Challenges ahead on Renewable Energy

Mr. John-Peter Amewu

An Energy Policy  Analyst, Mr. John- Peter Amewu, has stressed the need for Parliament to consider whether the current Renewable Energy Bill before it, if passed into law, would attract renewable power generators to invest in the country, in order to bridge the gap between demand and supply.

Mr. Amewu noted that the government, in its attempt to increase the degree of consistency in energy supply for the purpose of ensuring energy security, had recently proposed a renewable energy deployment target of 10 percent by 2020, from the current level of 0.5 percent in its energy policy, was commendable.

Speaking to The Chronicle in Ho over the weekend, the Energy Analyst observed that subsequently, the government had come out with a renewable energy bill currently before Parliament, to address some of the issues that would make the country achieve the deployment target in the policy document.

Mr. Amewu said while the renewable energy target in itself is very aggressive, the bill lacks some vital elements that would encourage generators of renewable energy to ply the market.

Mr. Amewu pointed out that even though it was important to encourage renewable energy generation in the country, it was often difficult and even premature to force renewable energy operators into a market like Ghana, where there was little or no competition in the market framework for conventional power.

He said it was also difficult, due to the substantial production and consumption subsidies granted to the conventional power sources, as more difficulties exist as a result of the market dominance by the conventional power operators, coupled with the nature of the market created by the Volta River Authority and Electricity Company of Ghana.

The Analyst observed that indications were that Renewable Energy for the country was likely not to work effectively, because that source of energy would become more expensive.

He further noted that Renewable Energy would only work when there was a favourable market and that in order to make it very easy for the consumers to buy, there must be a regulatory framework or support scheme to allow the Renewable Energy sell alongside the existing energy source.

Mr. Amewu believes this was the rationale for the introduction of the Renewable Energy Bill, currently before Parliament, and the aim of such a support scheme would be to offset the competitive disadvantage for Renewable Energy, but was quick to state that the current bill seems not to address some of the issues that might allow the Renewable Energy to work in Ghana.

He pointed out that possible internal failures, for example, are structural barriers, which may emerge as a result of the design of the mechanism, saying the failures could be a result of financial or price risks, which might be due to low production rate, i.e., who should be blamed when the wind does not blow, as well as how reliable are the generators.

Mr. Amewu stressed that another internal problem likely to happen, would be due to lack of favourable pricing framework for Renewable Energy sources, which had placed the Renewable Energy sources in a high cost environment, and therefore. not competitive to the traditional power generation mix of energy supply in the country.

He added that Renewable Energy, as compared to the current energy supply system, would therefore amount to increasing the cost, at what he called the burner tip, for the consumers, as well as lack of funds to invest in the new energy supply system, and inadequate public education on Renewable Energy supply, to make the players to make informed choices and decisions.

Touching on the way forward, the expert pointed out that in order to provide a regulatory guarantee for the perceived high cost of Renewable Energy, through the quantity mechanism, a system by the regulator determines the quantity of Renewable Energy, and let the markets determine the price.

Mr. Amewu said to ensure the effectiveness of the Renewable Energy Bill currently before Parliament, conscious efforts should be made to ensure public acceptance and support for Renewable Energy, stressing that a well-designed payment mechanism be put in place, and the grid access and strategic development of the grid ought to be taken into consideration.