The low level of access, rising fuel costs, and increasing effects of climate change are reinvigorating the policy-makers’ interest in Africa in renewable energy sources such as hydropower. Ethiopia is among countries which have very low modern energy sources, but possesses one of the highest hydropower potential, next to Congo. The topographic feature and the availability of water in Ethiopia permit a large hydropower potential. However, as the available runoff in rivers has very high hydrological variability, tapping into this potential requires investment on storage to smooth out the temporal hydrological variability. In this chapter, first the behavior of this hydrological variability and implication of water resources development are discussed. Second, various documents and reports providing varying values of hydropower potential of Ethiopia and Abbay are summarized. To improve the existing understanding of sites, topographical and hydrological evaluation of 129 hydropower potential sites has been carried out. These sites were identified in previous studies having a total capacity of 13,845 MW. After evaluations, 91 possible sites with total potential of 12,148 MW from various tributary rivers were identified and mapped. Dabus sub-basin stands first among the 16 sub-basins with 13 hydropower potential sites and a total capacity of 3,524 MW, and similarly the other sub-basins are also ranked. The ranking of these sites has been carried out based on cost per kilowatt hour of the hydropower potential (HP) sites. Furthermore, the chapter discusses the benefits and trade-offs for four priority developments identified as Eastern Nile regional fast-track projects.