SOLAR potential EDIT 2

Investment opportunities in Solar Energy in Ghana

STANDOUT CONSULT



INVESTMENT OPPORTUNITIES IN SOLAR ENERGY IN GHANA




Ghana has since independence depended heavily on hydro power as its primary source of grid

energy. Unfortunately, the supply of energy by hydro in the country is no more sustainable.


Energy is a major requirement for economic growth and development. Over the years, a number

of thermal plants have been installed to append the supply from the hydro plants. There is a

direct link between energy use, economic growth and standard of living. At the same time energy

supply has serious financial and environmental implications to such an extent that uncontrolled

energy consumption will have adverse consequences on the economy and the environment.

At a time when the Ghanaian economy is achieving sustained growth in excess of 6 per cent

annually, with ambitions to raise this further, there is a risk that misguided and inappropriate


policies will lead to the power sector becoming a drag on the economy. A major, avoidable

power crisis in 2006/2007 is estimated to have cost the country nearly 1 per cent in lost growth

of gross domestic product during those years. Five years later, Ghana once again was plunged

into power shortages, which also could have been avoided if lessons from the past had been

learned and decisions taken to ensure that adequate dual-fuel generation capacity was built. The

present recent power shortages, arising from a cut-off of imported gas from Nigeria, could have

been mitigated if Ghana's own gas from the Jubilee field had been developed in a timely manner


in parallel with oil production that began in 2010(World Bank's 2013 energy sector report). In

most countries, energy sector investments are mostly carried out by governments. However, the

Ghanaian energy sector rather possesses numerous opportunities for private investments with

regard to the heavy shortfall in supply.

Ghana relies on two primary types of generation facilities: hydroelectric plants and thermal.


Presently, there are ten major generation facilities in Ghana, three hydroelectric and seven

thermal. The recently commissioned Bui Hydro plant is expected to add 400MW when fully

operational. Historically, Ghana has been largely dependent on hydroelectric power.


OVERVIEW OF GHANA’S ENERGY SITUATION

Electricity access (September 2013) 80%

Electricity installed capacity 2013 3,170mw


Electricity generation 2013 12,200gwh

Crude oil production (2013 av) 90,000b/day

Energy resources: solar energy 4.5- 6.0kwh/m2/day

Wind energy along coast 5.0m/s at 12 meters height

Hydro 3,500mw (1580 exploited)


Bui hydro power 400mw1



CURRENT ENERGY FORECAST (DEMAND AND SUPPLY)

1 Energy Commission Annual Statistics 2014



Ghana already started investing in renewable energy even if it is still in a slow process.

Aside from the Bui, Kpong and Akosombo Dams in Ghana, the first Solar Power plant was introduced at

Navrongo, in the Upper East Region of Ghana in May 2013. The Navrongo Solar Power Plant cost the

Volta River Authority an estimated 8 Million US Dollar Budget.

It is already reported that the plant is not working efficiently. Problems have occurred while

storing energy and delivering energy to the households. Another big investment planned is the


Pwalugu Multipurpose Hydropower Dam, in the Upper East region at the White River in Ghana.

The construction of this project will start in 2017 and is planned to finish in 2022.

The Pwalugu Dam is considered to function as a multipurpose dam for several purposes, such as

for generating electricity as the major function, and for flood Control. The construction and

operation of the dam will provide many job opportunities as Planned.

It will however also affect the surrounding environment with traffic noise, dust and Exhaust

emissions. Many people might feel threatened by that and have to relocate, for which the Volta


River Authority plans on consulting the public and raise awareness of the project, its benefits and

its effects.

Renewable energy is one arguable topic on whether it could succeed in Ghana or not. Many

Steps are however being taken and using renewable energy would mean the prices of electricity

And heat would decrease, since the energy comes from an infinite source. Electricity would not

only become cheaper, but also more regularly provided than at the current state. It is in fact an

expensive investment for the government and the investor companies, but with the financial


Support coming from developed countries it is not farfetched, even solar street lights are being

used in several areas in Ghana, and seen as a step forward to an eco-friendlier country.

