procurement from Independent Power Producers. He holds a PhD from The Open University.
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