Taking advantage of a new regulatory environment in Ghana that’s more favorable to investments in renewable energy, Blue Energy, a UK-based renewable energy investment and development company has a unveil plans to build the country’s and the continent’s largest solar photovoltaic power plant.
Westmill photovoltaic solar farm constructed by Blue Energy in Wiltshire, UK. Photo courtesy of Blue Energy.
The 155 megawatt power plant will be built by the company’s subsidiary Mere Power Nzema Ltd. on a 183 hectare site close to the village of Aiwaiso in western Ghana. The company has secured a 100-year lease on the site, with planning permission as well as permission to connect to the grid.
Extoling on benefits of the location, Blue Energy said the site has “good solar radiation, has excellent access to the major road systems and is within easy reach of a deep water port at Takoradi.
“The plant will be directly connected to the 161 kV West African Power Pool transmission line, which runs alongside the site, linking Ghana to [the] Ivory Coast, Togo, Benin, and Nigeria, and has available capacity for its load.”
Blue Energy expects to begin installing about 630,000 solar photovoltaic modules by the end of the year, and for electric generation to start early in 2014, with sections coming “on stream” as they are completed. The $400 million project is due to reach full capacity by October 2015.
Industry analyst Ash Sharma at IMS Research told the BBC News that this “is the biggest single project that’s going ahead at this moment. It is not the biggest in the world, but if it goes ahead it will be the biggest in Africa.
“The project has land, it has planning consent, it has a generating license, and it has received a feed-in tariff. It is the right plant in the right place at the right time.”
Blue Energy says that it has “secured all the consents that it needs to go ahead with the project,” and that, “Ghana’s electricity regulator, the Energy Commission and the Public Utilities Regulatory Commission have awarded it a generation license and a feed-in tariff for the plant’s 20-year operational life.”
The only thing that still hasn’t been secured is investors. The company says that it’s in “discussions with a number of international financial institutions, and global equity and infrastructure funds which have expressed interest in providing debt financing or investing in the project.” Blue Energy expects to “reach financial close in the first half of 2013.”
Sharma agrees with the company’s projection, telling the BBC that he feels confident the financing needed to build the plant could be raised in the next six months.
In addition to outside investors, the project has a lot of internal backing. The Blue Energy is majority owned and funded by members of the Stadium Group, one of Europe’s largest private asset and development companies with £2.5 billion of assets under management, and if necessary “is fully able to source the development funding and equity.”
Also from a regulatory standpoint, this is a great time to be investing in renewable energy in Ghana, whose government has “set a target of more than doubling its installed capacity from 2,600MW today to 5,500MW by 2015.”
Daily Guide Ghana reported that last November, “Energy Minister Joe Oteng-Adjei announced he was seeking $1 billion of private investment to help Ghana achieve its target of generating 10 percent of electricity from renewable sources by 2020. The Nzema (Blue Energy) project will meet 20 percent of this generation target.”
Blue Energy elaborated, saying it expects to “increase Ghana’s current generating capacity by six percent and will meet 20 percent of the government’s target of generating 10 percent of its electricity from renewable sources by 2020.”
Blue Energy says this solar project is “expected to contribute $100 million in tax to Ghana’s government over the lifetime of the project,” adding that, “Its clean energy will avoid emissions of 5.5 million tons of CO2 (based on an oil-fired power station with equivalent output).”
The project is also expected to boost the local economy around the plant, with Blue Energy saying it “will create 500 jobs over the two-year construction period and 200 permanent jobs in operation.”
The company also expects to stimulate another 2,100 jobs in the local economy, by subcontracting activities to local companies and increasing demand for goods, services, and education.”
Blue Energy is very optimistic about the new project, saying that, “Ghana is one of the fastest growing economies in sub-Saharan Africa,” with 14.4 percent GDP growth in 2011, and demand for power growing at 10-15 percent a year.
The company says factors that have slowed the country’s economic growth in the past have included lack of reliable generating capacity and power shortages that were estimated to have cost 1.9 percent GPD in 2006.
Currently, Ghana is highly dependent on hydroelectric power (vulnerable to drought) and petroleum power.
Sharma said until now, “demand for renewable power has been held back in emerging economies like Ghana by high costs, but a recent glut of solar panels on world markets has seen prices tumble – much to the advantage of African countries.
“The reason the technology hasn’t taken off so far is that it has been too expensive, but the costs of solar have decreased dramatically in the last two years. They’ve fallen by 40 percent, and this has really enabled it to be used in emerging regions in Africa and Asia.”
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