In order to promote and invest in renewable energy resources, and support our climate, several

countries hence donate or support foreign governments in financing and training to take the

step towards an eco-friendly environment. One major investor in Ghana is Germany. In the

Previous year, Germany has boosted Ghana’s energy sector with 1.8 million Euro via the

Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) after the ratification of the


Renewable Energy Act in 2011.The German-Ghanaian bonds grow stronger through the

Frequent financial investment in biomass projects and climate change opportunities as well. It

is important to mention that financial support and investment alone cannot aid the environment

and help the Ghanaian climate if there are no awareness campaigns and projects.


.2



2 Energy Commission strategic report 2014


CURRENT ELECTRICITY CHARGES IN GHANA

Tariff category Tariff


Residential :

0 – 50 exclusive GHp/kwh

51 – 300 GHp/ kwh

301 – 600 GHp/ kwh

601+ GHp/ kwh

Service charge GHp / kwh

17.1998

34.5072

44.7836

49.7596

324.5190


Non – residential:

0 – 300 GHp/ kwh

301 – 600 GHp/ kwh

601+ GHp/ kwh

SERVICE CHARGE

49.6081

52.7884

83.2932

540.8649


SLT- LV:

Max demand

Energy change

Service charge

3028.8436

51.7067

2163.4597

SLT- MV

Max demand 2596.1516


Energy charge

Service charge

40.0240

3,028.8436

SLT-HV

Max demand

Energy charge

Service charge

2596.1516

36.7788

3,028.8436


SLT-HV MINES

Max demand

Energy

Service charge

3028.8436

58.4134

3028.84363


4



3 PURC ( public utility regulatory commission)



4 PURC ( Public Utility Regulatory Commission)




SOLAR INVESTMENT POTENTIAL

ADVANTAGES AND DISADVANTAGES IN GHANA

Advantages of solar investment

in Ghana

Disadvantages of solar

investment in Ghana High patronage of power in High capital requirement


Ghana

Climate friendly High political procedures

Profitable investment in the

rural areas

Bureaucratic procedures

Resources are infinite Inadequate experts


Public private partnership

advantage by government

High cost of maintenance

High demand for power in

Ghana

Unreliable sources of power


in Ghana


The potential drivers for electricity consumption

Under contemporary circumstances, we project that the potential drivers for

electricity consumption would be the same as in 2012 and are as follow:

Aluminum production should VALCO continue and expand operation;


Industry besides VALCO, largely mining and influenced by gold production;

Other or general Industrial share also growing;

On-going national electrification scheme;

Natural or organic economic expansion; and


Petroleum up-stream and mid-stream ac



Demand Drivers Minimum Maximum


VALCO One more Plotline Two more Potlines 600 GWh5 1,200 -1300 GWh Gold mining Surface mining Deep mining 200-232 GWh 400 -450 GWh Other Industries 320 350 National 172 GWh 375 GWh


Electrification Natural GDP

growth

National Average

2000-2012 electricity

growth

2010-2012 electricity

growth

121 GWh 978 GWh Gas processing 100 GWh 200 GWh


construction Demand-side

management

-10 -23

Total 1,503-1,535

5 Energy commission



Generation system, accounting for 1,180 MW of generation capacity or 60 per cent of the

national total.

The thermal plants, two located at Takoradi and four located in Tema, and the Mines Reserve

plant, represent the remaining 40 per cent of generation capacity. The Takoradi plants, one

simple cycle combustion turbine plant and one more efficient combined cycle plant, provide a

total maximum capacity rating of 550 MW. These plants can be operated on light crude oil


(LCO) or natural gas (NG); at present they are run mostly on LCO due to challenges vis-à-vis

natural gas availability. The remaining three plants are one LCO/NG dual-fired plant and two

diesel generators located in Tema, which together provide an additional 213 MW of capacity.

Currently power supply from Sunon Asogli Plant is not available due to lack of gas supply as a

result damage to the West Africa Gas Pipeline (WAGP).

