The AfDB has awarded a contract to China Energy Engineering Group for the construction of a 30 MW solar PV plant near Dekemhare, Eritrea. The project includes solar power generation, battery storage, and new transmission infrastructure.
Project Funding and Scope
In a significant step towards boosting renewable energy capacity in Eritrea, the African Development Bank (AfDB) has awarded the contract for the construction of the Dekemhare 30 MW Solar PV Plant to China Energy Engineering Group Shanxi Electric Power Construction Co. Ltd. The announcement was made after a competitive bidding process that saw 11 companies vying for the project. The plant will be located near the town of Dekemhare, approximately 40 km southeast of the capital, Asmara.
The AfDB approved financing for the Dekemhare project in March 2023, with the total project cost estimated at $59.21 million. The majority of the funding, 91% will come from the bank through its African Development Fund (ADF-15) and Transition Support Facility grants. The Eritrean government will contribute the remaining 9% as a counterpart contribution.
The project encompasses two main components. The first is the power generation phase, which includes the design and construction of the 30 MW grid-connected solar PV plant, a 15 MW/30 MWh battery energy storage system, a 33/66 kV substation, and a 66 kV transmission line. This transmission line will be connected to the existing line between East Asmara and Dekemhare.
The second component focuses on technical assistance and capacity-building support. This aspect of the project is designed to enhance the capabilities of energy experts in Eritrea, enabling them to assess the feasibility of large-scale clean energy projects within the Eritrea Electricity Corporation’s (EEC) network. It also aims to build capacity in network planning and design, performance improvement, and various financial, legal, operational, and environmental aspects.
Contractor Responsibilities and Construction Timeline
China Energy Engineering Group Shanxi Electric Power Construction Co. Ltd. has been tasked with the design, supply, and installation of the solar PV plant, the battery energy storage system, and associated facilities. The construction phase is expected to take approximately 24 months.
Once completed, the Dekemhare solar PV plant will significantly enhance Eritrea’s grid generation capacity, increasing it to 185 MW. Additionally, the share of renewable energy in the grid energy mix will rise to 23% from the current 3%.
Dekemhare solar PV plant
This transition is anticipated to reduce greenhouse gas emissions by 42,910 tCO2-eq annually. Furthermore, the cost of power generation is expected to decrease from 20 US cents per kilowatt-hour (kWh) using diesel fuel to 18.5 US cents per kWh with solar power.
Addressing Eritrea’s Energy Challenges
Eritrea has long struggled with inadequate, unreliable, and expensive electricity supply. The current available capacity is 35 MW, which falls short of the peak demand of about 70 MW. This deficit has led to frequent load-shedding periods, adversely affecting businesses and the general population.
The Dekemhare project aligns with Eritrea’s National Energy Policy of 2018, which is part of the broader Vision 2030. This policy aims to increase the electrification rate across the country and ensure that 20% of the electric power demand is met through renewable energy sources by 2030.
It also seeks to reduce the nation’s reliance on fossil fuels for power generation by promoting renewable energy sources such as solar, wind, and geothermal. The development of energy infrastructure is expected to support agricultural production, food security, and value chain development.
Economic and Environmental Benefits
The Dekemhare solar PV plant is expected to bring several economic and environmental benefits to Eritrea. By increasing the share of renewable energy in the national grid, the project will help bridge the electricity generation gap, reduce power generation costs, and increase the connection rate to the electricity grid. The additional renewable energy will also reduce greenhouse gas emissions, contributing to global efforts to combat climate change.
Moreover, the project is anticipated to create employment opportunities during the construction and operational phases, stimulating local business activities. This development is crucial for Eritrea, which has faced economic challenges and high unemployment rates.
The awarding of the contract for the Dekemhare 30 MW Solar PV Plant marks a significant milestone in Eritrea's journey towards sustainable energy development. With the support of the African Development Bank and the expertise of China Energy Engineering Group, Eritrea is poised to enhance its renewable energy capacity, reduce reliance on fossil fuels, and achieve its national energy policy goals.