Power Punch Is Ghana’s $550 Billion Energy Transition Plan Overly Ambitious? by davidomata October 19, 2023 written by davidomata Ghana’s recent announcement to shift its net-zero emissions target from 2070 to 2060 reflects a significant step towards combating climate change while fostering economic growth. The Energy Transition Plan, unveiled by President Nana Akufo-Addo, outlines a credible pathway for achieving this goal, focusing on key economic sectors. Current Energy LandscapeGhana boasts an impressive 86% electricity access rate, with approximately 12% of its energy mix derived from renewable sources, one of the best in West Africa. However, the nation grapples with high debt levels, especially within the energy sector, which could challenge the ambitious transition plan. Investment and FundingThe energy transition plan outlines an ambitious $550 billion budget, signalling a substantial opportunity for international investors to engage in sustainable development within Ghana. This financial commitment is integral to achieving the outlined goals and is expected to generate an estimated 400,000 net jobs within the Ghanaian economy. Decarbonization TechnologiesThe plan prioritizes four main decarbonization technologies: renewables, low-carbon hydrogen, battery electric vehicles, and clean cookstoves. These innovations will account for over 90% of the targeted emission reductions by 2060. Emission ProjectionsWithout implementing the plan, Ghana’s emissions will surge from 28 Mt CO2e in 2021 to over 140 Mt in 2050. The bulk of this increase is attributed to the transport sector, driven by population growth, rising GDP per capita, and increased vehicle ownership. Potential ChallengesThe plan’s ambitious targets face potential challenges, particularly the high existing debt levels nationally and within the energy sector. Successfully managing this financial burden will be critical to executing the transition plan effectively. The escalating national debt forecasted for Ghana from 2023 to 2028, projecting an increase of 71.82% and culminating in an estimated peak of $106.19 billion in 2028, presents a significant impediment to the finance mobilization for the energy transition plan. With the debt trajectory showing a persistent upward trend in recent years, allocating resources towards the ambitious energy transition goals could become increasingly challenging. The expanding debt burden implies limited fiscal space, potentially constraining the government’s capacity to allocate substantial funds towards the energy transition plan’s budget of $550 billion. This rising debt profile not only narrows the financial scope for new investments but also raises concerns about servicing existing debt obligations, potentially diverting funds from critical initiatives to achieve the transition targets. Navigating this mounting debt challenge will be crucial in successfully implementing Ghana’s energy transition plan. Conclusion Ghana’s Energy Transition and Investment Plan signifies a bold commitment to combating climate change while advancing economic development. The accelerated timeline from 2070 to 2060 reflects a heightened sense of urgency. However, the nation must strategically navigate financial hurdles to ensure the plan’s success. October 19, 2023 0 comment 0 FacebookTwitterPinterestEmail
Power Punch The Off-grid and On-grid Utilities Tango by omiesam August 15, 2023 written by omiesam Decarbonization has become a global priority. As a result, utilities in the Nigerian electricity supply chain must find innovative ways to transition to low-carbon electricity to achieve improved energy access and net-zero carbon emissions by 2060. Regulatory Overview The Nigerian Electricity Regulatory Commission (NERC) is the primary regulator of the electricity sector. The utilities in the Nigerian electricity value chain are partly owned and operated by the government and private companies. Section 80 and 167 of the Electricity Act (‘the Act’) 2023 mandates NERC to promote renewable sourced electricity and consider technology, financial viability, and impact on tariffs to ensure sustainably, respectively. Alongside this, section 164 of the Act further directs the NERC to develop and publish policies that: 1. simplify the licensing requirements for renewable energy service frameworks; 2. specify the responsibilities of renewable energy service companies in generation, transmission, and distribution activities for energy-generated capacity into the national grid and distribution network; and 3. provide guidelines for issuance on net-metering for roof-top solar PV systems, small wind power per the Act and renewable energy standards on installation, decommissioning and disposal of renewable energy accessories. The Challenge? The regulator is yet to show commitment to the objectives mentioned above. For instance, the NERC is yet to update the 2015 Regulations on Feed-in Tariff for Renewable Energy Sourced Electricity in Nigeria and provide guidelines on the rates that public utilities may charge for electricity generated from renewable per s.168 of the Act. The current regulation only prescribes feed-in tariff rates for the 2016 base year, which is problematic because s.169 of the Act stipulates that public utilities shall not demand a feed-in-tariff for electricity generated from renewable sources unless the billable rate has been approved and published by the NERC in the Federal Government Gazette and the mass media. As such, distribution utilities cannot buy or negotiate Power Purchase