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Opportunities for private investment in renewable energy in Ghana

Distributed Generation, Net-Metering and Captive Power Solutions

Steffen Behrle, Programme Manager, Renewable Energy, GIZ Ghana | 8 October 2019

Content

8 October 2019 Opportunities for private investment in RE

Global and Local Perspectives on Renewable Energy

Why distributed generation?

Existing and emerging business models for distributed generation

Ghana is net-metering ready

Funding sources

Case study

Challenges

What we have done

Where weare going

Summary

Global and Local Perspectives on Renewable Energy

8 October

2019Opportunities for private investment in RE

Global Trends in RE Deployment

2018 marked fourth consecutive year that net additions of renewable power were more than 50%

8 October

2019Opportunities for private investment in RE4

Global Trends in RE Deployment

Added in 2018

100 GW of solar PV

51 GW of wind power

20 GW of hydropower

10 GW of bio-power, CSP and geothermal power

8 October


Solar PV Trend in Ghana’s C & I Sector

0

5

10

2013 2014 2015 2016 2017 2018

Distributed (Grid-Tied) PV Installed Capacity (MW)

Source: Energy Commission, Ghana

*The drivers of this trend? Falling costs and innovative business models.*

8 October


Why distributed RE generation?

8 October

2019Opportunities for private investment in REPage 8

0.14

0.12

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

Res. 0-50kWh

Res. 51-300 kWh

Res. 301-600 kWh

Res. 601+kWh

Non-Res.0-300kWh

Non-Res.301-600

kWh

Non-Res.601+ kWh

SLT-LV SLT-MV SLT-HV SLT-HVMines

Residential Customers Commercial Customer Industrial Customers

USD

/kW

h

Energy Charges (per kWh)Streetlight + Rural Electrification LevyValue Added Tax (VAT)Levelized Cost of Energy (Residential Grid-tie PV)

PV Assumptions: 1. CAPEX: $1.5 (res),

$1.4 (C&I)/Wp;

2. 16% capacity

factor;

3. 20yr plant life;

4. Debt-financed with

5-yr loan term @

25% (res), 20%

(C&I)/yr;

5. O&M $/yr = 1.5% of

CAPEX;

6. Lifecycle part

replacements =

30% of CAPEX

Existing and emerging business models for

distributed generation

• Increasing no. of service providers will bring competition and lower market prices

• Emerging innovative business models eliminate high upfront cost

Opportunities for private investment in RE

Cash Purchase Lease-to-Own

PPA (only for bulk

electricity consumers)

Rental

Upfront costHigh upfront cost Zero or low

upfront costZero or low upfront cost

Zero or low upfront cost

Payment method

Progress payments until commissioning

Recurring payment for

hardwarelease

Payment per kWh

generated

Fixed regular payment for equipment

rental

Ownership

Client owns the PV system

Ownershiptransferred to

client on completion of

lease payments

Service provider owns

PV system. Ownership

may be transferred to

client at agreed

residual value

Service provider owns

PV system. Ownership

may be transferred to

client at agreed

residual value

Ghana is net-metering ready• Fully developed net metering legislation since October

2016

• 143 PV systems with total capacity of 3 MWp connected under the scheme, in-spite of existing challenges

• Distribution utilities are already familiar with the scheme and ready for full implementation

• Due to delays with its full implementation, awareness and knowledge is increasing on possibility of grid-connected systems outside the net metering scheme.

• First systems already installed by C&I customers

• Main market driver at the moment

Page 10 8 October 2019 Opportunities for private investment in RE

New and longer term funding sources on the

horizon

Page 11

• Crowd funding

• Private funds (equity, debt) from markets such as US, Middle East and Europe

• Donor funds may soon become available for on-lending through commercial banks:

SUNREF (AFD) -> Green credit line

Reform Partnership under G20 Compact with Africa (KfW) -> Green credit line

Green Climate Fund (Energy Commission & Ecobank)

• World Bank/AfDB/SECO SREP

8 October 2019


• 16kWp PV system procured in October 2016 for GHS90,000

• Total direct electricity consumption from PV plant (April 2019) = 45,347kWp (no net metering)

• Equivalent to GHS 76,541 (in 2years and 7 months)

• System will pay for itself by end of 2019, leading to cost savings of ~GHS 30,000/year for the next 17+ years

Case study: Solar PV self generation benefits

8 October


Before

25/11/2016All PV

generated

energy is self-

consumed on

weekdays

Drop in

demand during

sun hours

After

Challenges remain

High interest rates

Loan tenure (typically 1-5 years)

Prohibition of energy sales/PPAs for DG system

Net-metering implementation delays

Shift in focus: from utility scale RE (e.g. IPP tenders and PPAs) to distributed generation and emphasis on off- and mini-grid RE because of overcapacity and capacity charges

Energy sector-wide debt and financial challenges (desire to protect DUs)

Installation/service quality issues hindering potential market growth


What we have done

Advice and development of appropriate tools for regulators to help inform regulation decisions, e.g. net metering code development, net metering tariff impact models etc.

Awareness raising within distribution utilities (across all staff levels)

Presentations and discussions with top management about RE opportunities, challenges and possible business adaptation measure

Introductory as well as in-depth technical training on net-metering for more than 150 key staff of ECG and NEDCo

Support for company-wide general awareness raising

Study tours and exchange visits for both staff and top management

Targeted skills upgrade and acquisition for private service providers

General public education and awareness creation

The project as a point of call for new market entrants

In-depth technical and entrepreneurial training on grid-connected PV for 500 RE entrepreneurs, engineers, technicians in collaboration with the Deng Solar Training Center, the German Solar Training Week and the German Project Development Training Week


Where we are going

Energy Service Center with the Association of

Ghana Industries (AGI) established

Strengthen RE associations

Strengthen capacity for effective regulation of

distributed RE market, e.g. inspections and

monitoring of quality of installers and installations

Support development and implementation of RE

and EE business strategies for distribution

utilities

Options for entering into the market for

distributed generation e.g. in development,

construction, maintanance, financing solutions

TVET for RE and EE: demand-driven and

industry-led

Occupational standards

Curriculum development

Sector skills council

Pilot cooperative model (dual system)

Mission of the Energy Service Center:

Help SMEs to realize energy savings

Energy Service Center

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honest broker - second opinion - independent

8 October

2019Opportunities for private investment in RE

Summary

• Utility-scale RE market is essentially closed in Ghana

• Net metering is yet to be fully operationalized, however, other captive power options are possible, e.g. zero grid feed-in systems

• Distributed generation for C&I customers presents the greatest opportunity for market development at this moment

• C&I customer want to focus on their core business and are not interested in managing energy assets/resources in the long-term

• Once various green credit lines become operational, DG market for households and SMEs will grow

• RE associations need organizational development support to become active advocates for RE in Ghana

• Quality standards and assurance need to be improved if the market is to keep growing in-spite of challenges


8 October


In cooperation with:Implemented by

Deutsche Gesellschaft für

Internationale Zusammenarbeit (GIZ) GmbH

Registered offices

Bonn and Eschborn

GIZ Office Accra

P.O.BOX KA 9698

7 Volta Street Airport Residential Area

Accra-Ghana

T +233 302 780 448

F +233 302 777 375

E [email protected]

I www.giz.de

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