Ethiopia's biggest hydropower plant resumes operation after 11 months

NEWS - AFRICA NEWS


Addis Ababa, Ethiopia - Ethiopia's biggest hydropower plant, without a dam, Gilgel Gibe II (GII), has resumed operation after 11  months since it collapsed in January 2010, state media reported. The state Ethiopian Electric Power Corporation (EEPCo) had closed GII due to collapse in its main tunnel weeks after it was officially inaugurated at the beginning of the year.

Energy authorities and the country’s Prime Minister Meles Zenawi had then said that maintenance was to be completed in two months but the costly work in the tunnel took almost the entire year, leading to unannounced power shedding for months.

Geological incidents had caused a major slit in the concrete lining 9kms deep in the over 25kms long tunnel on 22 January, almost a week after inauguration and EEPCo closed the plant  25 January.

GII uses water from another dam constructed more than 26kms away for an existing power plant called GI. After it generates 180Mw at the older station, the water is channeled through 25.8kms long, 6.3m diameter concrete tunnel bowered through chains of mountains to generate 420Mw at GII.

Supported by a steep elevation, two 1,000m long metal penstocks at GII pour the water from the tunnel in the mid-height of a mountain down to the turbines at the bottom, increasing the turbine circulation and allowing the generation of more power.

Located 250kms south-west of Addis Ababa, GII was constructed by the Italian compant, Salini Costractori SpA, at a cost of 281 million euros (US$ 407 million) financing from Italy.

It was opened by Zenawi and Italian Foreign Minister Franco Frattini, on 13 January.

It was one of the three major hydropower plants Ethiopia inaugurated in the ending year.

Following a power crisis that led to a regular power shedding schedule for almost a decade now, the country has embarked on the construction of more than five ambitious power plants.

While the power shedding got so intense over the past three years, the prospect of ending the crisis with the commissioning of the new plant, like GII grew higher.

Nevertheless, the collapse of GII had made it clear the power crisis was not to end any time soon.

Ethiopia’s landscape and its river basins are said to have given the country a potential to generate over 46,000Mw hydropower but its current electricity generation capacity is 2,000MW, more than double from 2006.

The second most populous nation in sub-Saharan Africa has also signed agreements with Sudan, Kenya and Djibouti to sell power.

Pana 29 december 2010 

Booming Ethiopia Is the New Face of Africa

BY RICK ACKERMAN ON DECEMBER 23, 2010 1:24 AM GMT ·

(Here’s a man-bites dog story from Cam Fitzgerald, a frequent contributor to  Rick’s Picks  who lived for a while in Ethiopia. Cam paints a picture of an African nation that will be unfamiliar to many readers; for in fact, even though Ethiopia has only begun to emerge from poverty, its economic prospects are as bright as you will find anywhere on the African continent. To understand why, read Cam’s first-hand report .  RA)  

This is a growth story. A few years ago, I spent some time living in Ethiopia. I was in the suburbs of Addis Ababa, getting to know one terrific family in particular: the mother, who was the real head of the household; the father, Abba, a shoemaker; and his four single daughters, all in their thirties. What could possibly go wrong? OK, I am already getting off track. This is supposed to be an article about Ethiopia’s boom and the inflation that has come in its wake. I call the daughters “my gals” when I talk about them with friends, and we keep in touch almost daily via e-mail.  One is a student, and the other three work: as a translator, a seamstress and a secretary. They all have good educations, speak English and are in every way typical of women you might meet anywhere in the world: the same hopes and dreams, the same troubles with men and the same daily worries about meeting the bills, making ends meet and trying to save.

Well almost the same. You see, these women earn a grand total of 2900 Ethiopian birr in monthly income between them. That’s roughly $175 dollars for six people to share — a fairly typical income in Ethiopia.  However, I never thought of the family as poor during the time I knew them. They own a home, are well educated, eat well, and the girls were always “dressed to kill,” so on the surface it all looked pretty normal to me. Expenses are regional and relative, and so daily costs there are generally incredibly low. But come on! A buck a day per person is just not enough money! Nevertheless.

 16.5% Devaluation Overnight

So the cost of living is low. At least it was. Until the Central Bank, in a surprise announcement last month, devalued the currency by 16.5% in a single day, making it the fourth devaluation in less than two years.  Monetary policy was being used as a means for the country to retain a competitive export advantage, and to manage its currency’s float against the U.S. dollar. A falling dollar in effect precipitated the action by the Ethiopian Central Bank. So, this was no stealth devaluation — it was all in-your-face.