The total electricity generated in 2012 was 12,024GWh; as against 11,200GWh in 2011. The

2012 generation comprised 8,071GWh (67.1 %) hydropower and 3,953GWh (32.9%) of thermal


power. Even though hydropower generation share decreased by about 0.4 percentage points over

2011, total energy produced increased by about 824GWh. This increase was due to significant

water inflows into the Akosombo reservoir in the year 2012. Currently, Ghana as a nation has

exhausted her major hydroelectric power.

To meet the increasing power demand and making up for the heavy shortfall, non-hydro power

options will seriously be considered by government.


Before the power sector reform, Ghana’s market was highly regulated, with generation and

transmission vertically integrated in VRA and distribution handled by ECG, a fully state owned

enterprise, and NED, a subsidiary of VRA. ECG delivered power to customers in the southern

half of the country while NED delivered power to customers in the northern half.

Like many developing nations, Ghana needed outside capital to help develop its power sector. As

part of the power sector reforms, Ghana commenced the process of unbundling generation,


transmission, and distribution functions into separate markets, with immediate competition in

generation and eventually distribution.

As a result of reform, utilities have become specialized entities focusing on one of three areas.

VRA maintained its generation assets including Akosombo, Kpong and Aboadze, and now

focuses almost exclusively on generation. ECG and NED continued to focus exclusively on

distribution. As a new public utility, GRIDCo was essentially spun out of VRA and has the sole

responsibility for operating transmission in an open and non-discriminatory manner. The PURC


and EC were purposefully formed to jointly oversee the electricity sector. The PURC sets rates

and tariffs, monitors performance, promotes fair competition, and works to balance the interests

of utility providers and consumers. The EC issues licenses and establishes performance standards

for utilities.

The new structure enables and encourages the free entry of independent power producers (IPPs)

into the generation market, creating a competitive generation market which, when combined with

open access to transmission, also facilitates a bulk power trading market. The structure also


emphasizes decentralization at the distribution level, with plans for eventually adding more

distributors, each operating in a defined geographic service area. While the reform process has

formally been completed, the power sector is still undergoing transition in terms of achieving the

designed structure. At present VRA accounts for about 85 per cent of all grid-connected

generation, with only the remaining 15 per cent of generation coming from other producers.




THE ENERGY SUPPLY ORGANOGRAM IN GHANA



POWER CONSUMPTION

Currently, Ghana’s electricity sector has a customer base of about 4 million residential and

commercial customers and 4,153 industrial customers. In 2013 these customers contributed to a

peak power demand of 1,729 MW which indicates a 4 percentage rise over the previous year.

Peak demand is the maximum amount of electricity that customers consume instantaneously.


Until 1998, the supply of electricity in Ghana was exclusively from hydroelectric sources. Since

then about 1,000 MW of thermal generation capacity has been added. Currently, the installed

nameplate generation capacity is 2,412 MW. The current dependable generation capacity of

2,125 MW in Ghana is made up of about 50 per cent hydro and 50 per cent thermal.

World Bank, 2013, Energizing Economic Growth in Ghana: Making the Power and Petroleum


Ghana, with its attractive emerging economy, is seeking for more Independent Power Producers

(IPPs) to boost up national electricity production. There is potential for electricity generation

from renewable energy sources such as solar, wind, biomass and small hydro to connect

communities that are currently off-grid. In the renewable energy bill currently before parliament,

the country aims to supply 10 per cent of its domestic demand through modern renewable

technologies by 2020.


The key challenges facing the energy sector are the following:

Rapidly growing demand for energy by all sectors due to the expanding economy and

growing population.

Risk of significant imbalance between energy production and indigenous sources of supply.

Inadequate investments to match the growing energy demand due to lack of capital.

Risk of over reliance on imports to meet local shortfalls of conventional fuels, which could

threaten the country’s supply security, making it vulnerable to external pressures.


High levels of end-use inefficiency culminating in waste of final energy forms.

Inefficient pricing of energy services resulting in poor financial positions of the energy

providers, but also high cost of tariff, which would not encourage maximum use of energy

for wealth creation and could threaten the country’s growth in prosperity and modern way of

life.

Operational inefficiencies of the utilities leading to high energy losses and consequently

increasing cost of supply and distribution.


