As more companies go solar, Energy Ministry worries about ECG’s viability

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Minister of Energy, John Peter Amewu
Minister of Energy, John Peter Amewu

Despite the Energy Ministry’s excitement about companies increasingly utilising renewable energy means to power their businesses, thus going off the national grid, the future sustainability of the Electricity Company of Ghana (ECG) has being brought under the spotlight as its revenue streams could dry up.

The ministry, according to its Director of Renewable and Nuclear Energy, Wisdom Ahiataku-Togobo, is therefore contemplating measures that need to be put in place to ensure that a boom in solar and other renewable energy usage would not threaten the viability of the nation’s power distributor.

“It is not the best for the utility. These companies have battery storage, they generate their own power and store as well as batteries that takes care of their voltage ability and therefore use their own power,” he said.

According to him, the development “is making ECG non profitable and that is the biggest challenge that we have. Much as we encourage companies like Special Ice, Cal Bank and others, don’t forget these are the juicy companies that are supporting the residential consumers.

In Ghana, we do are doing rural electrification and we have 85 percent access but from this 85 percent, I can tell you that close to 51 percent is consumed by lifeline consumers and lifeline consumer charges are heavily subsidized so you need someone to pay a little more than the normal so that those in rural areas can continue enjoying electricity.

If we get all these juicy customers who are supporting the revenue base of ECG out of the revenue stream, it means two things: ECG may not get enough money to take care of the generation and operational cost and that means the residential consumers may have their power cost increased and that would not augur well for all of us,” he added.

Parliament and the entire Jubilee House — the seat of government — are expected to be powered with solar energy if arrangements go according to plan. Holy Child School in Cape Coast has halved its electricity bill with the construction of an off-grid solar-powered electrification system for the school.

Already, the iconic CalBank Tower is a green building and depends mainly on renewable solar power generated in-house and complemented by the national grid, management of Stanbic Bank Ghana and its partners have installed solar power systems at three of its branches, lowering their carbon emissions and making the bank more environmentally friendly, Special Ice has also Commissioned a 1000kw Solar Power Project to support its operations.

The examples above, including others, prove the fact that, various sectors of the economy are growing their interest in getting off the national grid onto solar, a move that makes players in the solar installation business excited as it indicates a productive, sustainable and green future.

According to players in the renewable energy sector, the fears expressed by Energy Ministry would be futile in the near future as the world is moving towards renewable energy, therefore, government should instead invest in the ability of state institutions to build their renewable energy production capacity, of which solar energy is one of the country’s best bet.

“In the near future when we seek funding from our developing partners for projects, they would insist that the projects be powered by renewable energy. That is where the world is moving now. Europe, America, and Asia are now looking to clean energy with China reducing its reliance on coal because of its effect on the environment.

Europe and America and talking about electric cars and why do you think they are serious about it? Everyone is going clean energy and they won’t give you funding and support you to continue polluting the environment,” an Energy Expert, Steven Essel told the B&FT.

CEO of Sunpower Innovations, Ernest Amissah, also made a forceful case for government to plan for the future as the days of renewable energy is closer more than ever. To him, the nation’s power generation mix which is expected to include 10 percent of renewable energy sources by 2030 should be aggressively pursued and achieved.

He also urged government to take steps to implement its net metering policy so as it can generate some income from private renewable energy providers. Net Metering is a billing related mechanism designed to encourage electricity consumers to supplement their purchase of electricity with grid-connected renewable energy self-generation. Under the net metering billing mechanism, renewable energy generation facility owners are credited for electricity the facility supplies to the grid, and this credit is set off against electricity purchased from the distribution utility.

For now, government gets little from the renewable energy suppliers but Mr. Amissah believes there can be a win-win situation. “As renewable energy provides power, government can serve as an off taker and purchase the power piped through the national grid, sell it at little margin and settle power provider only if some effort is put into fashioning a framework. For two years the Public Utility Regulatory Commission has been talking about coming up with a tariff rate or some tariff concept about net metering but that is yet to be firmed up,” Mr. Amissah said.

To Gideon Ofosu-Peasah, Deputy Director of the Africa Center for Energy and Environmental Sustainability, government’s worry about ECG’s viability is unfounded at least since more businesses going solar will lead to decreasing the dependence on the national grid for power to be made available for industrialization and electricity exports to neighbouring countries.

“The government will have to correct the market failure by building more industries to consume excess power. Second, allowing a quota system for renewable energy for a given period will smoothen and lessen the impacts on ECG thus allowing ECG to adjust to market changes. Third, the market failure can be corrected by incentivizing the residential, service and agric sector to go on renewables whiles industry and transport remain on the grid,” he said.

He added that, they are more ways the ECG can diversify including stimulating the use and management of electric vehicles, which would create a client base of ECG. “ECG can be equipped to manage all electric vehicle charging stations nationwide. ECG should also establish a renewable unit to partner developers to build and maintain projects. This will create a new revenue stream for ECG.”

He further made a strong case saying, ECG’s viability would not be threatened by renewables penetration but mainly the lack of investment in ECG over the years to be able to replace aging infrastructure and reduce technical and commercial losses to the barest minimum.

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