Ethiopia has one of the highest energy deficits in the world, with 56 million people lacking any access to electricity, including 61% of the rural population. Lack of access to energy is a major constraint on Ethiopian agriculture, a sector that is both central to rural livelihoods and increasingly vulnerable to climate change impacts. Agriculture accounts for 78% of the country’s employment, 40% of GDP, and the majority of export revenues. Chronic food insecurity already affects 10% of the population, and high reliance on wheat imports from Ukraine and Russia are certain to further undermine food security and affordability at a time when inflation is already very high. Over the coming decade, climate-induced harms to agricultural productivity are expected to worsen.
The Ethiopian government is approaching these twin challenges of agricultural productivity and energy access with an integrated approach, of which the new Distributed Renewable Energy-Agriculture Modalities (DREAM) project is an example. The project aims to demonstrate the viability of distributed solar mini-grids as a solution for delivering improved irrigation services, greater agricultural productivity, expanded rural electricity access, and enhanced gender and social inclusion. As the largest mini-grid irrigation project in the world, it will be a source of valuable learning—both for Ethiopia as it aims to scale the approach across the country, as well as for other African countries facing similar challenges.
The DREAM project will begin with nine pilot projects scheduled to break ground later in 2022. To understand the likely impact of solar mini-grid-powered irrigation on farmers, the Ethiopian Agriculture Transformation Institute and Duke University developed an economic viability model that uses sitespecific data to calculate likely impacts on farmer incomes. The model accounts for average planting, cultivation, harvesting, and marketing and distribution costs, as well as irrigation costs for both dieselpowered irrigation (the current technology in use at the sites) and a new electric irrigation alternative. This brief summarizes the findings of this analysis, which include:
- Transitioning from diesel-powered irrigation systems to solar mini-grids would increase production and farmer incomes significantly across all nine of the pilot sites analysed.
- Profitability for farmers at the pilot sites increases between 23% and 237%, consistent with findings from earlier studies.1
- Mini-grid irrigation tends to deliver the greatest productivity and income gains at sites with ample water availability and horticultural crops that have high year-round water requirements— such as multiple dry season plantings of onion and tomato, or fruit trees such as banana—and where the level of current irrigation is low due to diesel-related pumping constraints.
With greater confidence in adequate water supplies for their crops, farmers will be better positioned to raise yields, produce higher-value and higher-nutrient crops, and expand production. Scaled nationally, electric irrigation could potentially unlock $1.2 billion in additional revenues for farmers by 2025.
Identifying, demonstrating, and scaling new low-carbon development strategies that bolster pillars of human and economic well-being—like food and energy systems—must be an urgent global priority. Climate investors—both public and private—have thus far found few entry points into these types of projects in low- and middle-income countries, with just 1.7% of the roughly $600 billion in annual climate finance flowing to small-scale agriculture. The success of country-driven approaches like DREAM will be determined by whether pilots deliver on their expected promise and if investment models can be sufficiently de-risked to mobilize the capital needed for scale.
Excerpt of: Improving Rural Livelihoods, Energy Access, and Resilience Where It’s Needed Most: The Case for Solar Mini-Grid Irrigation in Ethiopia (2022)