The impact of renewable energy on Ghana’s economy

Tuesday 8 June 2021

​​​​​​​Cynthia Quarcoo

CQ Legal and Consulting, Accra


Access to energy is essential to economic growth and poverty alleviation. Access to reliable, cost-effective energy helps to modernise agriculture, increase trade, empower women, save lives, improve transport, expand industry and power communication.

As noted by the United Nations, Africa is the world’s second most-populated continent and has substantial renewable energy resources, most of which are under-exploited.

Over the last decade, Ghana’s energy demand has outstripped supply. Ghana has, therefore, adopted the UN Sustainable Development Goal (SDG) 7, the aim of which is to ensure universal access to affordable, reliable, sustainable and modern energy for all.

This has led to the gradual use of clean and renewable energy and expanded Ghana’s economic opportunities. For example, by 2019, 34 per cent of the energy generated in Ghana was from renewable energy sources, including hydro-marine, solar, wind, bioenergy and geothermal.

Focus on expanding renewable energy

Ghana has one of Africa’s highest rates of access to electricity. In 2014, this was estimated to be 72 per cent overall: over 87 per cent in urban areas and nearly 50 per cent in rural areas. Ghana also exports power to the neighbouring countries of Benin, Burkina Faso and Togo. The country’s power industry is composed of generation utilities, transmission and distribution companies, and independent power producers.

Demand for energy in Ghana is increasing by ten per cent per year, requiring increased generating capacity. The country is therefore focused on expanding its renewable energy.

Ghana is rich in an array of renewable energy resources, including biomass, solar, wind, and hydropower potential. Energy consumption taxes are being used to finance power development, including investing in renewables. However, institutional and policy issues have constrained market development of renewable energy.

Renewable energy use is increasing as demand and investment related to it also increases around the world. In response to these global trends, Ghana’s government views renewable energy as essential to the country’s overall energy supply mix and as a means of minimising the adverse environmental effects of energy production.

Ghana’s Renewable Energy Act of 2011 (Act 832) provides for the development, management, use, sustainability, and adequate supply of renewable energy for generating heat and power. Act 832 provides a framework to support the development and use of renewable energy sources and to help attract investment in renewable energy sources.

The effort to expand renewable energy in Ghana is not only focused on the development of electrical and other alternative fuel sources, but also to reduce carbon emission and combat climate change.

Although no clear integrated plan exists for the long-term development and promotion of renewable energy resources in the country, the Renewable Energy Master Plan has been developed to address the effects of short-term planning of the overall development of the renewable energy sector,. The Plan’s goals are to provide an investment-focused framework for the promotion and development of Ghana’s renewable energy resources to support sustainable economic growth and reduce climate change.

Switzerland and Ghana join forces on solar

Switzerland and Ghana are working together to develop commercial and industrial solar energy projects, which will help enable Ghanaian companies to act on climate change.

The two nation recently signed the agreement in Accra – in accordance with Article 6 of the Paris Agreement – and will now work together to foster increased adoption of low-carbon and green technology solutions. This cooperation will set a precedent for other countries in Africa to explore innovative climate change related financing.

The partnership kicks off with a joint solar energy and ecological cooking project. Under this new partnership, at least five million Ghanaian households will benefit from environmentally-friendly cookers and solar-generated electricity.

The partnership will also support private sector investment in Ghana’s National Energy Access Programme (NCEP), complementing Ghana’s contributions to the Paris Agreement through its Nationally Determined Contributions (NDCs).

The two countries are now exploring additional joint initiatives under the agreement.

Rural development: a prime focus in Ghana’s alternative energy future

Solar power investment is a promising solution for the rural electrification in Ghana. Small-scale solar power plants are widely regarded as being most suitable in meeting the energy needs of rural communities. Component costs are low, as are the qualified local human resources required to build the systems. For example, for several years, Black Spider Ghana has provided solar energy technology to residential communities, farms, hospitals, and industrial and commercial developments in both rural and urban areas.

In the case of solar energy development, the experience of Saudi Arabia is seen to be instructive to other countries, including Ghana. Here, where solar power has been extremely popular due to high heat conditions in daytime, and where most energy is generated in this way, solar has become a more effective means to power heating and cooling than burning oil, which can be preserved for use in a more strategic way.

By the end of 2015, more than 10 MWp of standalone solar PV systems had been installed in Ghana. These power sources are now being used for lighting, water pumping, powering of computers for the teaching of ICT, and vaccine refrigeration nationwide.

Over 70,000 solar lanterns have been distributed in Ghana. Standalone solar PV systems have been supported by government and the donor community projects in the past, but now their growth is also market driven.

Governments support essential

To date, there have been several government projects related to the development of renewable energy, which in some cases have enjoyed several years of success. These include the Weichau Project and the Isofoton Project, funded by the Spanish government; the Renewable Energy Services Project (RESPRO), funded by UNDP and GEF; as well as the ARB Apex Bank Project.

These projects provided lighting solutions and other services to local communities, based on a fee-for-service model and community ownership.

In Ghana, for the progress and growth of renewable energy to be sustainable and successful, it also requires a focus on local conditions and the involvement of local stakeholders.