Agreements (PPAs) with a renewable energy generator unless they are under the guidelines published by NERC. On the other hand, critics may rebut this observation by highlighting the incentives for renewable energy participation as a signal of the sector’s commitment. Section 166 of the Act mandates the Federal Ministry of Finance to introduce incentives to facilitate the generation and consumption of energy from renewable energy sources. Some of the incentives include: 1. tax exemption: utility companies engaged in generating electricity from renewable energy sources are granted pioneer status (tax exemption) for the first three years, renewable for another two years; 2. duty allowance for imports and exports of renewable machinery and materials; 3. free custom duties for two years on the importation of equipment and materials used in renewable and energy efficiency projects; 4. guaranteed purchase of power generated – the Feed-in Tariff Regulation for Renewable Energy Sourced Electricity directs distribution companies and the Nigerian Bulk Electricity Trading Company to each procure 50% of the total output of a renewable energy plant; and 5. five-year tax exemption for prospective manufacturers of renewable energy machinery from the commencement date of manufacturing, amongst others. Although these initiatives are commendable, the bureaucratic challenges for decentralized energy projects to participate in the electricity market outweigh the incentives. Bureaucratic challenges such as complex licensing and approval processes and sub-optimal political priorities have delayed the seamless integration of off-grid renewable energy. Nigeria generates its electricity through thermal and hydro, resulting in heavy dependence on the oil and gas industry. The oil and gas industry is a dominant sector in Nigeria with influential personalities. Thus, prioritizing the mix of renewable systems to the national grid would result in a dip in profits, and such an outcome may not be ideal. Moreover, the Federal Government of Nigeria, in July 2023, unveiled a policy to propel gas investment of about $18 billion to offset Nigeria’s $1 billion gas legacy debt. Conclusion The power sector is crucial in achieving Nigeria’s decarbonization targets. Therefore, the NERC must take active steps to ensure that the integration of off-grid systems envisaged in the Electricity Act is implemented. August 15, 2023 0 comment 0 FacebookTwitterPinterestEmail
Power Punch Nuclear Power: Key to European Energy Security? by aisi June 6, 2022 written by aisi The diversification of energy sources has become pertinent to the global community in addressing climate change. Today, each region seeks to find cleaner fuels such as nuclear and green hydrogen tailored to their available resources and economies. An example is the possibility of nuclear power as the key to European energy security. In 2019, 39 per cent of the energy consumed in Europe was provided by fossil fuels, with 26 per cent from nuclear power generation. However, unlike Africa, Europe has the capacity and finance to develop projects from clean energy generation options. Also, the continent currently faces enormous internal pressures, like the need to cut dependence on Russian natural gas. These pressures, alongside the necessity to reduce greenhouse gas emissions, have left the continent seeking to find clean, cost-effective ways to ensure energy security. For these reasons, nuclear power is one of the options being considered to replace fossil fuel energy generation. Nuclear power plants, although fairly expensive, can last from 30 to 60 years before they are decommissioned. Also, nuclear power plants are considered clean because they do not emit greenhouse gas emissions that are detrimental to the global climate. For this, France and other countries have announced plans to increase nuclear power generation to meet their emission reduction goals. However, are these points valid enough for nuclear power to be the key to European energy security? Despite the absence of greenhouse gas emissions from nuclear power plants, nuclear pollution is not completely non-existent. Nuclear explosions and the disposal mechanisms of radioactive waste from nuclear plants have been topics of concern among environmentalists. Usually, nuclear waste is packaged in canisters and then buried underwater, underground or in buildings. However, this process, coupled with the possibility of a nuclear plant explosion, does not eliminate the risk of radioactive contamination of land and marine environments. In the past, major disadvantages to adopting nuclear power generation were the cost and difficulty in developing the plants. However, technological breakthroughs have made for simpler nuclear reactor designs. For example, Small Modular Reactors (SMRs) can be built remotely before being deployed and generate up to 300MW. In Romania, the U.S Trade and Development Agency (USTDA) provided funding to support the integration of SMR technology into the country’s energy mix. Also, with support from the USTDA, Poland has begun front-end engineering and design studies to develop the country’s first ever nuclear power plant. The urgency to decommission as many fossil fuel plants as possible and the rapidly growing global population have demanded each continent find energy sources that are clean, affordable and sustainable. Being clean, lasting and cost-effective, perhaps nuclear power is the key to European energy security. June 6, 2022 0 comment 0 FacebookTwitterPinterestEmail
