Malaika Bakar writes: Building a business case for renewable energy in Ghana

The pervasiveness of environmental concerns in today’s world and conversations about sustainability make renewable energy a non-negotiable imperative if the world must reverse its current course.

This feature article explores the transformative power of renewable energy and highlights its numerous advantages in shaping a sustainable future.

With their ability to harness the infinite power of nature, renewable energy technologies offer many benefits that extend far beyond reducing our carbon footprint.

From mitigating climate change to fostering economic growth, renewable energy holds the key to a sustainable and prosperous future for generations. Statistics of the composition of renewable energy usage and non-renewable energy sits at a 10/90 percent split.

Wind power, geothermal energy, solar energy, hydropower, tidal energy, hydrogen, and other renewable technologies are widely popular sources of energy throughout the world today. In Ghana, the government has been actively promoting the development and utilization of renewable energy sources to diversify its energy mix and reduce dependence on -non-renewable fuel sources.

Renewable energy programmes have proven beyond doubt that such interventions have enormous potential to reduce poverty and improve the socio -economic development in the country, particularly in rural communities while contributing effectively to Ghana’s net-zero targets. As of the end of 2021, Ghana had an installed and dependable generation capacity totalling 5,265.10. MW and 4,706. MW respectively.

This installed capacity comprised of 3,753 MW thermal, 1,584 MW hydro and 144 MW from other renewable sources, highlighting the low contribution of renewable energy to the current energy mix. The situation is even more alarming when the contribution of hydro is discounted as usually done with respect to renewable energy discussions in Ghana.

The development and utilization of renewable energy in Ghana are ongoing processes, and these energy sources’ specific mix and availability may evolve over time. Currently, however, the main types of renewable energy sources in Ghana include solar energy, which is in abundance due to the country’s location near the equator, wind energy where Ghana has development of wind farms such as the 225MW Ayitepa Wind Farm, and hydroelectric power like the Akosombo and Bui Dams. The rest are biomass energy, and waste-to-energy including landfill gas and waste incineration. There is also geothermal energy, which is yet to be exploited in Ghana.

The benefits of developing and using renewable energy are enormous, with far-reaching impacts on the earth’s sustainability The first is its cost-saving advantage. Renewable energy sources such as solar and wind power can save costs  over time. Once the initial investment is made in infrastructure and equipment, the fuel sources for renewable energy (sunlight, wind, etc.) are free, reducing the reliance on costly imported non-renewable fuel sources.

This can lead to more stable and predictable energy costs, shielding consumers and businesses from volatile fuel prices. Transitioning to renewable energy can also help reduce overall energy expenditure in the long run. By utilizing renewable sources for electricity generation, Ghana can decrease its dependence on expensive fuel imports, which often come with associated costs such as transportation, storage, and market fluctuations.

Secondly, developing and deploying renewable energy technologies in Ghana can stimulate job creation and economic growth. The renewable energy sector requires skilled labour to install, operate and maintain renewable energy systems. This can lead to job opportunities and skills development for local communities, contributing to economic development.

Also, diversifying Ghana’s energy mix with renewable sources enhances energy security by reducing dependence on fossil fuel imports. This helps mitigate the risks associated with global fuel price fluctuations and supply disruptions. Ghana can achieve a more secure and resilient energy system by relying on domestic renewable energy resources

Furthermore, investing in renewable energy systems is often a long-term investment that can provide a positive return on investment (ROI) over the system’s lifespan. As technology advances and costs continue to decline, the payback period for renewable energy installations becomes more favourable, making it an attractive financial choice for businesses. While not strictly economic, it is imperative to mention the environmental benefits of renewable energy.

By reducing greenhouse gas emissions and air pollution, Ghana can mitigate the associated costs of environmental degradation, including healthcare expenses and environmental remediation efforts. It is important to note that the financial benefits of renewable energy in Ghana may vary depending on the specific renewable technologies deployed, project scale, local market conditions, and supportive policies and incentives.

In Ghana, several financial incentives and government support programs aim to encourage businesses to invest in renewable energy. These include ‘Feed-in Tariffs’ (FiTs) established by the Ghana Energy Commission, which provides fixed payment rates for electricity generated from renewable sources.  The Renewable Energy Purchase Obligation (REPO) also requires electricity distribution companies to purchase a set percentage of power from renewable sources.

Businesses can also enjoy tax incentives such as exemptions or reductions in import duties, corporate income tax, and value-added tax (VAT) on renewable energy equipment. Ghana also has the Renewable Energy Fund (REF) offering grants, soft loans, and financial assistance for renewable energy projects.  Businesses and investors should consult with relevant government agencies, industry associations, or renewable energy experts for the most up-to-date information on these incentives and programs in Ghana.

The sustainability Energy Fund for Africa (SEFA) under the African Development Bank is also a multi-donor special Fund that provides catalytic finance to unlock private sector investment in renewable energy and energy efficiency. The overarching goal is to contribute to universal access to affordable, reliable, sustainable, and modern energy services for all in Africa.

The benefits of renewable energy are vast and multifaceted, reaching far beyond reducing greenhouse gas emissions. By embracing clean, sustainable, and abundant power sources, we can mitigate climate change, enhance energy security, foster economic growth, and improve public health.

The transition to renewable energy is not merely an environmental imperative; it is an opportunity to reshape our global energy landscape and build a sustainable future that prioritizes the well-being of our planet and its inhabitants. By leveraging renewable energy, Ghanaian businesses can align with global trends, meet evolving customer expectations, and gain a competitive advantage in the market whilst generally saving on energy cost in the medium to long term.

Malaika Baker

Head, Oil & Gas / Energy and Infrastructure

Stanbic Bank Ghana