Compounding worries for my girls is the recent commodity boom and an attendant, sharp price increase in cotton, coffee, cocoa, wheat, canola, and of course cooking fuel (kerosene). The problem they are facing is that commodities, while locally sourced, are not locally priced, as they are subject to global competition and speculative forces. Prices are set in the futures markets. So despite being an agricultural country and net food exporter, Ethiopia and its people face the same market dynamics and price hikes that we are about to experience in the West. (This story is indirectly about us, as you will see). And because Ethiopia is primarily an agricultural exporter, the new prices hit the streets almost as fast as they changed on the boards in New York and London. It is no joke that Ethiopians are now unable to afford buying some of the produce of their own country. Following this last price spike, coffee is almost out of the question.

 Coffee a Luxury

Since the summer, the cost of a kilo of coffee has climbed from about$ 2.20 U.S. to more than $4 –a price spike of almost 100%.  Buying coffee on a daily budget of a dollar is not just prohibitive, it is a sacrifice and a luxury. This irony is not lost on the people living right in the midst of the country where coffee was originally discovered, and where it is still a primary exports.

The gals have been pretty worried lately. They are stoic, though, and rarely complain, even though the price of flour is also up over 70%, cooking oil by 50%, and onions (of all things) by an incredible 250%. And you thought we had inflation worries in the U.S.! Ethiopia’s Central Statistical Agency (CSA), meanwhile, reports for 2010 that tobacco has risen 34%, clothing 25% and rent, fuel and power have collectively risen by over 16%. Yikes! All of this is an outgrowth of a shifting, global  investment dynamic that has made paper investments risky; where bonds pay nothing; and where holding cash is a surefire way to go broke over the long run. There has been a shift, particularly amongst hedge funds, from certain equities and debt instruments and into hard assets, gold and resources.

Exacerbating this trend is the widespread belief that quantitative easing is leading to dollar devaluation.  This makes resource investments very appealing as a long-term hedge against inflation. Stimulus leakage itself, as well as the outcomes of investment changes that flow from quantitative easing, are now driving the African growth story even as they exert tremendous inflationary pressures. These are the sources behind some of the stresses the people there are now facing.

 Inflation’s Hardships

An unfortunate outcome of the new dynamic is big price increases that negatively impact not only Ethiopians, but people who live in the poorest countries in the world. Keep in mind that in many countries across Africa and parts of Asia, food and transportation are the largest components of household budgets. Double-digit inflation therefore inflicts hardship in a way that very few North Americans can fully comprehend.  Today, Ethiopia is one of the largest coffee exporters in the world, and not so surprisingly, government revenues have surged on the back of commodity price increases and export growth. Increased incomes from both private and corporate sources including the VAT tax have reportedly shot up a staggering 150% in just the last three months, and the government is on track to fully exceed its wildest estimates.

To look at it one way, the price increases for food are coming out of the pockets of the average person on the street and then miraculously reappearing on government ledgers. While it is not quite simple, the differences between export revenues and increased consumption costs could hardly balance equitably. But this is not a bad-news story, and while Ethiopians are paying the price at the till, the country is experiencing powerful growth on the other. Why?  Because the country possesses abundant natural resources. Ethiopia is a veritable cornucopia, and China (amongst others) wants in on the action. So they have shown up with what the country badly needs: hard cash, engineering expertise and generous assistance with infrastructure improvements. They even send in their own people and equipment to get the jobs done. No hurry of course. Pay the bill later.

 A Happy Surprise

The happy surprise is that the commodities boom is beneficial to Ethiopia in many ways. The country’s natural resources are only now being explored, even as known quantities of gold, potash and natural gas are being exploited beneficially. Diamond exploration is under way in Welega Province by an Australia miner, Nyota (ASX:NYO). From what I know, they are almost certain to find some there. As a result, employment numbers are up across the country and there has been a significant infusion of foreign investment over the last few years. Capital is flowing from India, Malaysia, Singapore, China, Australia and many other sources. Not so surprisingly, there has also been inflation to match the rapid growth, and this has made life difficult for the working man or woman.

