Will renewables expand Ghana’s economy?

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Ghana is turning to renewables as a way to expand its electricity capacity and diversify the energy mix, with the private sector flagged to take the lead in a major project rollout.

On February 13 the Energy Commission, a statutory agency charged with regulating and managing the development of the country’s energy resources, lodged its Renewable Energy Master Plan (REMP) with the Ministry of Energy (MoE), setting out the blueprint for the development of alternative power production through to 2030.

Under the plan, due to come into force this year, Ghana aims to increase installed renewable capacity – which, under the classification, excludes hydropower projects greater than 100 MW – from 2015 levels of 42.5 MW to 1364 MW by 2030, of which 1095 MW will be linked to the national grid.

At present, the country has total installed capacity of 4132 MW, according to the MoE, made up of thermal power (61%), hydro (38%) and solar (less than 1%).

However, given that unpredictable rainfall and water supplies can affect hydropower generation, the REMP places a particular focus on solar energy. The MW peak (MWp), which measures the maximum possible solar power generated under ideal conditions, is expected to rise from 22.5 MWp to 447.5 MWp over the 12-year period.

The rollout of capacity will create 220,000 new jobs, according to the commission’s forecasts, both in the renewables segment and the broader economy, as well as cut carbon emissions by 11m tonnes.

See also: The Report – Ghana 2019

Incentives for private investors

To achieve these goals, the REMP foresees $5.6bn in total investment, representing an annualised spend of $460m, of which 80% is expected to come from the private sector.

To encourage private sector input, the plan lays out a series of incentives to be enacted by the government.

These include substantial tax reductions; exemptions on import duties and value-added tax through to 2025 on materials, components, machinery and equipment that cannot be sourced domestically; and import duty exemptions on plant and plant parts for electricity generation from renewables.

Tax exemptions on imports will gradually be phased out, however, as domestic renewable energy technology improves and is able to better meet the manufacturing and service needs of power providers.

Off-grid growth to power remote communities

Rising demand and the growing need to support social and economic development in remote communities is already driving renewable energy expansion and generating business opportunities in the alternative power sector.

The government is currently running a pilot programme to provide off-grid solutions in isolated communities, with 55 areas to benefit from having dedicated renewable generation capacity installed as part of a $230m scheme.

While Ghana has the second-highest electrification rate in sub-Saharan Africa, at 84%, behind only South Africa, millions living in rural or remote communities do not have regular access to electricity, and 33% of rural households are not connected to the national power grid.

The high cost of linking these communities to the main national grid has been the leading factor in extending off-grid services to these regions, mostly located in and around the Lake Volta basin.

Such communities, many of which rely on fishing and agriculture as their main forms of income, would benefit economically from reliable access to electricity, with the opportunity for refrigeration allowing for their produce to be preserved fresh and shipped to markets beyond the region.

The initial rollout of off-grid networks forms part of a far bigger programme envisioned under the REMP; 1000 communities are to be linked to standalone renewable sources by 2030.

A smaller-scale solution for isolated communities undertaken by the MoE has been the distribution of solar-powered lanterns, which can double as charging units for mobile phones.

Some 120,000 of the solar lanterns, intended to offer an alternative to more costly and polluting kerosene lamps, had been distributed by the ministry as of late March, and 1m are to be handed out by 2030.

The increased use of renewable energy sources in rural and remote communities also targets a reduction in the use of wood for cooking, which should help cut fossil fuel consumption, slow deforestation and improve air quality.

Health and education facilities to benefit from power deal

Off-grid capacity is also set to be expanded under a new partnership between domestic renewable energy technology provider Strategic Power Solutions (SPS) and AEG International of the US.

Under a project launched at the end of March and supported by the US Trade and Development Agency, 28 health centres and 310 schools across six Catholic dioceses will be linked to solar power sources. The solar panels to be deployed at these sites will be assembled at SPS’ manufacturing facility, while the batteries and other equipment required will be imported from the US.

While such projects have the direct benefit of improving access to reliable energy sources, they also help encourage the local renewables sector to expand capacity, with SPS moving to increase its annual production capabilities from 32 MWp to 165 MWp in the short to medium term.

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