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KPANSHEGU, Ghana – In a remote savannah in northern Ghana, I’m sitting with a chief angry about the lack of lights in his 800-person village. His residents can’t read at night. They have to walk 45 minutes to charge cell phones.
“People have suffered a lot,” said Chief Archibald Adam Abudu, who even made a personal plea to Ghana’s president this summer to bring electricity.
But power is unlikely to come soon. The government, which is adding more power capacity in urban areas, is years away from helping isolated areas like this.
There is help for Kpanshegu, however. Saha Global, a Boston-based NGO, is bringing solar power and clean water to dozens of small villages across northern Ghana. The group recently opened a small solar charging center, run by two local women, in the village. It uses solar panels to provide green power that the villagers can tap into. On the morning I visited, a dozen villagers were re-charging their cell phones and batteries for their solar lanterns.
Solar power is emerging as a cheap, affordable power alternative in Ghana, a fast-growing West African country where a quarter of the population has no electricity and those who have it struggle with constant power outages.
“Nobody in our communities had access to electricity. They were all relying on kerosene lamps, which are polluting and substantially more costly,” said Saha Global founder Kate Cincotta, a 32-year-old MIT graduate whose group has launched 26 solar businesses providing affordable green power to 10,000 residents.
Saha Global is among a half-dozen startups that I encountered in Ghana’s
nascent solar space. The industry is benefitting from plummeting costs and friendlier treatment from the government, which aims to get 10 percent of the country’s power from green energy sources by 2020. Most of the solar efforts are focused on regions where electricity is nonexistent or unreliable—and where mobile money, a uniquely African phenomenon makes it easier to pay for power, is becoming more commonplace.
PEG-Ghana, Ghana’s largest off-grid solar provider, pegs its entire business model on a mobile money transfer system that enables millions of Ghanaians to transfer money to other users, pay bills, purchase goods, earn interest and borrow, all from a cell phone. The company is a spinoff of M-KOPA Solar, a remarkable Kenyan company that has used the same mobile money system to sell household solar systems to 425,000 customers across East Africa. With a $30 deposit followed by 50-cent digital payments every day, M-KOPA customers can own their home solar system (a solar panel, two lights, a cell-phone charger and a solar-charged radio) outright after just one year.
Ghana is the next frontier for pay-as-you-go solar businesses, such as PEG-Ghana and Azuri Technologies. “There are lots of people off the grid, it’s English speaking and it’s one of the fastest growing mobile money markets in Africa,” said Lauren Cochran, director of private investments at Blue Haven Initiative, a Boston-based investor that helped PEG-Ghana raise $7.5 million this year to expand its business in Ghana and other West African countries.
PEG-Ghana already has 29 service centers and 200-plus employees that are servicing 14,000 customers, and sales are growing by 20 percent a month. “We’re in a good space,” said the company’s country manager Simone Vaccari, who hopes to have 100,000 customers across West Africa by 2018.
While household solar systems like PEG-Ghana show promise, what about businesses, manufacturers and entire villages looking for bigger renewable systems instead of relying on a spotty or nonexistent power grid? This is where larger solar mini grids and even bigger grid-scale solar projects are coming into play.
Black Star Energy is building solar mini grids serving seven small communities in the Ashanti region. Its first system, in a cocoa farming area, opened last fall. Company CEO Nicole Poindexter says a big advantage of her larger systems is that they can run bigger appliances, such as refrigerators, which are critical in Africa for ensuring that food is not wasted. Africa loses enough food annually to feed 300 million people, much of this due to lack of refrigeration, according to a recent Food and Agriculture Organization report.
Ghana’s government is also enacting policies to attract outside investors and developers for renewable and fossil fuel projects, including competitive bidding, power purchase agreements and feed-in tariffs – all of which help ensure satisfactory long-term payments for power that is produced.
So far, the results have been mixed, with the biggest additions to the power grid being natural gas plants, which are benefitting from the country’s first offshore natural gas field developed last year. Solar projects are also being added to the grid, but they’re smaller — including a 20-megawatt solar PV project that went on line in April and a second 20-MW project awarded to a South African firm earlier this fall. Several more renewable energy projects are in the works up north, including a $4.5 million solar installation for an agriculture venture in Yagaba Basin.
Officials at the U.S. Agency for International Development’s Ghana office say there’s a lot of interest and potential with grid and off-grid solar, and they credit the government for setting renewable energy goals and enacting policies to encourage foreign investment.
But the fact remains that solar is still a small energy player in Ghana, accounting for less than one percent of the country’s meager 3,000 megawatts of total installed capacity.
So what will it take it for solar to grow exponentially? It’s less a technology issue than a money and policy issue.
One key step is clearer, more consistent government policies that will better support existing solar businesses and attract new ones. That may sound simple, but it’s not. Earlier this year, in fact, the government switched to a new tariff system that resulted in import duties and other tax exemptions for small solar equipment being dropped. As a result, major solar equipment suppliers like Burro are now paying a 20 percent import duty and a 17.5 percent value-added-tax for small solar lamps being imported from China. The extra costs have been devastating.
After posting record sales in 2015, Burro’s business year is off by more than 50 percent this year, says Burro’s country manager Carol Brown whose company is a supplier for Saha Global and a national store chain Melcom.
“The tariff issues has definitely hurt us,” said Brown, who has also been hurt by a weaker economy and a more reliable power grid.
Peyton Fleming is a senior director at the nonprofit sustainability group Ceres, which has launched a Clean Trillion campaign aimed at accelerating clean energy investment necessary to curb climate change. Details at www.ceres.org