The most recent inflation data show that the annual rate is above 11% even without considering commodities. This is on top of last year’s 9%, and an astounding rate of 45% in 2008.  If you can believe this, people there hold U.S. dollars as an inflation hedge! This actually makes perfect sense, since inflation is relative.  And when both Gold and Silver lie beyond the financial means of virtually everyone, then a store of greenbacks seems as good as gold itself. Especially when the value of your own currency is shrinking by the day. According to the CIA fact-book, Ethiopian GDP growth was running at 8.7% for 2009 while industrial growth exceeded 10%, making Ethiopia the world’s fifth fastest-growing economy. Exports were worth a paltry $1.6 billion U.S. versus $7 billion in imports. Obviously, there is much progress needing to be  made. However, as U.S. contributions to programs and aid have added to remittances from the Ethiopian diaspora, IMF forgiveness of some indebtedness and Chinese direct investment have made up the difference, bringing the country’s budget nearly into balance.

 Chinese Investors

As noted above, the Chinese, among others, are taking a very serious interest in the region, which is enjoying a construction boom. According to The Economist, Ethiopia and Eritrea will be among the three fastest-growing economies in the world in 2011. Wow! Growth there is anticipated to exceed 10% annually. Surprise! And you thought it would be China, didn’t you? Nazret.com, the Ethiopian news portal, just reported Chinese investments exceeding $800 million in a wide variety of projects and activities, including cement factories that are creating thousands of new jobs. This might sound like chump change, but it is in fact very significant relative to Ethiopian export incomes.

Imagine for a moment that a single country invested in the U.S. a sum equal to half of America’s exports trade, and you can see what is happening to Ethiopia. In the background, up to 16 new universities are being constructed or are near completion, courtesy of the German government and related agencies. According to Wiki, nearly half of Ethiopia’s population is below the age of 14, and 60% of it is below 30. Quite a contrast to the burgeoning retiree population of Western nations. Furthermore, health initiatives from a multitude of sources including the U.S. Government, the Gates Foundation, Canadian International Development Agency (CIDA) and a host of others are making the country stronger and healthier than ever. At 2%, AIDS rates are among the lowest in Africa and dropping due to education and health initiatives. Relatively low wages have also enticed some of Asia’s overheated economies into outsourcing to Ethiopia. This might seem surprising, since many people think of Asia itself as one monstrous factory. Rarely do we consider that production costs, particularly in China, have spiked due to the ongoing real estate bubble, and that the Chinese themselves are eager to hold down production costs by outsourcing. Much of Africa beyond Ethiopia has been benefiting from this development.

 A Friendly Place

As a result, Ethiopia has been ramping up its textile business at a feverish pace, and factories have been springing up across the country. The government of Meles Zenawi has openly welcomed new investments, and resource rights are being sold to interested parties as exploration for minerals ramps up. The government is stable and has been for many years, and the country is more or less at peace. It would be hard to find a friendlier, warmer place to visit.

But there is so much more to this story. China’s growing demand for construction materials has seen them investing in no fewer than three cement facilities recently to supply voracious demand in Asia’s big cities, but also to build dams in Ethiopia. Dams? Yes.  Few of you reading this will know that the Nile River’s main source of water – as much as 85% of it, according to one recent estimate —  lies in the Ethiopian highlands. This has raised concerns that Egypt may someday receive less than what it currently believes is equitable. Ethiopia is by no means the parched wasteland that many imagine it to be. To the contrary, although almost devoid of trees, much of the country is wet and green, particularly in the highlands, and this is why hydroelectric  is such an obvious solution to the country’s growing power needs.

The rains unfortunately are not always predictable, and this has been at the root of some past disasters and famines, as irrigation has not been sufficiently developed to ensure steady agricultural productivity. But growth has been phenomenal, due in large part to the needs of a burgeoning Asia.  The Chinese in particular have moved into the country in a big way and are busy building roads, dams, irrigation systems and bridges across the country. Things are changing for the better, and quickly.  Thus, in a surprise twist, what is arguably the poorest country on Earth is actually one of the world’s biggest investment and growth stories of the year. Don’t believe me? Go and see it for yourself. Ethiopian Airlines is well known as the best carrier on the continent, sporting the newest fleet of Boeing 737’s and 777-200’s, as well as one of the safest flight records anywhere.

This year alone, Ethiopian Airlines have acquired or placed on order 38 new aircraft including ten state-of-the-art 787’s. An expansion of the Bole International Airport, which is considered Africa’s primary air hub and which hosts almost four million passengers annually, is ongoing to accommodate growing air traffic and congestion. The on-board food, incidentally, is terrific.

