DISCLAIMER Portions of this document may 'be illegible in electronic image products. Images are produced from the best available original document. Implementation of Renewable Energy Technologies - Opportunities and Barriers Ghana Country Study Ishmael Edjekumhene Sefa Bonsu Atakora Rodney Atta-Konadu Abeeku Brew-Hammond Kumasi Institute of Technology and Environment Ghana Ghana Country Study. Published by: UNEP Collaborating Centre on Energy and Environment, Risg National Laboratory, Denmark, 2001. ISBN: 87-550-3010-6 Available on request from: UNEP Collaborating Centre on Energy and Environment Risg National Laboratory P.O. Box 49 DK 4000 Roskilde Denmark Phone: 4546 32 22 88 Fax: 4546 32 19 99 Cover photo: courtesy Wisdom Ahiataku Togobo, Ministry of Energy, Ghana Print: Pitney Bowes Management Services Denmark NS,2002 Acknowledgements The authors would like to thank Prof. Fred Akuffo, Mr. Ben Hagan, Dr. Rudith King and Dr. Jyoti Painuly for their critical but helpful comments and suggestions in the preparation of this report. To all personnel of the Ministry of Mines and Energy and the Energy Commission who provided useful information and participated in the workshops we express our profound gratitude. Various contributions from many other stakeholders are gratefully acknowledged. Thanks are also due to Ms. Kylee Roberts, a CIDA-funded intern from Policy Research I International, Ottawa, Canada who edited the report. Finally our special gratitude goes to the UNEP Collaborating Centre on Energy and Environment (UCCEE) at Riso National Laboratory in Denmark, who provided institutional leadership for this project, and to DANIDA for funding the project. iii DEDICATION This report is dedicated to the late Dr. John Kofi Turkson (1954 - 2000) who until his untimely death was the project co-ordinator. May his soul rest in perfect peace. iv CONTENTS ACJCNOWLEDGEMENTS m DEDICATION Iv LISTACRONYMS AND ABBREVIATIONS XI EXECUTIVESUMMARY 1 1 INTRODUCTION 4 1.1 OBJECTIVES 4 1.2 METHODOLOGY 5 1.3 STRUCTURE AND SCOPE OF THE REPORT 6 2 CONCEPTUAL ISSUES IN ENERGY POLICY 7 2.1 CONCEPTS 7 2.2 SOMEDEFINITIONS 7 23 MEASURES AND INSTRUMENTS OF ENERGYPOLICY 8 2.3.1 INTRODUCTION 8 2.3.2 &ONOMIC OR INCENTEVE-BASED INSTRUMENTS 8 2.3.2.1 Taxes 8 2.3.2.2 Subsidies 9 2.3.2.3 Tariffs 9 2.3.2.4 Financing Schemes 10 2.3.3 INFORMATION AND EDUCATION 11 2.3.4 NORMATIVE MEASURES OR COMMAND-AND-CONTROLMEASURES 11 2.3.5 RESEARCH AND DEVELOPMENT 