Solar energy, which is relatively abundant, is barely exploited to supplement the commercial

energy requirements of the country.




This document presents some historical energy use patterns in Ghana and how the future energy

scenery would look like for the period 2006 – 2020. The energy projections were based on GPRS

projected economic growth rates. Possible interventions in the energy supply-demand chain, i.e.

from energy production and transportation to the demand sectors of the economy have been

discussed in the annexes to this main text.


Strategic targets and plans and recommended policies for the energy sector have been provided.

Sectoral strategic targets and plans are also available in the annexes.

The primary indigenous energy comprised 90-95 percent wood fuels (generally called biomass),

5-10 percent hydro energy and less than one percent solar energy. The hydro energy was

supplied from Akosombo and Kpong hydroelectric dams in the form of electricity. Solar energy

was used for the sun-drying of crops; mainly cocoa; cereals consisting of maize, paddy rice,


sorghum and millet; vegetables consisting of groundnuts and pepper and other exportable

commodities requiring drying. Solar energy for production of electricity was relatively

negligible; about 150 tons of oil equivalent.

Government Energy Objective Five 2015


Accelerate the development and utilization of renewable energy and energy efficiency

technologies so as to achieve 10 percent penetration of national electricity and petroleum

demand mix respectively by 2020.

Strategies

Government recognizes the advantages of indigenous and renewable energy resources to

complement the existing conventional and traditional energy mix of the country.


The nation therefore target 10 percent of renewable in the electricity supply mix in terms of

installed capacity and 10 percent of renewable in terms of petroleum fuel supplies by 2020.

The renewable energy for electricity is expected to come mainly from solar, small and medium

sized hydro plants, wind, biomass and municipal solid wastes.


Renewable energy to supplement petroleum supplies is expected to come from bio-fuels.

Government Energy Objective Six

• Enhance private sector participation in energy infrastructure development and service delivery.

Strategies

Private sector investment is a critical ingredient in the development of all aspects of the energy

sector. In this regard the Government is; Pursuing the requisite legal and regulatory reforms and

mechanisms to facilitate the participation of Independent Power Producers in electricity delivery


.Establishing ‘Access Code’ that will guarantee open access to electricity transmission

infrastructure. This could be done either as public-private partnership project or a wholly private

sector investment. Facilitating the expansion of electricity supply capacity in the sub-region

under the West African Power Pool (WAPP) protocol.

Ghana’s total energy supply has to grow significantly to help achieve the development agenda

goal. The challenge is how to increase the energy supply and also expand the energy

infrastructure in the country in a way that is sustainable


The Energy Resources and Vision

Ghana is well endowed with a variety of energy resources including biomass, hydrocarbons,

hydropower, solar and wind. It has the capacity to produce modern bio-fuels and is exploring

options to develop nuclear energy.

The energy sector vision is to develop an “Energy Economy” to secure a reliable supply of high

quality energy services for all sectors of the Ghanaian economy and also to become a major


export. The goals of the power sub-sector are to increase installed power generation capacity

quickly from about 2,000 MW today to 5,000 megawatts (MW) by 2015, and increase electricity

access from the current level of 66% to universal access by 2020.

The challenge is how to attract investments to build the necessary infrastructure for the

generation, transmission and distribution of electricity throughout the country. This is key to

ensuring the sustainable development of the sector.


Apart from financing, the policy focuses on institutional and human resource capacity

strengthening as well as regulatory reforms required creating a competitive electricity market.

Creating the right environment for private-public partnerships in the development of new power

plants is essential to the growth of the power sector. The biggest obstacle to achieving this is the

issue of cost-recovery, a challenge that this policy tries to directly address.

QUALIFICATION AND APPLICATION FOR LICENCE


Any investor venturing into the RE( Renewable Energy) industry must be registered under

Ghanaian law either as a limited liability company under the Companies Act, 1963 (Act 179) or

under the Incorporated Private Partnerships Act, 1962 (Act 152). In addition to the incorporation

requirement, investors must take note of the Ghana Investment Promotion Centre Act, 1994

(478) (the “GIPC Act”) and the Ghana Free Zone Act, 1995 (Act 504) (the “Free zone Act”).


