Ethiopia has abundant, affordable clean electricity, but limited energy access and underdeveloped networks are holding back electrification across its economy, according to new global analysis.
The findings come as Ethiopia prepares to host COP32 in Addis Ababa in 2027 and as parliament approves a US$145.8 million concessional loan from the International Development Association to modernise electricity infrastructure and expand access to reliable power.
The analysis finds that Ethiopia generates almost all its electricity from clean sources, primarily hydropower, and has achieved rapid electric vehicle adoption. Electric cars accounted for 60 per cent of new passenger car purchases in 2024.
However, around 40 per cent of the population still lacks electricity access, while inadequate grid infrastructure, limited industrial electrification and low household electricity use are constraining wider progress.
The Electrification Competitiveness Index assesses how far electrification has progressed in different countries, examining both developments on the ground and the conditions needed for further progress.
Ethiopia scores 45 per cent for deployment and 38 per cent for enabling conditions, making it the only country in the Index where progress on the ground outpaces the policies and other conditions supporting further growth.
It falls within the Index’s “risk of stalling” group, alongside Australia, Brazil, South Korea and the United States.
The Index says Ethiopia’s abundant clean electricity and progress in electric transport provide a foundation for growth. However, extending electricity access and improving infrastructure will be essential to unlocking wider economic benefits.
Electrification combined with clean power can reduce reliance on fossil fuels, strengthen energy security, reduce exposure to volatile fuel prices, support growth and productivity, cut emissions and improve health through cleaner air.
Ethiopia scores 19 out of 30 for deployment in grids and power markets, but 12 out of 30 for enabling conditions.
The country generates almost all its electricity from clean sources, mainly hydropower, providing relatively affordable power. Yet only 55 per cent of the population had electricity access in 2023.
The Index says electricity network development remains limited despite major expansion in generation capacity. It identifies faster delivery of the National Electrification Programme and greater investment in grid and off-grid electricity systems as priorities.
Ethiopia scores 8 out of 20 for both deployment and enabling conditions in industry.
Abundant low-cost electricity offers opportunities to reduce reliance on imported fossil fuels, but industrial electrification remains limited and much of the sector continues to use oil and coal.
The Index identifies grid reliability, greater investment and stronger equipment-efficiency standards as priorities.
In buildings, Ethiopia scores 7 out of 20 for deployment and 5 out of 20 for enabling conditions.
Electricity accounts for only 2 per cent of residential energy consumption, with biomass remaining the main fuel for cooking. Limited electricity access and insufficient appliance standards are restricting progress, despite the potential for affordable clean electricity to support a shift to electric cooking and other technologies.
Road transport is Ethiopia’s strongest area in the Index, scoring 9 out of 20 for deployment and 11 out of 20 for enabling conditions.
Electric vehicles accounted for 60 per cent of new passenger car purchases in 2024, following a ban on imports of combustion-engine vehicles alongside tax and tariff incentives.
The country is also expanding charging infrastructure, although nationwide coverage remains at an early stage.
The Index identifies several priorities for Ethiopia, including accelerating the National Electrification Programme, expanding grid connections and off-grid electricity access, and attracting investment through electricity market reforms.
It also recommends strengthening industrial and appliance efficiency standards, increasing training for electrical workers, extending transport electrification success to industry and buildings, and continuing reform of fossil fuel subsidies.
Molly Walton, Director of Energy at We Mean Business Coalition, said Ethiopia has a major advantage in its abundant, affordable clean electricity.
“Ethiopia has a major advantage in its abundant, affordable clean electricity, providing an opportunity to strengthen industry, reduce dependence on imported fuels and support economic growth,” she said.
“But much of that potential remains untapped because electricity networks are not reaching enough businesses and households.”
She said the priority now is expanding access to reliable electricity and building the infrastructure needed to support wider electrification.
“Accelerating grid development, investing in rural electricity access and attracting more private investment would help Ethiopia make greater use of its clean power resources,” Walton said.
“Stronger industrial policies, efficiency standards and workforce development would also help extend the benefits of electrification beyond transport into businesses and homes.”
The Index was developed by We Mean Business Coalition with support from RMI. It assesses 16 countries: Australia, Brazil, China, Ethiopia, France, Germany, India, Indonesia, Italy, the Philippines, Poland, South Africa, South Korea, Spain, the United Kingdom and the United States.
China leads the Index on electrification deployment, while the United States risks losing momentum amid federal policy reversals and grid bottlenecks.
France and Spain combine strong policies with progress on the ground, while other major European economies, including the UK, Germany, Italy and Poland, have yet to translate their policy frameworks into comparable results.
The research finds a sizeable global implementation gap. The median Enablers score across the 16 countries is 67 per cent, compared with 45 per cent for Deployment. Fourteen of the 16 countries score higher on Enablers than Deployment.
The gap reflects different challenges across countries, including the recent introduction of some policies, policy uncertainty, grid-connection delays and incentives that remain misaligned between fossil fuels and clean electricity.
María Mendiluce, Chief Executive Officer of We Mean Business Coalition, said electrification is becoming a test of economic competitiveness and energy security.
“Those countries like China, France and Spain with strong deployment and enablers show what can happen when investment, infrastructure, industrial strategy and demand move together,” she said.
“Elsewhere, governments have put many of the right policies in place, but businesses still need affordable clean electricity, grid connections and the confidence to invest. The competitive advantage now comes from turning policy into delivery.”
The findings are released after the COP31 Presidency’s call for electricity to supply 35 per cent of global final energy demand by 2035, up from just over 20 per cent today.
They also follow the first six months of the Hormuz crisis, during which fossil-fuel importing countries paid an additional US$330 billion for seaborne oil and LNG.
According to the International Energy Agency, faster electrification could cut fossil import costs by around US$400 billion a year by 2035.
The Index assesses 52 indicators covering grids and power markets, road transport, industry, buildings and cross-cutting readiness. It measures Deployment and Enablers separately to show not only how electrified countries are today, but whether they are creating the conditions for further investment.
