Parliament Amends Renewable Energy Law

PARLIAMENT HAS amended the Renewable Energy Act 2011 (Act 832) to promote renewable energy and reduce the burden of high tariffs on consumers that are emerging as a result of utility scale photovoltaic (PV) plants charging feed-in-tariff (FIT).

The Renewable Energy (Amendment) Bill, 2020 thus provides for all future utility scale solar photovoltaic (PV) to be procured through competitive bidding.

The amendment will pave the way for the establishment of a competitive procurement scheme and a net-metering scheme in respect to electricity generated from a renewable energy source, and empowers the minister to designate a public entity to perform specific functions in the area of renewable energy and other clean energy alternatives.

The Renewable Energy Act 2011 (Act 832) was enacted in 2011 to promote the development of the renewable energy resources of the country.

It provided for a regulatory and licencing framework for the development of renewable energy in Ghana and sought to place obligations on utilities and bulk customers to purchase part of the electricity requirements from renewable energy sources.

The bill, when assented to, would also oblige the distribution utilities to procure electricity from consumer generators to encourage small-scale self-generation through net-metering.

Furthermore, the new legislation mandates fossil fuel-based wholesale electricity suppliers, fossil fuel producers and other companies that contribute to greenhouse gas emissions to complement the global effort of climate change mitigation by investing in non-utility scale renewable energy technologies.

Prior to the enactment of Act 832 the biggest obstacle to the development of renewable energy, especially solar, was the high cost of technology and the resultant high unit cost of electricity from solar photovoltaic (PV) systems. Act 832 thus established a feeding-tariff scheme to guarantee a good rate of return for investors.

The Energy Ministry said, however, that following the enactment of Act 832, rapid technological development had resulted in a steep reduction in the prices of technology to the extent that in some countries electricity from solar PV systems were at grid parity or in some cases cheaper than fossil fuel-based power generation.

Currently, the pace of reduction in the price of renewable energy systems, particularly solar PV systems and the resultant cost of electricity from the renewable energy systems, has rendered the FIT regime a burden on consumers who have to pay for expensive solar PV power based on FIT; while the solar PV power could be secured at a cheaper cost through competitive bidding.

Energy Minister, John Peter Amewu, stated that electricity from utility-scale renewable energy sources was now a good choice and should no more be an obligation.

A bidding process conducted by the Ministry of Energy in 2015 yielded a price of US cent 11.47/kWh from solar energy. In 2016, Bui Power Authority also floated a tender for 50 megawatts (SOMW) solar which yielded a price of US cents 8.8/kWh.

This occurred at a time when conventional power plant developers were requesting for 13 to15 US cents/kWh and the gazetted FIT in Ghana was 15US cents/kWh.

By Ernest Kofi Adu, Parliament House