The GIPC Act provides the framework under which companies having foreign participation may

register to obtain specified benefits:

Unconditional transferability through any authorized dealer bank in freely convertible currency

of:

o Dividends or net profits attributable to the investment


o Payments in respect of loan servicing where a foreign loan has been obtained

o Fees and charges in respect of any technology transfer agreement registered under

the GIPC Act

o The remittance of proceeds (net of all taxes and other obligations) in the event of

sale or liquidation of the enterprise or any interest attributable to the investment

Guarantee against expropriation. Expropriation can only be done in the public interest or

for a public purpose. The law requires that the expropriation must only be made upon the


payment of fair and adequate compensation (which is subject to judicial review as to the

adequacy of the compensation paid). The compensation must be paid without undue

delay and authorization for its repatriation in convertible currency shall be issued

Companies have the benefit of being able to have their disputes settled by International

arbitration. More importantly, where there is disagreement between the investor and the

GoG as to the method of dispute settlement to be adopted, the choice of the investor shall

prevail


The GIPC provides assistance and guidance to companies and acts as liaison between the

company and relevant GoG departments, agencies and any other public authorities

Expatriate employees engaged in a company to which the GIPC Act applies, are entitled

to utilize banking facilities through authorized dealer banks for the purpose of making

remittances abroad where the remittances do not exceed the total official wage of the

expatriate personnel


Subject to application to the GIPC, exemption of import duties, sales tax or excise duties

are available on the plant, machinery, equipment or parts thereof where the plant,

machinery, equipment or parts of the plant machinery or equipment are not zero-rated

under the Customs Harmonized Commodity and Tariff Code scheduled to the Customs,

Excise and Preventive Service Act, 1993.


Similarly, the Free Zone Act sets the legal regime for the establishment of free zones for the

promotion of economic development and related matters. To operate in a free zone or to produce

power geared towards power customers outside of Ghana the investor must register under the

Free Zone Act. In view of the mechanisms operational under the West African Power Pool

(WAPP), export of power may be a viable option for potential investors.

The Free Zone Act provides, among other things, the following benefits:


Exemption from the payment of income tax on profits for the first ten years from the date

of commencement of operations and taxable at a rate not exceeding 8% after the tenth

(10th) year

An investor may hold 100% shares in a free zone enterprise

An investor in a free zone shall be guaranteed unconditional transfer through an

authorized dealer bank in free convertible currency of

o Dividends or net profits attributable to the investment


o Payments in respect of loans servicing where a foreign loan has been obtained

o Fees and charges in respect of a technology transfer agreement

o The remittance of proceeds net of the taxes and any other obligations, in the event

of the sale or liquidation of the enterprise or an interest attributable to the

investment

Guarantee against expropriation and in the event of any such expropriation, the Act

makes provision for the payment of adequate compensation


Entities seeking to engage in any commercial activity designated under the Act require a license

from the Commission. For the purposes of the Act, commercial activity encompasses production,

transportation, storage, distribution, sale and marketing, importation, exportation and re-

exportation and installation and maintenance.


According to the Licensing Manual for Service Providers in the Renewable Energy Industry,

published in September, 2012 (the “RE Manual”) and issued by the Commission, entities that

engage in different commercial activities require different licenses for each activity.

All applications for licenses will receive notification of grant within sixty (60) days unless

refused. Refusals may only be based on grounds of inadequacy of technical data, issues of

national security, public safety, food security, health and environmental safety. The wholesale


electricity supply license is granted for twenty (20) years and licenses once acquired are only

transferable with the written approval of the Commission.

According to the Licensing Manual for Service Providers in the Renewable Energy Industry,

published in September, 2012 (the “RE Manual”) and issued by the Commission, entities that

engage in different commercial activities require different licenses for each activity.


All applications for licenses will receive notification of grant within 60 days unless refused.

