Distributed Energy Resources regulation market highlight: Ghana

Our white paper on Distributed Energy Resources (DERs) Regulatory Building Blocks examines the regulatory treatment of DERs in Africa and categorizes markets based on their level of DER integration into previously centralized energy systems.

This is the third in a series of blogs that highlight features of CBE’s DER regulatory framework in different countries according to the market stages we set out in the white paper (centralized control, cautious co-existence, directed benefits, and early market management). Read the first blog on the Democratic Republic of the Congo and the second blog on Zimbabwe.

Background

• Ghana has one of the highest electrification rates in West Africa at 85% nationally
• The Government has set out plans to increase renewable energy’s share in the generation mix by nearly 1GW by 2030
• Currently, Ghana’s installed electricity generation capacity is 5,194 MW comprised of hydro, thermal, and renewables
• The Government and partners are The energy sector plays an important role in this work

Indicators of the right building blocks for a functioning DER sector in Ghana

• Primary energy sector legislation supports the deployment of DERs: Energy Commission Act 1997 and Renewable Energy Act 2011
• Dedicated DER regulations: License Manual for Service Providers in the Renewable Energy Industry 2012 and Guidelines for Distributed Energy Generation 2023
• Clearly established eligible customer criteria: prospective offtakers or DER customers must first secure a Bulk Customer Permit from the Energy Commission (EC). Eligible DER customersof at least 500 KVA consistently for a consecutive period of 3 months, or a minimum annual energy consumption of 1 million kilowatt-hours (kWh)
• Contractual flexibility: DER providers can contract through a lease or a Power Purchase Agreement (PPA) with their clients

Lifting of a moratorium that stalled DER sector growth

In August 2020, Ghana placed a moratorium on the signing of any new power purchase agreements (PPAs). The moratorium was initially intended to resolve excess on-grid generation capacity that was permitted without a sustainable contracting framework. The ban on PPAs was then “temporarily” extended to embedded power projects following a Ministerial directive to the EC, Ghana’s energy regulator responsible for licensing projects. The directive did not distinguish between embedded projects, which are grid-connected, and behind-the-meter DERs. The DER moratorium, though notionally temporary, proved to be a long-lasting barrier to distributed energy for industry in Ghana.

In April 2023, the EC announced that the moratorium on embedded generation projects was lifted. The Government indicated an interest in the development of renewable energy and achieving climate objectives. It is likely that broader energy sector reform, and increased domestic demand, also created an opportunity for DERs to co-exist alongside new on-grid generation.

Alongside this notable progress, the EC drafted new guidelines for distributed renewable energy generation and introduced a new framework for applying wholesale electricity supply licenses for DERs.

CBE’s experience in Ghana

CBE is currently licensing multiple DER projects for industrial customers in Ghana under the new licensing rules, which involve various submissions to the EC:

1. Stage 1 – Acquisition of a project registration certificate
2. Stage 2 – Acquisition of a wholesale electricity supply license (provisional) and certificate of authorization for local content and local participation
3. Stage 3 – Acquisition of an operational lisence

The Ghana EC has been consistently supportive and responsive to our queries. This engagement helps to reduce uncertainty regarding the process and broader statutory timelines for licensing.

Lifting the moratorium on the issuance of (provisional) wholesale electricity supply licenses for DERs in Ghana has once more opened the door for clean, reliable, onsite energy for industry. Regulatory improvements in the following areas may be considered by the EC and wider government:

• The EC’s existing “guidelines for renewable energy distributed generation” should be finalized and published. The draft rules are detailed and clarify:
  • Installation, connection, and deployment of DERs
  • License requirements for installation and importation
  • Technical standards for importing, installing, and maintaining DER systems
  • Appropriate DER financing models
• As energy sector leaders gain familiarity with DER systems and as their penetration in the sector increases, the licensing process might be streamlined by reducing the licensing stages or easing requirements at each stage
• The EC should set and communicate fixed timelines for license reviews. Instead of irregular reviews, the Board should review applications monthly

Summary

Ghana is placed at stage 1: cautious co-existence according to CBE’s White Paper framework. The EC has demonstrated that they are working to further progress Ghana’s DER regulatory framework, through stakeholder engagements and the digitalization of data collection from DERs.

The guidelines for renewable energy distributed generation, which remain in draft form, should be finalized and published to provide clarity about how the DER sector will be overseen in Ghana. In addition, the EC should consider reducing the licensing timelines for DERs by setting and communicating monthly timelines for which the committees would review and determine license applications.