 Capitalists Welcome

Back in Addis, meanwhile, my gals are feeling very stressed. Their wages are on the rise but are not keeping pace with the loss of buying power caused by the recent birr devaluations, nor with the fast pace of rising costs for nearly all of the things they need.  I can send cash to help out, of course (and I do), but the girls represent only one small family in a country of more than 80 million people. What about everyone else? I worry, too, for my friends over there, and I can only hope that the recent developments eventually lead to a higher standard of living, and that Ethiopia can escape the grip of poverty that has been its hallmark for most of the past century. Industrialization and resources are clearly the keys to Ethiopia’s future, the fuel behind its recent growth story. It is still early in the game for capitalists to get involved. The country is open to investment, and even a relatively small sum can yield potentially explosive results.

If that sounds like advertising, consider that fewer than 1.5 people in 100 have cell phones, according to a recent report. That is the lowest concentration in all of Africa, and among the lowest in the world. There is huge pent-up demand for technology of all kinds, a youthful population and a growing (although still tiny) middle class. Like much of Africa, Ethiopia has energy to burn and a desire to break from the bonds of the past. Demographics tell us there is tremendous potential there and a lot of future customers. Asian direct investment tells us that development is being fast-tracked. This is a country you will want to follow if you are an investor who is interested in emerging markets. And last, Ethiopians themselves are telling us they want to be an integral part of the global community. This is truly a growth story.

If you remain doubtful that Ethiopia has potential, check out this short video of a concert in Addis Ababa. It is a little rough and almost certainly made with a cell phone, but if this does not convince you the country has energy, then nothing will. Beyonce is center stage, and she kicks off a show featuring Teddy Afro, one of Ethiopia’s most famous musicians.

This five-minute clip should tell you everything I cannot say in words alone. Hopefully, it will open your eyes to one of the very biggest development stories in the world today. It is about the New Africa, the world’s last big frontier, and a Wild West of investment opportunities. The potential is tremendous.  All of those people look hungry, all right — but in a way you probably never expected. So forget the sad, sad imagery of the past. These people are hungry to join the party!

Power Engineering Names Renewable Project of the Year

By Lindsay Morris, Associate Editor, Power Engineering  

At a gala banquet at POWER-GEN International in Orlando, Fla., on December 14, Power Engineering magazine's editors recognized the 2010 Projects of the Year Award finalists and announced the winners.

 

Orlando, Florida, USA -- This year's Power Engineering Projects of the Year Award winners and honorable mentions represented facilities and/or technology that signified excellence in four categories: coal-fired, gas-fired, nuclear and renewable/sustainable.

Best Renewable/Sustainable Projects

Tekeze Hydropower Project

The Tekeze Hydropower project in Ethiopia, located on the Tekeze River, a tributary of the Nile, is the Project of the Year for renewable/sustainable projects. The $350 million project, funded by the government of Ethiopia and owned by Ethiopian Electric Power Corp., adds 40 percent more electric capacity to the country and was the largest public works project in Ethiopia’s history at the time of construction. Due to the lack of natural resources and the cost of imported fuels, power generation in Ethiopia comes primarily from hydroelectric sources.

The Tekeze Hydropower project is the tallest arch dam in Africa at 188 meters. The 300 MW facility includes a double curvature concrete arch dam, a method of design that minimizes the amount of concrete used. It created a reservoir 70 kilometers in length. An underground powerhouse containing four 75 MW Francis Turbines sits 500 meters downstream of the dam and is fed by a 75-meter-high intake structure connected by a 500-meter-long concrete-lined power tunnel. A 230 kV double-circuit transmission line 105 kilometers long was constructed through mountainous terrain to connect to the Ethiopian national grid.

The project’s beginnings date back to 1995 when the Ethiopian Ministry of Water Resources conducted a study identifying the site as one of two preferred dam sites for hydropower development. MWH joined the project in 1998 and made modifications to an existing design for the dam, powerhouse and tunnel system, resulting in cost savings.

A multi-stage impoundment approach was implemented during construction, which allowed the river diversion to be closed in May 2007, nearly two years prior to dam completion. This allowed for more than 3 billion m³ of water to be retained, advancing generation by more than one full year. The value of the water captured via early impoundment was worth approximately $40 million. In addition to power generation, the Tekeze dam enables regulation of river flow, allowing downstream communities year-round access to the water supply.

