February, 2026
Ethiopia has been identified as one of Africa’s most promising solar power growth markets, with a new industry report pointing to surging electricity demand, large access gaps and policy shifts that are pushing the country onto investors’ radar despite persistent financing and regulatory constraints.
The Global Solar Council’s Africa Market Outlook for Solar PV: 2026–2029 lists Ethiopia among eight “Markets to Watch”, placing it alongside established solar leaders Egypt, South Africa and Nigeria, as well as emerging markets including Rwanda, Tanzania, Somalia and Zimbabwe. The designation reflects projected growth momentum rather than current installed capacity.
The report says Ethiopia’s appeal lies in the scale of its unmet demand. About 56 percent of the population remains without electricity, even as power consumption is expanding by roughly 12 percent annually, driven by rapid urbanisation, industrial parks and rising commercial activity. This imbalance is creating one of Africa’s largest addressable markets for off-grid, mini-grid and commercial solar systems.
Government policy is also playing a role. Ethiopia’s National Electrification Program 2.0 targets 75 percent electricity access by 2030 through a mix of grid extension and off-grid technologies, aiming to deliver more than 9.23 million new household connections. Solar photovoltaic systems and battery storage are prioritised for rural services, health facilities, water utilities, telecom infrastructure and productive uses such as irrigation and agro-processing.
At the same time, the report highlights rapid growth in commercial and industrial solar, as businesses seek solar-plus-storage solutions to manage reliability challenges and rising energy needs. Innovative financing models, including pay-as-you-go, leasing and energy-as-a-service structures, are gradually expanding access and attracting private capital into distributed segments.
However, the council warns that structural barriers continue to slow deployment. Foreign-exchange shortages, currency convertibility constraints and limited long-term local-currency financing weigh heavily on project economics. Regulatory frameworks for distributed generation and battery storage remain incomplete, while multi-agency permitting, land access and grid-connection processes raise costs and extend project timelines. As a result, donor-backed finance from development institutions still dominates mini-grid and access projects, with commercial lenders largely concentrated in higher-margin urban and industrial installations.
Ethiopia’s inclusion comes as Africa’s solar market accelerates more broadly. The report finds the continent installed about 4.5 gigawatts of new solar capacity in 2025, a 54 percent year-on-year increase, marking its fastest annual growth on record. Distributed systems accounted for an estimated 44 percent of installations, though the report says this figure is likely understated due to limited data on residential and commercial deployments.
Under a medium-growth scenario, Africa could add more than 31 gigawatts of solar capacity between 2026 and 2029, with distributed and utility-scale projects expanding in parallel across a widening group of countries. “Solar plus storage is the technology that can deliver energy access, resilience and economic growth across Africa,” said Sonia Dunlop, chief executive of the Global Solar Council.
With Ethiopia set to host COP32 later this year, the report says the country has an opportunity to convert rising attention into concrete investment by easing foreign-exchange access for clean-energy imports, clarifying regulations and accelerating project pipelines. If those steps materialise, Ethiopia could emerge as one of Africa’s fastest-growing solar markets, gradually diversifying a power system long dominated by hydropower.
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