Refusals may only be based on grounds of inadequacy of technical data, issues of national

security, public safety, food security, health and environmental safety. The wholesale electricity

supply license is granted for 20 years and licenses once acquired are only transferable with the

written approval of the Commission. For the purposes of acquiring the wholesale electricity

supply license, the acquisition process is divided into three broad stages. These stages illustrate

the kinds of information that will be required by the EC in order to grant approval for


progression to subsequent stages. The stages are as follows: Stage 1. Acquisition of provisional

license, Stage 2. Prior to construction, Stage 3. Acquisition of operating license.

It is important for RE developers to initiate their projects far in advance. Bureaucratic

bottlenecks may hamper attempts to sail through the entire process; it is advisable for developers

to involve the Ministry of Energy & Petroleum (MoEP) early on in the process to facilitate


meetings with the various stakeholders in the energy sector. This method has been put to

effective use in other projects in the energy sector.

Qualification for a Licence

4.1 A license may only be granted to:

(a) a citizen of Ghana; or


(b) a body corporate registered under the Companies Code, 1963 (Act 179) or under any other

law of Ghana; or

(c) a partnership registered under the Incorporated Private Partnership Act, 1962 (Act 152).

Application

4.2 An application for a license shall be made in writing addressed to the Executive Secretary of

the Energy Commission and shall be submitted together with all relevant information as

specified in the respective chapter for each license type.


4.3 An application for a license shall be made on forms approved and supplied by the

Commission. The application form can also be accessed from the Commission’s website

www.energycom.gov.gh. A sample of the form is provided as Schedule 1: “Application Form”

of the Manual.

4.4 The applicant shall complete the appropriate application form in its entirety and submit all

required attachments, affidavits, and evidence of capability specified by the form at the time an

application is filed.


4.5 An incomplete application will not be processed or may be rejected. All specified exhibits

required under Part A of the filing instructions shall be submitted together with the formal duly

signed application form for consideration for the issue of a license to undertake the prescribed

operations in the electricity supply industry in Ghana.

4.6 Separate applications are required from an applicant to engage in different market activities

that fall within different segments of the industry. The Commission will accept a single


application from an applicant in respect of multiple activities in the same segment of the

industry. While the Commission will accept applications in this form, separate licenses will be

issued for each market activity and for each facility where the activity is carried out and the

appropriate fees charged.

4.7 An application shall be deemed to have been successfully lodged only if all relevant

supporting documentation required as indicated in the respective chapter for each license type is

attached in addition to full payment of the required application fee.


4.8 The Commission shall acknowledge receipt of an application for a license within 5 working

days of submission of an application and indicate whether the applicant’s submissions fully

satisfy the requirements expected for the relevant type of license.

4.9 An applicant may be required to furnish the Commission with additional information when

necessary.

Application Fee


4.10 The applicant shall pay to the Commission an application fee prescribed under LI …..

4.11 The application fee to apply is stated in Schedule II: Schedule of Licence Fees. The

application fees as stated in the Schedule shall be valid for the period from January 1 through to

December 31 of each year.

4.12 Application fees may be revised.

4.13 Application fees are also payable for an application to transfer a license.


4.14 The stipulated application fee shall be payable in respect of each type of license sought,

regardless of whether or not applications are made separately or are aggregated into a single

application document.

4.15 A license application shall not be assessed unless the appropriate Application Fee is paid by

the applicant.


4.16 Application fee paid at the time of submitting an application shall cover all the stages in the

licensing process.

4.17 An amendment application filing fee shall be charged for a request to amend an approved

license, sitting clearance, construction work permit or authorization to operate.

4.18 The amendment application filing fee shall be determined by the Commission based on the

amount of work involved with the amended


Obligation to be licensed

1.9 Section 8 of the Renewable Energy Act, 2011 (Act 832) provides that a person must not

carry on operations in Ghana's Renewable Energy Industry for which a license is required unless

the person either:

(a) Holds a license granted under the Act authorizing the relevant operations; or

(b) Is exempted from holding a license.


1.10 A breach of this requirement is an offence under the Renewable Energy Act, 2011 (Act 832)

and may be sanctioned accordingly.