11 2.3.6 RFiFORMING THE ENERGY SECTOR 12 2.4 POLICY INSTRUMENTS AND MEASURES FOR RENEWABLE ENERGY TECHNOLOGIES 12 2.4.1.1 Non-Fossil Fuel Obligation (NFFO) 13 2.4.1.2 Renewable Portfolio Standard (RPS) 15 2.4.1.3 Electricity Feed Law @FL) 16 2.4.2 EXAMPLES OF FINANCING MEKXANBMS 16 2.4.2.1 The Dealer Model 17 2.4.2.2 The Concession Model 17 2.4.2.3 The Retailer model 17 2.4.3 DEMONSI"ION PROJECTS 18 2.5 OVERVIEW OF THE EXPERIENCESOF SOME ASIAN COUNTRIES 18 3 RENEWABLE ENERGY POLICY INSTRUMENTS AND MEASURES IN GHANA -22 3.1 INTRODUCTION 22 3.1.1 BACKGROUNDTO THE NATIONALENERGY BOARD LAW (PM>C LAW 62) 22 3.1.2 MEASURES ADOF'TED BY NEB TO I~~F'LEMFLNTPROGRAMMES AND PROJECTS 25 3.2 TIfE ENERGYSECTOR DEVELOPMENT FROGRAMME (ESDP), 1996-2000 25 3.2.1 POLICY FRAMEWORK AND STRATEGIC OBJEcnVEs 25 3.2.2 ENERGY SECTOR PROGRAMMES AND hPLEMENTATION STRATEGY 26 3.2.3 RENEWABLE ENERGYSECTOR 26 3.2.3.1 Biomass 28 3.2.3.2 Implementation Strategy 28 3.2.3.3 Solar Energy 29 3.2.4 PROJEcr FINANCING AND BENEFll3 29 33 POWER SECTOR 30 3.3.1 POWER SECTOR DEVELOPMENTPROGRAMME 30 3.3.1.1 Extension of Transmission and Distribution Systems 30 3.3.1.2 Increasing the Capacity of Power Generation System 31 3.3.1.3 Institutional Reforms and Independent Power Producer (IPP) 31 3.3.2 "HE NATIONALELECIWFICATION SCHEME 32 3.4 hMINI!3TRAnvE AND INSTITUTIONAL ARRANGEMENTS 33 3.5 EVALUATIONOF ENERGYSECTOR DEVELOPMENT PROGRAMME (ESDP) 34 3.5.1 OTHER POLICIES MEASURES 35 3.5.1.1 Energy Commission 35 3.5.1.2 Public Utilities Regulatory Commission (PURC) 37 3.6 SYNTHESIS 37 3.6.1 ECONOMIC INSTRuME"l3 38 3.6.1.1 PV Import Duty Waiver and/or Reduction 38 3.6.2 TAXINSTR~ 39 3.6.2.1 Petroleum Taxes 39 3.6.3 FINANCING SCHEiIkE 39 3.6.3.1 Energy Fund 39 3.6.4 PRICING INSTRUMENT 40 4 RENEWABLE ENERGY RESOURCES AND TECHNOLOGIES IN GHANA 41 4.1 INTRODUCTION 41 4.2 BIOMASSENERGY 41 4.2.1 INTRODUCI'ION 41 4.2.2 RESOURCE ASSFSSMENT 42 4.2.2.1 Forest Resources 42 4.2.2.2 Logging Residues 42 4.2.2.3 Wood Processing Residue 42 4.2.2.4 Crop Residue And Animal Wastes 43 4.2.3 IMPLEMENTED PROJECISAND STUDIES 44 4.2.3.1 Pyrolysis 44 4.2.3.2 Improved Cookstoves 45 4.2.3.3 Biomass-Fired Dryers 45 4.2.3.4 Sawdust Briquettins 46 4.2.3.5 Biogas 46 4.2.3.6 Cogeneration 47 43 SOLAR AND WIND ENERGY 47 4.3.1 OVERVIEW 47 4.3.2 RESOURCE ASSEsSMENT 48 vi 4.3.2.1 Solar 48 4.3.2.2 Wind 48 4.4 IMPLEMENTED SOLAR PROJECTS 50 4.4.1 SOLARPV SYSTEMS 50 4.4.1.1 The DANIDA / Ministry of Health (MOH) Solar Project 50 4.4.1.2 TU-Berlin/UST Solar Pump Project 51 4.4.1.3 CIDA-University Of ReginaAJST Renewable Energy Project 51 4.4.2 THE MINISTRY OF AND ENERGY’SPROJECTS 52 4.4.2.1 The Wechiau Project 52 4.4.2.2 The Spanish Solar Project 53 4.4.2.3 The UNDPIGEF Project 53 4.4.2.4 Streetlight Projects 53 4.4.3 THE M.INE3TRY OF HEALTH’S SOLAR REFRIGERATING PROJECT 54 4.4.4 SOLAR THERMAL SYSTEMS 54 4.4.4.1 Evaporative Cooler for Food Storage 54 4.4.4.2 Ministry of Mines and Energy’s Solar Thermal Projects 55 4.4.4.3 The Cylindro-Parabolic Solar Collector Project at KNUST 55 4.4.4.4 The Thermiosiphon Solar Water Heater Project at KNUST 55 4.4.5 SOLAR TEC”0LOGlEs IN PEXSPECTIVE 56 4.4.6 WINDENERGY PROJECTS 58 4.5 SMALL HYDRO POWER 58 4.5.1 DEFINITIONS 58 4.5.2 RESOURCE ASSESSMENT 59 4.5.3 POTENTIAL PROJECTS 63 5 BARRIER ANALYSIS - BIOMASS TECHNOLOGIES 65 5.1 INTRODUCTION 65 5.2 BIOMASS DRYERS 65 5.2.1 BACKGROUND 65 5.2.2 SOCIO-TECHNICAL 65 5.2.2.1 Resources 65 5.2.2.2 Technological/Technical 66 5.2.2.3 Environment 66 5.2.2.4 Social 66 5.2.3 ECONOMIC 66 5.2.3.1 Market 66 5.2.3.2 Financing, Costs and Benefits 67 5.2.4 CROSS-CU”G 67 5.2.4.1 Information 67 5.2.4.2 Institutional 67 5.2.4.3 Policy 67 5.2.5 SAWDUST BRIQUEiITING 67 5.2.6 SOCIO-TECHNICAL 67 5.2.6.1 Resources 67 5.2.6.2 TechnologicaUTechnical 68 5.2.6.3 Environment 68 5.2.6.4 Social 68 vii 5.2.7 ECONOMIC 68 5.2.7.1 Market 68 5.2.7.2 Financial Analysis 69 5.2.7.3 Financing 71 5.2.8 CROSS-CUTIWG 71 5.2.8.1 Information 71 5.2.8.2 Institutional 71 5.2.8.3 Policy 71 5.2.9 SAWDUST STOVES 72 5.2.9.1 Background 72 5.2.10 SOCIO-TECHNICAL 72 5.2.10.1 Resources 72 5.2.10.2 TechnologicaVrechnical 72 5.2.10.3 Environment 73 5.2.10.4 Social 73 5.2.1 1 EkONOMIC 73 5.2.11.1 Market 73 5.2.1 1.2 Financial Analysis 73 5.2.1 1.3 Financial 74 5.2.12 CROSS-CU”G 74 5.2.12.1 Information 74 5.2.12.2 Institutional 75 5.2.12.3 Policy 75 5.2.13 BIOGAS 75 5.2.13.1 Background 75 5.2.14 SOCIO-TECHNICAL 75 5.2.14.1 Resources 75 5.2.14.2 TechnologicaWechnical 76 5.2.14.3 Environment 76 5.2.14.4 Social 76 5.2.15 ECONOMIC 76 5.2.15.1 Market 76 5.2.15.2 Cost Benefit Analysis 77 5.2.15.3 Financing 78 5.2.16 CROSS-CUTIWG 79 5.2.16.1 Information 79 5.2.16.2 Institutional 79 5.2.16.3 Policy 79 5.2.17 STAKEHOLDERS’PERSPECTIVES 79 5.2.18 KEY BARRJERS 80 5.2.19 RA”G OFBARRIERS 80 5.2.20 SUGGESTEDBARRIERREMOVALPROCEDURES 81 5.2.20.1 Policy 81 5.2.20.2 Raw Material 82 5.2.20.3 Financing 82 5.2.20.4 