The Horn of Africa nation of Ethiopia has signed a $4 billion agreement for the development of a 1000-megawatt geothermal farm.
Ethiopian officials signed the deal with American-Icelandic company Reykjavik Geothermal for the development of the geothermal farm, which will supply energy for both local consumption and export.
The farm will be situated 200 kilometres south of the Ethiopian capital of Addis Ababa in the Corbetti Caldera region, and will be built in two phases. The first phase will see the construction of 500 megawatts in installed capacity by 2018, while the second phase is slated for completion in 2021.
The project is currently the largest source of foreign direct investment for Ethiopia, and with a total capacity of 1000 megawatts, it will be one of the largest geothermal facilities on the planet upon completion.
Three quarters of funding for the project comes from Reykjavik Geothermal, while the remaining 25 per cent will be borrowed.
Reykjavik Geothermal CEO Gudmundur Thoroddsson observed that in places where it's available, geothermal is a highly advantageous form of renewable energy, as unlike solar or wind power it is not reliant upon prevailing climate conditions, which can be fickle or wanting in some regions.
"It's an energy source that is very reliable, always there, and is not dependent on weather so it fits very well into the mix," Thoroddsson said.
Miret Debebe, head of the Ethiopian Electric Power Corporation, said Ethiopia is an ideal location for the development of geothermal energy, given the country's abundance of geological resources.
"Geothermal (is) one of the most attractive renewable energy resources," he said.
The Great Rift Valley in East Africa, which spans eight countries including Ethiopia, could be host to as much as 20 gigawatts of potential geothermal energy.
According to Bloomberg New Energy finance analyst Mark Taylor, the agreement could herald the beginning of the development of this wealth of natural resources.
"This could be the thing that cracks open the market - for this company and for others to develop more projects there," said Taylor. "It could widen the base for geothermal development in the region."
Ethiopia serves as a prime example of how even developing economies can implement ambitious plans for the development of clean, renewable energy.
The country has already invested in the construction of a series of hydropower dams, including the 6,000-megawatt Grand Renaissance Dam on the Nile, which will be Africa's largest dam following completion in 2017.
The Ethiopian government has made renewable energy an integral part of its development policy, and has the goal of transforming the country into a carbon-neutral, middle income country by 2025.