Ghana renewable energy master plan: The benefits of private sector participation

Abstract

This paper assesses the benefits of private sector participation in the Ghana Renewal Energy Master Plan (REMP) using a stylized Generation Expansion Planning model and concludes with a discussion on a financial incentive that could be offered to private investors to encourage their participation in the REMP. Using cost of electricity provision and level of demand unmet, the paper argues that there is significant benefit in incentivizing the private sector to participate in the REMP especially when the government faces budgetary constraint and unable to meet all electricity demands. Based on its 2016 feed-in-tariff for renewable energy generators and going by its annual investment levels in new generation capacity, Ghana stands to save on average, as much as US$265 million per year in cost of electricity provision along with a reduction in unmet demand by an average of 6.5% if it could attract private investors to participate in the REMP at desired levels. This potential cost savings can serve as the basis for a financial incentive scheme aimed at attracting private sector participation. This research has the tendency to unlock the conundrum of attracting private financing towards energy transition in similar developing economies.