Auction-based renewable electricity procurement has the potential to attract private investment and lower prices, but its design and implementation can be challenging. Since 2018, Ethiopia has organised auctions to procure new capacity from independent power producers (IPPs).

Based on an in-depth study of the political economy, this policy briefing explores factors impeding the design and implementation of IPPs’ projects, including the shortage of foreign currency and convertibility of the Ethiopian birr to repatriate profits. It proposes measures to overcome these obstacles and mitigate risks, to put Ethiopia on course to achieve universal access to electricity by 2030.