A 10-year 2000m³/sec flood on Aug. 9, 2006 was an unexpected test for the dam. The dam proved its ability as a gravity structure and no damage was incurred to any of the permanent structures.

Local community infrastructure was improved as a result of the project, including construction of more than 40 kilometers of roads and installation of the first communications links from the area to the outside world. Also as a result of the project, education was improved in the area as the wife of the MWH chief design engineer spearheaded efforts to build a new school near the village of Seboko. The school was financed by contributions from engineers, contractors and staff working on the project, local residents and a supportive local government.

On-the-job training was also provided to locally-hired employees. Ethiopian Electric Power Corp. implemented programs to provide education and training to local workers. Programs included education to combat AIDS, malaria and other safety, health and welfare issues affecting the local community.

Honorable Mentions

Canoe Creek Hydroelectric Project

Canoe Creek Hydro is a 5.5 MW run-of-river hydroelectric facility on Vancouver Island that provides power to a remote community on the island and helping the island become less reliant on mainland power. The facility is owned and operated by the Tla-o-qui-aht First Nation and located in the heart of the Nation’s Tribal Parkland. The Barkley Project Group Ltd., along with Amnis Engineering and Hazelwood Construction One, worked with Vitaulic, a manufacturer of mechanical pipe joining solutions, to develop Canoe Creek. Construction started in May 2009 and ended in May 2010. The plant went into service in June.

Canoe Creek Hydro operates by diverting stream flow into a penstock at a high elevation – up to 84 percent grade – intake. This made construction a challenge, as did the facility’s location in the Pacific Rim Rainforest, where annual precipitation is amongst the heaviest in the world, particularly in the winter months when construction took place.

Constructing the 4-km-long penstock line in these conditions using welding techniques would have proven difficult. Instead of using mechanical welding on the penstock, the companies used mechanical couplings. In the field, the couplings proved advantageous in many ways. For example, couplings could be installed in any weather condition with no special requirements. Couplings also reduced the amount of excavation, bell holing and dewatering that would be common with welding.

Couplings also improved site safety. As the pipe was already on site, Hazelwood grooved and re-coated the pipe prior to sending it up the single-lane logging road for assembly. In addition, the replacement of welding with mechanical joints allowed for a reduction in the number of laborers required on the job site. Canoe Creek also employed local laborers.

Environmental benefits were also gained by replacing welded joints with mechanical joints. Welding one kilometer of straight-run 36-inch pipe produces about 40,338 kg of CO₂ emissions using a diesel-powered machine and 9,463 kg of CO₂ emissions using an electric-powered machine. Grooving and coupling that same run of pipe produces 62 kg of CO₂ emissions. The use of couplings also reduced the amount of x-raying required on site, reducing radiation emission. PM, CO₂ and radiation were reduced, as well as electrical energy use.

Biogas facility owned by PurposeEnergy, Inc.

This biogas facility project at the Magic Hat Brewery in South Burlington, Vt. allows the owner, PurposeEnergy Inc., to use organic waste streams and generate biogas. The biogas is then used by the brewery’s steam boilers and/or PurposeEnergy’s cogeneration plant. In mid-2008, Pizzagalli Construction Co. was selected as the design/build partner for this $3.4 million project at New England’s largest craft brewery. This brewery waste recovery system was developed by CEO and founder of Purpose Energy, Eric Fitch.

Underground process piping, stone aggregate piling for the digester, structural excavation and backfill and all of the concrete work began in December 2009. A 1,600 square foot mechanical building was built and a digester tank was installed. The piping process was completed by May 2010 and the facility began operations in June 2010.

PurposeEnergy’s Biphase Orbicular Biodigester was designed for brewery by-products and enables the conversion of high solids content brewery waste into carbon neutral, renewable biogas. This system is also designed to utilize the waste heat from the generator’s exhaust, coolant and engine oil to heat the digester and preheat the water used in the brewing process.

The PurposeEnergy project has brought many benefits to the facility and environment. By diverting the waste stream created during the brewing process, the brewery’s operating costs have been reduced as Magic Hat Brewery no longer needs to pay for waste treatment surcharges, thereby reducing traffic, noise and air pollution that would result from the transportation of the waste. In addition, the use of this technology creates a clean, carbon neutral energy source that decreases the effects of greenhouse gases on the environment.