The AfDB has awarded China Energy Engineering Group a contract to build a 30 MW solar PV plant near Dekemhare, Eritrea, a project that also includes battery storage and new transmission infrastructure.
Project Funding and Scope
In a major step toward boosting renewable energy capacity in Eritrea, the African Development Bank (AfDB) has awarded the contract for the Dekemhare 30 MW Solar PV Plant to China Energy Engineering Group Shanxi Electric Power Construction Co. Ltd. Selected from a field of 11 companies, the plant will be located near Dekemhare, a town about 40 km southeast of the capital, Asmara.
The AfDB approved financing for the project in March 2023, with an estimated total cost of $59.21 million. The bank will provide the majority of the funding—91%—through its African Development Fund (ADF-15) and Transition Support Facility grants, while the Eritrean government will contribute the remaining 9%.
The project has two main components. The first covers power generation, including 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 to connect with the existing infrastructure between East Asmara and Dekemhare.
The second component focuses on technical assistance and capacity-building support. This will enhance the skills of Eritrea’s energy experts, helping them assess the feasibility of large-scale clean energy projects for the Eritrea Electricity Corporation’s (EEC) network. It will also build expertise in network planning, design, performance improvement, and various financial, legal, operational, and environmental matters.
Contractor Responsibilities and Construction Timeline
China Energy Engineering Group Shanxi Electric Power Construction Co. Ltd. will handle the design, supply, and installation of the solar PV plant, battery energy storage system, and associated facilities. The construction phase is expected to last approximately 24 months.
Once complete, the Dekemhare solar PV plant will significantly boost Eritrea’s grid generation capacity to 185 MW, raising the share of renewable energy in the grid’s mix from 3% to 23%.
This transition is expected to reduce annual greenhouse gas emissions by 42,910 tCO2-eq. The cost of power generation is also projected to fall from 20 US cents per kilowatt-hour (kWh) with diesel to 18.5 US cents per kWh with solar power.
Addressing Eritrea’s Energy Challenges
Eritrea has long struggled with an inadequate, unreliable, and expensive electricity supply. Its current available capacity of 35 MW falls short of the peak demand of about 70 MW, a deficit that has led to frequent load-shedding and adversely affected businesses and the general population.
The Dekemhare project aligns with Eritrea’s 2018 National Energy Policy, a key part of its broader Vision 2030. This policy aims to increase the national electrification rate and ensure renewables meet 20% of electric power demand by 2030.
It also seeks to reduce the nation’s reliance on fossil fuels by promoting sources like solar, wind, and geothermal. Developing this energy infrastructure is in turn expected to support agricultural production, food security, and value chain development.
Economic and Environmental Benefits
The Dekemhare solar PV plant is set to deliver several key economic and environmental benefits to Eritrea. By expanding the share of renewable energy, the project will help bridge the electricity generation gap, lower power costs, and increase grid connection rates. This shift to cleaner energy will also reduce greenhouse gas emissions and contribute to global climate change efforts.
The project is also expected to create employment during its construction and operational phases and stimulate local business activity. This development is crucial for Eritrea, which has been facing economic challenges and high unemployment.
Awarding this contract marks a significant milestone in Eritrea’s journey toward sustainable energy development. With support from the African Development Bank and the expertise of China Energy Engineering Group, the nation can now enhance its renewable energy capacity, reduce its reliance on fossil fuels, and move closer to its national energy goals.
