creating an enabling environment for renewable energy
TRANSCRIPT
BY: ADELAIDE BENNEH PREMPEH
CREATING AN ENABLING
ENVIRONMENT FOR RENEWABLE
ENERGY DEVELOPMENT IN POST
COVID 19 PANDEMIC GHANA:
THE ROLE OF THE PRIVATE SECTOR/
INVESTORS
OVERVIEW OF B&P ASSOCIATES
2
B&P Associates is a Corporate and Commercial
Law and Consultancy firm in Ghana.
We are experienced in providing Legal and
Investment Advisory and Business Support
Services, including Company Secretarial Services.
We assist our clients in navigating corporate and
commercial transactions, performing regulatory
compliance and research work.
Our team of lawyers are multilingual and
licensed to practise in Ghana, Nigeria, England
and Wales and New York.
OUR EXPERTISE
3
Corporate &
Commercial
Transactions
Real Estate,
Construction &
Infrastructure
Corporate
Governance &
Regulatory
Compliance
Business
Support
Services
Financial
Advisory &
Tax Services
Energy &
Natural
Resources
Trust, Wills &
Probate
Employment &
Immigration
PRE - COVID1
COVID-19 EFFECT2
POST-COVID (i.e LOCK DOWN)3
4 PRIVATE SECTOR STRATEGIES
TABLE OF CONTENTS
PRE-COVID
Renewable Energy Potential in Ghana
There continues to be immense opportunity and
case for RE- development in Ghana, even now in a
“post-COVID” (i.e lockdown) environment.
Ghana Germany
Annual Sunlight 2,377 hours 1,625 hours
Land Area 238,533 km² 349,360 km²
Population 30.4 million 83.1 million
Total Power Generation
Capacity
4,399 MW 210.2 GW
RE Generation Capacity
(excluding hydropower)
22.5 MW
(0.5% of total generation
capacity)
117.7 GW
(56% of total generation
capacity; solar comprising 50%
of RE and 23% of total
generation capacity.)
A Comparative Example of Ghana and Germany
• From a population perspective and given the availability of sunlight
and potential infrastructural sites, Ghana has grossly underutilized
leverage to permeate full access to energy in homes and workplaces
throughout the country.
• According to the Energy Commission’s report – Energy Statistics
(2020 Publication) – 85% of the population have access to
electricity. This implies that the remaining 15% do not have access.
Covid or not, the case for Renewable Energy development is intact and
ever urgent for Ghana’s industrialization drive and the growing national
demand for electricity, especially in remote communities.
Legislative and Policy Framework
for Renewable Energy in Ghana
Renewable Energy Act 2011
(Act 832)
Renewable Energy include
solar, wind biomass, hydro,
geothermal energy, generally
defined under the Act as
being energy from non-
depleting sources
Ghana has a robust framework to support Renewable Energy:
Act 832 adopted to provide
fiscal incentives and regulatory
framework to encourage
private sector investment
within the industry.
Established the Renewable
Energy fund to offer financial
incentives, capital subsidies,
production subsidies and equity
participation for renewable power
generation Feed In Tariffs &
Renewable Purchase Order.
Energy Commission (Local Content and Local Participation)
(Electricity Supply Industry) Regulations, 2017 (LI 2354)
• Promulgated under Energy Commission Act 1997 (Act 541),
applicable to Renewable energy as it pertains to the local content
and local participation framework of electricity supply from all
sources (including renewable energy).
REMP (Renewable Energy
Master Plan) 2019
It is a long term plan for the development of the RE sector.
A recognition that a shift to renewables or development of renewables will contribute positively to development, industrialization and ultimately our GDP.
Investment focused framework for:
--sustainable growth;
--contribution to improved social life;
--reduction of adverse climate change effects;
--emphasis laid on available incentives to investors within the RE sector, licensing, local content and participation.
REMP Goals by 2030
1
• An increased proportion of RE in the national energy generation mix with grid connected systems.
2
• Reduced dependence on biomass as the main fuel for thermal energy applications.
3
• Provision of renewable energy based decentralised electrification options in off-grid communities.
4
• Promotion of local content and local participation in the renewable energy industry.
How COVID-19 impacted the RE
Private Sector in Ghana.
• B & P Associates’ (BPA) anonymous survey conducted,
focused on the impact of the Covid-19 Pandemic and
Beyond on the private sector/ investor.
• The survey findings are based on data obtained from 8 out
of 54 renewable companies currently registered on the
Energy Commission website.
• Questions posed and responses received, formed the basis of
the findings below.
a.Commercial consumers market is the primary
target of the renewable energy private investor.
A focus on commercial consumers as opposed to small size off-grid
market because latter is perceived as unattractive and assessed as not
bankable from an investor’s standpoint.
Consequently, such projects are invariably taken on by the under
resourced private investor who invariably is hindered by technical
and financial constraints and requires the support of donors and
development partners.
a.Commercial consumers market is the primary
target of the renewable energy private investor.
b. The survey respondents engage in the sale of the
following renewable energy products to their respective
markets.
• Photo voltaic (PV) Solar;
• PV models, inverters, AC combines, powers meters;
• Turnkey solar plant leasing (sale over 10 to 15 years);
• C&I Solar Systems;
• PV solar generating power plants;
• Commercial and industrial solar financing;
• Solar panels, inverters, batteries, cables and electric cars.
c. Investor Funding is the major form of project
funding for the renewable energy sector.
