Ethiopia has one of the most ambitious energy expansion programmes but to achieve these goals, policies must be aimed at localizing the development and manufacturing of energy technologies. However, the country is dependent on importing solar and wind energy technologies. The aim of this paper is therefore to explore the challenges of locally developing and manufacturing solar and wind energy technologies, the necessary assets and policy instruments that can facilitate localization of energy technologies. This was achieved through survey questionnaire and interview from different stakeholders. The results show that the region has very limited capability of developing and manufacturing of solar and wind energy technologies because of lack of investment capital, under developed solar and wind supply chain, lack of skilled workforce and others. To overcome these challenges, financial incentives for research and development, solar and wind based power generation, manufacturing are considered as the top policy instruments with other policies included in this paper. Therefore, a proper implementation of the internationally proven policy instruments recommended in this paper are urgently needed in the region in order to achieve one of the sustainable development goals that stipulate facilitation of the implementation of modern, affordable and sustainable energy to the society. (c) 2020 Elsevier Ltd. All rights reserved.