Construction of the interconnector is expected to start in early 2013 and be complete by 2016. The estimated US$1.2B project is to be funded by the World Bank, the French Development Agency and the African Development Bank.
The power agreement, reached in December, is part of the Kenyan government's effort to increase the country's installed electricity capacity to 3868MW by 2016, up from the current 1394MW.
The plan will address the chronic power shortages that push the country into adopting more expensive thermal power, fuelling high consumer prices.
The power purchasing agreement with Ethiopia is the second Kenya has had after a similar arrangement more than a decade ago where Kenya imported about 30MW from Uganda. But unlike Uganda, which only serves Western Kenya, the Ethiopian supply will be fed into the national grid, making it available countrywide.
Hydropower accounts for more than half of power generation in Kenya, followed by thermal and geothermal sources. Ethiopia is currently undertaking multibillion hydropower projects to generate around 8000MW of power in the next five years.
In April 2011, Ethiopia launched The Renaissance Dam project, Africa's biggest dam, over the Nile River. The dam will generate around 5250MW of power by 2015 at a cost of $5B.
Ethiopia already provides power to Djibouti and is planning to start supplying neighbouring Sudan.
Source: Ethiopian Embassy in London