• Donor funding is not ordinarily a funding source for the renewable
energy private sector.
• Limited access to banking credit.
d. To a large extent, the COVID Pandemic impacted
access to financing.
e. The COVID Pandemic has impacted on the cost of
production of renewable energy solutions in 2020, with
an appreciable cost increase in some instances.
Reasons provided:
• Customers unwillingness to commit to renewable energy.
• Credit restriction as a result of financiers’ lack of appetite for risk.
• Decrease in production from supply chain capex which resulted
in increase in pricing.
f. Other changes to the business attributable to the
pandemic.
• A reduction in OPEX- virtual meetings.
• Reduction in energy consumption and disrupted patterns.
• Reduction in sales in the short term.
• Lengthier bureaucratic processes and delayed investor decision
making – business sentiment of uncertainty.
• Investor confidence waned due to liquidity crunch.
• Increased customer interest in commitment to RE.
• Increased efficiency.
g. Strategies adopted to mitigate the negative effects of
the COVID pandemic.
• Expansion of business model to other sectors of the market- off
grid/ mini grid/ communities.
• Flexible financing arrangements offered to customers.
• Intensified marketing efforts to make up for lost sales.
g. Strategies adopted to mitigate the negative effects of
the COVID pandemic. • Accelerated development of other projects.
• Introduction of more affordable systems.
• Increase in interest from market to offset business revenue losses,
resulting in increase in sales, outreach strategies.
h. The Silver Lining of the COVID Pandemic.
• Modified Health and Safety protocols.
• Accelerated efforts to develop new renewable projects to achieve
economies of scale.
• Conducted more business transactions using digital tools.
• Converted short term supported customers into long-term leases.
i. Asset financing as a way of conducting business in
the renewable energy sector has not been affected.
Describe any projects or strategies you have adopted to
enhance sustainability and/or affordability of your RE
products in Ghana. (If no strategies have been adopted,
indicate “None.”)
• Flexible payment or repayment terms with selected existing
customers hit hard by the COVID-crisis.
• Expansion of business model to other sectors of the market.
• Support for customers with lease-free periods during lockdown
(adoption of government 2020 Q2 power cost cut of 50% for
selected customers.
j. Appetite remains to expand business operations in
spite of the pandemic.
Future strategies shared by Survey Respondents
1. Innovative Financing.
2. Technology and knowledge transfer.
3. Business Model- community or otherwise e.g. PEG Africa
(Ghana) utilising the ‘Pay As You Go’ model for communities to
promote sustainability and affordability, operating in Ghana and
the subregion.
4. Collaboration instead of competition against each other to have a
bigger share of the pie in terms of market / funding- AfCTA could
be a major enabler for cross border investment.
5. Impact Investing is a key funding tool amongst developers and
attractive to credible investors e.g. Blue Haven Initiative: PEG
Africa Investment, Pay-as-you-go financing.
Enhancing the enabling environment to scale up
Renewable Energy in Ghana
• Supportive legal environment- more inclusive and equitable.
• Creative financing models to empower new and marginalized
solar energy projects and customers.
• Gender diversification of a male dominated energy sector for
higher profitability and human resources e.g. Suka Ghana and
their “Power Sister” training for women.
• Streamlining processes to avoid the complex and lengthy
bureaucracy that deters potential investors.
Enhancing the enabling environment to scale up
Renewable Energy in Ghana
Enhancing the enabling environment to scale up
Renewable Energy in Ghana • Supportive capacity building efforts for local financial institutions.
• National electrification must necessarily include off-grid solutions
beyond IPP –Infrastructure especially for the remote and rural
areas.
• Stronger dialogues between regulators and investors in support of
good projects and future growth.
Enhancing the enabling environment to scale up
Renewable Energy in Ghana • Awareness raising campaigns and communication strategies to
educate remote communities about business opportunities and off-
grid renewable energy benefits.
• Sustained and improved international development partnerships,
including comparative learning and knowledge transfer. (Ghana
and Germany €100 million Partnership for Renewable Energy
Expansion; Power Africa Initiative under USAID.)
1. http://www.energycom.gov.gh/files/2020%20ENERGY%20STATISTICS-revised.pdf
2. Ghana sunlight hours: http://www.accra.climatemps.com/sunlight.php
3. Germany sunlight hours: https://www.currentresults.com/Weather/Europe/Cities/sunshine-annual-average.php
4. Germany energy portfolio: https://www.cleanenergywire.org/factsheets/germanys-energy-consumption-and-power- mix-
charts
5. Ghana energy portfolio: https://www.usaid.gov/powerafrica/aboutus/power-africa-jobs
6. Population of Ghana: https://data.worldbank.org/indicator/SP.POP.TOTL?locations=GH
7. Population of Germany: https://data.worldbank.org/indicator/SP.POP.TOTL?locations=DE
8. Land Area of Ghana: https://www.britannica.com/place/Ghana
9. Land Area of Germany: https://data.worldbank.org/indicator/AG.LND.TOTL.K2?locations=DE
10. Ghana-Germany partnership: https://www.ghanaweb.com/GhanaHomePage/NewsArchive/Germany-supports-Ghana-
with-100-million-for-renewable-energy-expansion-589929
11. USAID Power Africa Initiative: https://www.usaid.gov/powerafrica/aboutus
REFERENCES
THANK YOU
Adelaide Benneh Prempeh
+233 (0) 24 282 214
+233 (0) 307 001 566
House No. 99A, 4th Norla Street
Labone, Accra.
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