The Grand Ethiopian Renaissance Dam Is Finished. Ethiopia's Problem Now Is Getting Its Power to People and Markets

On 9 September 2025 Prime Minister Abiy Ahmed formally inaugurated the Grand Ethiopian Renaissance Dam on the Blue Nile at Guba, near the Sudanese border. The dam reached its maximum output of 5,150 MW on the day, making it Africa's largest hydroelectric plant and putting it among the 20 largest in the world, at roughly a quarter of the capacity of China's Three Gorges. The project cost about USD 5 billion, and local media reported that 91 per cent of the funding came from the state, with the rest from Ethiopians buying bonds or making donations.

The presidents of Somalia, Djibouti and Kenya attended. The diplomatic dispute will dominate headlines, as it has since construction began in 2011. Our view is that the more consequential questions for the next five years are economic. Before the GERD, Ethiopia already relied overwhelmingly on hydropower, with plants such as Gibe III on the Omo river. Adding 5,150 MW to that base gives the country, on paper, generating capacity well in excess of its current domestic demand.

The Reuters account of the inauguration noted that access in rural areas is often constrained by underdeveloped transmission networks. Ethiopian Electric Power and Ethiopian Electric Utility, the state generation and distribution companies, have historically struggled financially, with tariffs that were among the lowest in Africa. The surplus also explains why Ethiopia has attracted energy-intensive users such as bitcoin miners, which can be located near substations and buy large volumes at short notice. To make the most of this, Ethiopia needs bankable, long-term export contracts with creditworthy buyers and reliable transmission links.

Egypt depends on the Nile for about 90 per cent of its fresh water and fears that the GERD could restrict flows during droughts and encourage further upstream dams. Our view is that the dispute is now about operation rather than construction. The GERD is a remarkable national project, financed largely from domestic sources and completed despite conflict and diplomatic pressure.