Table 1: Duration of Licence Type of

Licence

Term of Licence

Wholesale Electricity Supply Licence 20 years

Biofuel Production Licence : Small, 20 years


Medium & Large scales

Bulk Biofuel Transportation Licence 5 years

Bulk Biofuel Storage Licence 20 years

Biofuel Export Licence 5 years

Charcoal Production Licence 20 years

Bulk Charcoal Transportation Licence 5 years

Charcoal Wholesale/Storage Licence 5 years


Charcoal Export Licence 1 year

Briquettes/Pellet Production 20 years

Briquettes Export Licence 10 years

Importation Licence 10 years

Installation and Maintenance Licence 10 years


6

WHOLESALE ELECTRICITY SUPPLY LICENCE TO GENERATE ELECTRICITY

FROM RENEWABLE ENERGY SOURCE

Acquisition of Wholesale Electricity Supply Licence


STAGE 1: ACQUISITION OF PROVISIONAL LICENCE

Required Submissions

Exhibit WS1- Scope of Operation

Exhibit WS2- Company Registration

Exhibit WS3- Principal Officers, Director and Partners

Exhibit WS4- Ownership and Corporate Structure

Exhibit WS5- Cross-ownership and Ring Fencing


Exhibit WS6- Disclosure of Liabilities and Investigations

Exhibit WS7- Financial Capability and Proposed

Financial Plan

Exhibit WS8- Statement of Assets

Exhibit WS9- Feasibility Report

Exhibit WS10- Business Plan 6 Ministry of energy license manual


Exhibit WS11 - Company History and Existing Activities

Exhibit WS12- Industry Participation

Exhibit WS13 - Operational Experience and Expertise

Exhibit WS14 - Specific Licence Conditions and

Exemptions

Exhibit WS15 - Indicative Implementation Plan


Exhibit WS16 - Commercially Sensitive Information

Exhibit WS17 - Generating Plant Technology and Type of

Renewable Energy Resource


7

CONCLUSION AND RECOMMENDATIONS

For several decades, electricity generation, transmission and distribution in developing countries

especially Ghana, have been monopolized by agencies mostly controlled and funded by

governments. These agencies, for lack of adequate funding, have not been able to provide


adequate and reliable services for most rural areas. Several developing countries have taken bold

initiatives to restructure their electric power sector, with remarkable improvements in the

availability and quality of electric power supply. The India experience through the Indian

Renewable Energy Agency has shown that renewable energy resources and in particular, solar

PV, have the potential to meet the electricity needs of developing countries in a deregulated

electricity industry. Several constraints exists which hinder the dissemination of PV systems but

these can be surmounted through policy, regulatory and financial provisions and the political will


to achieve the millennium development goals, through the adoption of environmentally friendly

technologies for electricity generation. In view of this, the government of Ghana is considering

the alternative source of energy to beef up the existing inadequate one. The government of

Ghana over the years have turn serious attention on the solar energy with serious participation of

the private sector through the Public Private Partnership iniative (PPP).

7 World Bank Report 2013


Opportunities


The political and economic stability of Ghana, as well as favorable environmental conditions

afford a good basis for investment by Independent Power Producers (IPPs) to get into the Ghana

RE market.

Results from a study commissioned by the EC indicate that “… there exist wind regimes with

speeds between the range of about 5.5m/s and 6.2m/s. An evaluation by experts from Risoe of

the potential of the wind regime to generate electricity established a potential of about 300-500


MW. The average annual solar irradiation in different parts of the country ranges from 4.4

kWh/m2/day to 5.6 kWh/m2/day. This large solar potential can be harnessed for electricity and

process heating purposes.”3

It is therefore no surprise that a number of IPPs are attracted to this area. A 155MW plant (being

developed by Blue Energy, a UK based renewable energy investment company) and several


other solar plants (over 100MW) are at various stages of development by IPPs. There are yet to

be any major project developments in wind generation though.



CURRENT SOLAR DEVELOPMENT

A 2MW solar plant has been installed in Navrongo, Upper East of Ghana.


A 315kW solar plant has also been installed at Noguchi Memorial Research Institute at

the University of Ghana, Accra.

Licence Manual for the Service Providers in the Renewable Energy Industry has been

developed.

