In ghana’s clean energy transition, ambition meets caution clean energy finance forum gas city indiana zip code

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Interest in Ghana’s solar market is booming. However, the nation has a long way to go to reach its goals. As of March 2017, the Ghanaian Energy Commission had issued provisional licenses for developers to install roughly 3000 MW of photovoltaic capacity.

Actual growth is much slower. According to a recent article in Renewable and Sustainable Energy Reviews, construction and siting permits have been issued for just 54 percent of this capacity. And as of May 2018, only two projects totaling 22.5 MW are operational.

Some of this delay is by design. “We’ve had over 100 companies who have shown interest to develop large-scale, utility-scale solar, wind and bioenergy projects,” said Frederick Kenneth Appiah, chief program officer of renewable energy with the Energy Commission. “But of course, they have to go through a process.”

This process is part of a well-developed regulatory system supporting Ghana’s renewable energy target, which was set in 2006 and updated in 2010. Ghana has a target of 10 percent electricity production from renewable sources by 2020, according to International Renewable Energy Agency (IRENA). This is an increase from zero percent in 2006. It has just under one percent today.

Historically, Ghana’s electricity system has depended heavily on hydropower. According to the Energy Commission, around 42 percent of the country’s power capacity is provided by three large hydropower facilities. Most of the remaining power is generated in thermal power plants running on oil or natural gas.

“There is excess power due to the emergency power crisis period,” Appiah said. During this period, fuel shortages created frequent outages. “We contracted certain thermal power plants. So now we have power plants that are available, but our peak demand is low.”

With an eye toward declining electricity rates, the government has indicated that it would not sign any power purchase agreement (PPA) above $0.10 per kWh, Appiah said. The lights of Accra illuminate a hillside in the evening. (Credit: Sam Mardell) Learning from Germany

“We didn’t used to tender for solar projects. We used to come and identify a PPA. It raised the cost of electricity in the country,” Sogbadji said. “When we started our solar program, a lot of companies were coming in with very ridiculous PPAs over $0.20-0.25 per kWh.”

Electricity Company of Ghana (ECG), the larger of the two state-owned distribution utilities in Ghana, has tendered the majority of solar projects in the country. According to Appiah, “They have signed so many PPAs that they are now reviewing them to make sure they get a competitive price.”

GIZ and African Development Bank helped provide support for the government as it engaged in initial bidding for solar projects. “When we went for bidding, the first time we went as low as $0.11 cents. Next, we went to around $0.09. Next, we are looking to go below $0.08 cents per kWh.”

For Ghana, being a smart customer means taking a cautious approach. The Energy Commission’s licensing process is a good example. Appiah said there are three stages to this process. First, a developer is approved for its intention to develop a certain capacity. Next, the site is approved by a technical committee. Following construction, the Energy Commission issues a final license allowing the project to operate.

GIZ has helped with technical feasibility studies to assess how much solar can be injected to the grid. And the grid is improving. Substations are being constructed, Appiah said, and connections with neighboring countries allow power exports. These are important steps required for large-scale renewable energy integration. Meeting Energy Targets

In 2016, Ghana established an incentive program for residential solar, which covered 20 percent of the installation cost for homeowners. “Raising the 80 percent is challenging to some people,” Appiah said. With the power crisis over, households see little reason to go solar.

Many of these communities are located on remote and difficult-to-reach islands. Hydro-solar microgrids are a potential solution to electrify these communities. This model has many benefits, according to Sogbadji. Hydropower depletes water that could be used for other uses. When paired with solar, the hydropower can be turned off during the day and then turned on at night.

Creating renewable energy markets is urgent from a climate perspective, but Appiah said he has confidence that the country has taken the correct approach in steadily creating a policy and regulatory framework that can handle a rapid increase in renewable energy. “We are developing renewable energy bit by bit. It may be slow, but we are sure of what we are doing.”