An estimated 13% of Ethiopia’s population has access to electricity. Almost all electrified centres are urban, with rural areas as well as most small rural towns largely un-electrified. Rural Electrification (RE) thus remains a major challenge to the power sector of Ethiopia. The national power utility (EEPCO) has traditionally been assigned the task of electrifying rural demand centres. EEPCO has, however, concentrated on the more developed and profitable urban areas. The objective of this article is to present the findings of a study that examined whether the on-going power sector reforms in Ethiopia can attract private investment in Rural Electrification (RE) as an alternative to the sole reliance on EEPCO. Initial findings of the study indicate that private investment in RE can be enhanced with some improvement in the legal and regulatory provisions, along with extension of technical assistance from EEPCO to private investors.