The implementation of the planned interconnection between the Ethiopia and Kenya will enable these two countries to benefit from the respective advantages of their own power systems, which have strong complementarities: the bulk of Kenya's generation is expected to come from geothermal and fuel fired thermal plants, while Ethiopia possesses a large potential of hydro power. Despite the availability of enormous energy resources, the two countries currently have overall electrification rates less than 20%. This low level of access to electricity is a major barrier to social and economic development, especially in agriculture and industry. The construction of an interconnecting power line between the two countries will increase reliability of supply. They would also be able to trade not only energy, but also reserve capacity that would provide an incentive to coordinate outages so that the total reserve margin on the interconnected system could be reduced, resulting in savings in capital and operating cost. In the short-term, the line will also enable Kenya to cover its power needs by importing cost-effective power from Ethiopia instead of relying on expensive and polluting thermal power stations in Kenya. The amount estimated to finance the entire project is about 660 million Euros for Phase I (200 MW) and 400 million Euros for Phase II (600 MW).
As a priority for the future project preparation, financial close needs to be reached on the hydropower plant Gilgel Gibe III which will feed the interconnector with the necessary power. Investigations related to possible adverse environmental and social impacts of Gilgel Gibe III must still be undertaken and necessary steps to mitigate any adverse environmental or social impacts analysed. A further ITF Grant will be used for the financing of a comprehensive Environmental and Social Impact Assessment study for Lake Turkana and a Cumulative Impact Assessment.
The ITF Grant supporting the project preparation of the construction of the Interconnector was used for the co-financing of a feasibility study. A full-fledged technical and financial feasibility study, as well as a detailed Environmental and Social Impact Assessment, a Resettlement Action Plan, and the choice of the proper organizational and institutional frameworks for the construction, ownership and operation of the Interconnector have been completed in June 2009.