Companies have been granted provisional licenses for wholesale Renewable Energy

electricity generation.


The European Union has supported the Energy Commission to prepare a framework for

resourcing and operationalisation of the Renewable Energy Fund.

Draft Guidelines for net metering has been prepared.

Standardized PPA is being developed.

Guidelines for connecting RE plant to the distribution


The government of Ghana over the years have been looking at the alternative sources of energy

to curtail its persistent energy problem in the country, however much attention is turn to the solar

energy which will be more efficient and serve as the alternative for the current shortage, but the

main problem with this is the large capital needs in setting up the plant and its operations. The

government of Ghana seeing the need and potentials solar can contribute to help augment the


current energy needs is looking for private investors who have the means to set up the plant and


its operation through its Public Private Partnership Initiative (PPP).8

The Government has established a target of 10% of power generation coming from renewable

sources (which includes under-100 MW hydro plants) by 2020. So far, Ghana only has a 2MW


grid-connected renewable energy plant in operation. Both solar and wind are at early stages of

development, and the wind resource in Ghana is limited.

Further, both solar and wind power are expected to require significant tariff premiums over

Conventional generation to be financially viable. Thus, the target of 10% for 2020 is unlikely to

be achieved.

Nonetheless, global trends in the solar photovoltaic (PV) manufacturing industry, with sharply

declining investment costs per kilowatt installed, suggest that medium- to large-scale grid-


connected solar plants (without storage) have a role to play in Ghana. VRA could consider solar

projects close to its reservoirs so that solar and hydropower could complement each other, and

there would no additional costs of connecting the solar power to the grid. PURC’s announcement

of the feed-in tariff for solar power has removed an element of uncertainty for potential private

project developers.

Further, it is also likely that stand-alone solar systems in the remotest rural areas are likely to be

much cheaper than conventional rural electrification, whose subsidy requirements are a major 8 Ministry of energy strategic plan for 2014


burden for NED co and ECG. There are several opportunities in the solar energy production in

Ghana but the key challenge is the capital requirement to set it up, any investor who is interested

in the industry could take advantage of the PPP Policy Ghana government is offering.



References:


Aitken W. Donald (2003). Transitioning to a Renewable Energy Future. ISES (International Solar Energy Society) [online] [cited May 18, 2006]. Available: http://www.ises.org/shortcut.nsf/to/wp Cavusgil S. Tamer; Ghauri N. Perez & Agarwal R. Milind (2002). Doing business in emerging markets: entry and negotiation strategies. Sage Publication Inc. ISBN 0 – 7619 – 1374 – 2.


CIA, (2008), World fact books, Ghana, available at: https://www.cia.gov/library/publications/the‐world‐factbook/geos/gh.html (accessed 29 October 2008) Dovi, E. (2007). Africa’s major aluminum producer closes amid Ghana energy crisis. [online] available at: www.voanews.com/english/archive/2007 ‐ 03/2007 ‐ 03 ‐ 16 ‐ voa47.cfm (accessed 31 January, 2009).


ESTIF, (2008). Solar thermal market in Europe: trends and market statistics 2007. European Solar Thermal Industry Federation, Renewable Energy House, Brussels. June 2008 Holm Dieter (2005). Renewable Energy Future for the Developing World. ISES (International Solar Energy Society) [online] [cited May 18, 2006]. Available: http://www.ises.org/shortcut.nsf/to/wp99 IEA (2002). Renewable energy, into the mainstream, The Novem Sittard, The Netherlands, 2002.


Mensah‐Biney, R. (2007). Reflecting on the power/energy crisis in Ghana [online] available at: www.ghanaweb.com/GhanaHomePage/features/artikel.php?ID=127315 (accessed 31 January, 2009). New African (2007). Ghana: How the power shortage is being fought [online] available at: http://findarticles.com/p/articles/mi_qa5391/is_200710/ai_n21296867


Zittel, Werner (2002). Renewable Energy in Europe – Past and Future. First

International Workshop on oil depletion. L‐B‐Systemtechnik GmbH, Germany.

Uppsala, July 24, 2002

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