Ghana has one of the more liberalized power sectors in Africa. Since 2006, the country has added 1.2GW of oil, diesel and gas power projects. This has yet to be emulated in the renewable energy sector, though the country has seen a large amount of interest in its feed-in tariff (FiT) program for renewables.
Until late 2013, when Ghana’s first utility-scale PV plant came online, renewable energy production came solely from distributed PV generation, which currently amounts to about 5MW across thousands of small installations. This distributed capacity was built through both on- and off-grid development aided by Ghana’s Energy Development Access Project (GEDAP) and has contributed to the country’s high electrification growth rate, which stood at 72% in 2012, up from just over 60% in 2009. One of the more unusual projects on the continent was initiated in 2014 in Ghana, with a local company seeking to construct a tidal project and aiming to commission the first units by the end of 2015.
The country has set a target of 5GW overall power generating capacity by 2016, and a 10% renewables share by 2020. While the former will likely not be met, the renewables 2020 target remains a possibility. That will largely depend on grid capacity, with impact studies underway.
In 2011, the government introduced the Renewable Energy Act, which comprises five main components all aimed at incentivizing renewable energy investment in the country. They are the FiT, a renewable energy purchase obligation, renewable energy fund, biofuels blending and net metering.
Interest in Ghana’s FiT sharpened after the rates were raised in September 2014. Included in the new regulations was a cap put on the size of solar PV projects to maintain grid stability. Of the 48 licences issued, two projects have received building permits – one solar and one wave project – while an additional 16 siting permits have been issued, the majority for solar. The siting permits allow for developers to acquire the site and receive environmental authorization. However, developers have raised concerns over the short 10-year rate guarantee and the creditworthiness of the Electricity Company of Ghana, which buys 72% of all power.
Ghana has yet to finalize the renewable energy purchase obligation with which the three distribution companies and 33 bulk users will have to comply. Under the obligation, the Public Utilities Regulatory Commission will take into account the technology used and the net effect on the end user tariff. If the obligation is not met the companies will face penalties.
The renewable energy fund and targets that were outlined in Ghana’s Renewable Energy Act have yet to come into force. In February 2015, the fund got a major boost as the government announced levies on petroleum products and electricity sales which would go to the fund. It targets the installation of 200,000 solar home systems. While the renewable energy target was never outlined in an official government announcement, the Ministry of Energy has consistently referred to a “10% target” – which would equate to roughly 500MW of installed capacity.
The law also directs the National Petroleum Authority (NPA) to set a biofuels blending mandate, although little progress has been made. In July 2014, the NPA begun consultations to introduce a 5% blending mandate, but there are no timelines in place for when this will be implemented.
In January 2015, the net metering code was released, with the law expected to be promulgated in mid-2015. The code does not pay a tariff to users but rather credits them for the amount they feed into the grid. By December 2014, 19 distributed solar projects were feeding into the grid and receiving generation credits. Projects are limited to a maximum capacity of 200kW.
Ghana offers import duty exemptions on equipment and while renewable energy is not mentioned specifically, those products are being exempted. The government has recently made a push to see solar home systems distributors utilize the duty exemptions as much as possible, with imports struggling to meet demand. New equipment and machinery can qualify for accelerated depreciation.
Score Summary
Ghana scored 1.07 in Climatescope 2015, ranking it 28th on the list of countries overall, two places below its position in 2014. The country’s best performance came on Greenhouse Gas Management Activities Parameter IV.
On Enabling Framework Parameter I, Ghana’s score fell slightly. Nevertheless, it remained strong in the area of policy on access to energy thanks to initiatives such as its rural electrification program and the presence of a clean energy plan.
On Clean Energy Investment and Climate Financing Parameter II, the country ranked 50th overall, owing to very low levels of investment to date.
Ghana was ranked 20th on Low-Carbon Business & Clean Energy Value Chains Parameter III, reflecting, among other things, a reasonably well-developed distributed clean energy sector.
On Parameter IV, the country ranked third highest in Africa, and 15th overall, thanks to relatively low levels of CDM risk and the presence of capacity building around GHG management.