A system dynamics framework to formulate energy policies for sustainable development in Ethiopia

Abstract

Since 2010, Ethiopia has aimed to enhance its energy infrastructure for economic growth, targeting lower-middle-income status by 2025. Despite vast renewable resources, limited electricity capacity poses a challenge, necessitating impactful policies for improving energy supply and sustainable development. Conventional methods struggle with the complexity of hundreds of variables and their interactions in the energy socioeconomic system. This research constructs a simulation framework employing the system dynamics approach, which is well-suited for capturing intricate feedback loops created by variables within the energy socioeconomic system. The framework is then used to evaluate alternative policies to inform decision-makers in addressing the conflict between sustainable development and the national electricity balance in Ethiopia. Scenario simulations predict significant growth in renewable energy capacity from 2025 to 2043, driven by policies promoting economic growth, energy investment, and dam construction. Energy demand, growing at 10 % annually from 2000 to 2022, is expected to reach a 19 % growth rate between 2043 and 2050. Simulation results also reveal the significant impact of industrial and service sector growth on demand, the crucial role of universal electricity access in exacerbating deficits, and the potential risks of expanding electricity exports, highlighting the need for balanced policy planning. Policymakers should reconsider the schedule design for universal electricity access and export policies, emphasizing advanced technology in consumption and efficiency for a balanced energy system. The study concludes with policy implications, limitations, challenges, and future research directions.