Under first phase, a 500MW plant will be built inside the region of Corbetti Caldera, where around 10MW of power will be online in 2015 with full capacity to be operational by 2018.
The second plant is likely to include an around 500MW of capacity.
Ethiopian prime minister Hailemariam Desalegn said over the next 30 years Ethiopia will need to harness as much as 80GW of hydro, geothermal, wind and solar power, not just for itself, but for its neighboring countries as well.
"This cannot be done by public investment alone; we will need to partner with the private sector to bring in significant private investment going forward. From that perspective, this 1GW project with Reykjavik Geothermal is not that large – but it’s a great start," Desalegn added.
Under a power purchase agreement with Reykjavik Geothermal, Ethiopian Electric Power Corporation will buy all the plants’ output.
Reykjavik Geothermal chairman Michael Philipp said the agreement for 1GW of geothermal power, an investment of $4 billion over an eight-ten year period, confirms the confidence of international investors in the growth and stability of the Ethiopian economy.
"This project is being led by US private investors and has generated significant interest from the development agencies involved with the Power Africa initiative announced by President Obama," Philipp added.