Social Acceptance 82 5.2.21 FOLLOW-UPPROJECTS 83 5.2.22 COMPARATIVEANALYSIS AND CONCLUSION 83 viii 6 BARRIER ANALYSIS - SOLAR TECHNOLOGIES 85 6.1 INTRODUCTION 85 6.2 SOLAR CROP DRYERS 85 6.2.1 RESOURCES 85 6.2.2 TECHNOLOGY 85 6.2.3 INFOFWATION 86 6.2.4 SOCIAL 86 6.2.5 ENVIRONMENTAL 87 6.2.6 MARKET 87 6.2.7 COST-BENEFWANALYSIS 87 6.2.8 FINANCING 88 6.2.9 bJSllTUTIONAL 88 6.2.10 POLACY 88 6.3 SOLAR WATER HEATERS 89 6.3.1 RESOURCES 89 6.3.2 TECHNOLOGY 89 6.3.3 SOCIAL 90 6.3.4 ENVIRONMENTAL 90 6.3.5 MARKET 90 6.3.6 FINANCIALANALYSIS 90 6.3.7 FINANCING 92 6.3.8 hFORh4ATION 92 6.3.9 bJSTITUTIONAL 92 6.3.10 POLICY 92 6.4 SOLARWATER PUMPS 93 6.4.1 RESOURCES 93 6.4.2 TECHNOLOGY 93 6.4.3 SOCIAL 93 6.4.4 MARKET 93 6.4.5 COSTSAND BENEFITS 93 6.4.6 FINANCING 94 6.4.7 INFORMATION 94 6.4.8 hJSllTUTIONAL 94 6.4.9 POLICY 95 6.5 STAKEHOLDERS' PERSPECnVEs - SOLAR WATER PUMPS 95 6.5.1 RANKING OFBARRIERS 95 6.5.2 BARRIERREMOVERS 98 6.5.3 FOLLOW-UPPROJECT 98 6.6 CONCLUSIONS 98 7 BARRIER ANALYSIS - SMALL HYDRO POWER 99 7.1 INTRODUCTION 99 7.2 SOCIO-TECHNICAL BARRIERS 99 7.2.1 RESOURCES 99 7.2.2 "NOLOGICALIT~CHNICAL 100 7.2.3 ENVIRONMENTAL 100 ix 7.2.4 SOCIAL 101 7.3 ECONOMICBARRIERS 102 7.3.1 MARKETBARRIERS 102 7.3.2 FINANCIAL ANALYSIS 102 7.4 CROSS-CUTTINGBARRIERS 106 7.4.1 INFORMATION BARRIER 106 7.4.2 POLICY 106 7.4.3 INSTlTUTIONAL BARRIERs 107 75 STAKEHOLDERS' PERSPECTIVES - SMALL HYDROPOWER 107 7.6 KEYBARRIERS 107 7.6.1 RANKING OFBARRIERS 108 7.6.2 BARRIERREMOVERS 109 7.7 FOLLOW-UPPROJECT 110 7.8 CONCLUSION 111 8 OPPORTUNITIES FOR DEVELOPMENT OF RETS 112 8.1.1 INTRODUCI-ION 112 8.1.2 NATIONALELECTRIFICATION Sc~~hrl~ 112 8.1.3 POWER SECTOR REFORM 113 8.1.4 NATIONALELECTRIFICATION FUND (NEF) 113 8.1.5 ENERGY- 114 9 POLICY IMPLICATIONS 114 9.1 INTRODUCTION 114 9.2 SUMMARY OF KEY FINDINGS 114 93 POLICY OPTIONS 116 9.3.1 INTRODUCTION 116 9.3.2 SOLAR 116 9.3.3 BIOMASS 118 9.3.4 SwHYDRO POWER 119 9.3.5 RETS~GENERAL 119 9.4 CONCLUDINGREMARI(s 120 10 REFERENCES 122 APPENDICES 126 Appendix 1 Framework for Barrier Analysis 126 Appendix 2 List of Identified SHP Sites In Ghana 128 Appendix 3a Financial Analysis of 30,000 Tomes Sawdust Briquetting Plant -Worst Case 130 Appendix 3b Financial Analysis of 30,000 Tomes Sawdust Briquetting Plant - Best Case 13 1 APPENDIX4A FINANCIAL ANALYSIS OF WLI FALLS (PROJECTLIFE 40 YEARS) 132 kPENDIX4B FINANCIAL ANALYSIS OF TSATSADUFALLS (PRo~c'r LIFE, 40) 133 APPENDIX 5 20% MORE: A WISH-LISTFORRETS IN GHANA.