The Clean Technology Fund (CTF) has agreed to provide a $10m loan for the development of a 50MW geothermal power plant in Ethiopia.

CTF is one of the two funds within the Climate Investment Funds (CIF).

The investment enables CTF to become the first geothermal independent power producer (IPP) in the country.

The geothermal project is said to be a key part of Ethiopia’s efforts to harness sustainable energy resources to support the economy and livelihood.

African Development Bank (AfDB) has welcomed the move from CTF.

African Development Bank Principal Climate Finance Officer and CIF coordinator Leandro Azevedo stated: “CTF will catalyze the deployment of renewable energy technologies in Ethiopia and will underpin future investments into the sector as first-mover risks are reduced and compliance requirements are better understood to all market participants.”

The plant is the first phase of government’s plan to build 150MW by 2024

The geothermal power plant will be designed, constructed, commissioned and operated under a build, own, operate and transfer (BOOT) scheme.

It marks the first phase of Ethiopian government’s plan to build a generation capacity of 150MW by 2024.

The project also includes a sub-station and an 11km transmission line.

When completed, the geothermal power plant is expected to curb over 10 million tonnes of CO2 emissions during its lifetime, while creating nearly 600 jobs.

African Development Bank climate change and green growth director Anthony Nyong said: “We welcome the participation of CTF in this project.

“These concessional resources will be instrumental in helping the country to diversify its energy mix by facilitating the deployment of renewable energy technologies while supporting Ethiopia in meeting the targets under its National Electrification Plan 2.0.”

In March, CTF had approved a loan of $28m to support clean energy development in Zanzibar, Tanzania.

The financial assistance will be used for the development of a privately financed grid-scale solar power plant.