The power sector plays an important role in Ethiopia’s economy. Recent economic performance by Ethiopia has been remarkable. The performance has been favourably affected by an improved policy environment. Ethiopia has one of the lowest levels of energy consumption per capita in the world, which is 28 kWh. Only 13% of the population has access to electricity. Electric supply is under the Ethiopian Electric Power Corporation (EEPCo) with the supply divided into two major systems, namely, the Interconnected System (ICS) possesses 400 MW installed capacity, of which 372 MW is hydroelectric and 28 MW thermal facilities supplying the main supply grid, and the Self Contained System (SCS), secondary network, comprises thirty five diesel plants and three small hydro units. Its total capacity is 25 MW of which 19 MW is diesel and 6 MW hydro. Altogether the installed capacity of the hydro and thermal schemes is about 425 MW of which roughly 80 per cent represents the dependable capacity. The dependable capacity is lower than the installed capacity mainly due to ageing of the generating units. The ICS accounted for 1,306 GWh in the fiscal year ending July 1999, or 98% of total EEPCo electric sales. The self Contained System (SCS) accounts for the remaining 2% of electric sales. EEPCo currently provides electricity to over 574,406 customers in approximately 458 towns and communities in Ethiopia which is only a small proportion of the country's 60 million inhabitants.

Continuity and quality of electric power supply in the ICS are essential to support the country’s continued economic growth. Expansion of the SCS will address the low access rate and help support further economic activity in the rural areas.