PROPOSAL FOR REVIEW
PROJECT TITLE: RENEWABLE ENERGY-BASED ELECTRICITY FOR RURAL SOCIAL AND ECONOMIC DEVELOPMENT IN GHANA
GEF FOCAL AREA: Climate Change
COUNTRY ELIGIBILITY: Ghana is a signatory to the U.N. Framework Convention on Climate Change and deposited its ratification instrument with the United Nations on September 6, 1995.
TOTAL PROJECT COSTS: $ 3,072,000
GEF FINANCING: $ 2,472,000
GOVERNMENT COUNTERPART: (a) $500,000 (cash and in kind)
COFINANCING/PARALLEL U.S. Department of Energy/National Renewable Energy
FINANCING: Laboratory $100,000 (parallel financing for technical support), under a Memorandum of Understanding between the U.S. Dept. of Energy and the Ghana Ministry of Mines and Energy
GEF IMPLEMENTING UNDP
AGENCY:
LOCAL COUNTERPART Execution: Ministry of Mines and Energy (MOME)
AGENCY: Implementation:Volta River Authority/Northern Electricity District (VRA/NED)
ESTIMATED STARTING DATE: January 1, 1997
PROJECT DURATION: 3 years
GEF PREPARATION COSTS: $74,000 (PDF Block B of $59,000; $5,000
(Government of Ghana); $10,000 (NREL)
COUNTRY/SECTOR BACKGROUND/CONTEXT
Country Background
1. The Republic of Ghana is located between 4 deg. and 12 deg. north latitude, bordering the North Atlantic Ocean, between Côte d'Ivoire to the west and Togo to the east. The climate is tropical and extremely sunny; warm and comparatively dry along the southeast coast; hot and humid in the southwest; and hot and dry in the north.
2. The country has about 18 million people with an average per capita income of approximately $400. In 1990 it was estimated that seventy percent of men and fifty-one percent of women age 15 and over could read and write. Almost half the population (46%) is under the age of 15, 51% are 15-64 years, and only 3% are 65 years and older. The population growth rate is estimated at 3.06% per year (mid-1995). Infant mortality rates are very high: 81.7 deaths/1,000 live births. At the current rate of population growth, the population will double by the year 2020.
Energy and Electric Power Sectors
3. Ghana's electric power system is operated by two parastatal utilities: the Volta River Authority (VRA) and the Electricity Corporation of Ghana (ECG). The VRA is responsible for power generation and transmission at 161 KVA and 225 KVA. The ECG is responsible for power distribution in the south; in the north, the Northern Electricity Department (NED), a subdivision of VRA, handles distribution. VRA and ECG report to the Ministry of Mines and Energy.
4. There are 1,122 MWe of installed generating capacity in the public system in Ghana, with 912 MWe of hydro power from the Akosombo Dam, 160 MWe from the Kpong dam, and 30 MWe of diesel power at Tema. Electrical load growth in recent years has consistently exceeded expectations. Between 1985-1992, domestic load growth averaged 9.6% per year. Between 1990-1992, despite tariff increases in both years, annual load growth exceeded 15%. During the period 1982-84, severe drought conditions existed in Ghana during which time power rationing took place. The level of the Akosombo dam during July/August 1994 was below the minimum operating level and a plan of once-a-week, 24-hour-long power outages was put into effect nationwide.
5. The Government of Ghana is committed to extension of electricity services to every community of 500 people or more by the year 2020. The National Electrification Scheme (NES) is planned to proceed in six five-year phases over the period 1990 - 2020. The electrification of the several thousand unelectrified villages in the country has been assumed to be via grid extension, with community participation under the Self-Help Electrification Program (SHEP). This will be a challenging and financially difficult task, due to (1) the low density of potential consumers of rural areas, (2) the low income levels in rural communities, and (3) the significant distances required for medium-voltage lines, the costs of medium-voltage and low-voltage lines, transformers, and service drops. Also, most of the equipment is imported, and over 90% of the cost of the equipment is in foreign exchange. And, because the SHEP requires that communities be within 20 km of a medium-voltage line, many communities may not receive electricity services for several decades.
6. A national study has identified 4,221 village communities with a population above five hundred inhabitants. As of 1991, when the study was submitted, only 478 of these communities had been electrified, all of them via grid extension. By December 1995 the number of electrified small communities had grown to 904.
7. Five hundred communities are presently being electrified under the District Capitals Electrification Programme of the National Electrification Project. Concurrently the Ministry of Mines and Energy is processing the funding and importation of materials and equipment for the electrification of 1,390 communities 2) under the Self-Help Electrification Programme (SHEP). This latter effort will require an estimated US$ 80 million (at 1994 currency exchange rates) and will be undertaken in two phases. Together, these activities will result in at least 1,890 communities electrified over the next five years under the National Electrification Scheme.
8. When the NES is completed, many remote communities will still lack electricity. The use of free-standing PV systems can provide valuable electricity services to these smaller communities as well as to the larger communities that would otherwise be electrified via grid extension. If the present rate of population growth (3%/year) continues, by the year 2020 the population of Ghana will have doubled; this presents an enormous added challenge to rural electrification.
Rural Sector
9. Three quarters of Ghana's population lacks access to electricity. To provide rural Ghana with reliable electricity for household energy needs, community services, and productive uses, the Government initiated the National Electrification Scheme (NES) to furnish power throughout the country by the year 2020. The program was initiated in 1989 as the principal instrument for achieving the national policy of extending electricity to all parts of the country by the year 2020.
10. This program has resulted in the electrification of over 200 towns and rural communities since 1989. The NES has two main components. These are (1) the District Capitals Electrification Program (DCEP), and (2) the SELF-Help Electrification Program (SHEP). Under the DCEP the target is to extend the grid to all of the 110 district administrative capitals. The goal of the SHEP is to electrify villages and towns within 20 km of the national grid. Under the SHEP, prospective villages and towns are required to make material contributions (power poles and labor) towards electrification.
Technical Basis for Assistance 11. There is a strong need for technology indigenization through training of local technicians, engineers, and entrepreneurs, and through joint ventures and licensing arrangements with international equipment suppliers. A "critical mass" of market activities is required to attract private sector investment and activities. This in turn will stimulate competition, reduce prices, and improve services.
12. Decentralized electrification has not taken place yet due to a number of barriers encountered in the Ghanian electric utility system, within Government, and in the private sector. The proposed project is designed to remove barriers to the wide-spread use of renewable energy technologies for off-grid rural electric power delivery in Ghana, and proactively catalyze effective programmes for renewable energy-based electricity services. It is intended to lay the foundation for larger future investments in this area. Removal of these barriers is consistent with sustainability because the incremental costs of decentralized renewable energy-based power systems are expected to be negative in comparison with the base case of grid expansion with thermal power at the margin.
13. This project brief identifies these barriers such as institutional, technical information, and market related barriers and describes how the project will overcome them, enabling the VRA (and its successors), in collaboration with the private sector, to pursue wide-scale electrification of off-grid communities through the use of renewable energy technologies. This will help VRA to meet the country's development objective of full electrification with little or no net CO2 emissions. It will also help open the country's energy markets to decentralized use of renewables. The project to be developed as part of this PDF activity will fall under the GEF Operational Programme 6: Promoting the Adoption of Renewable Energy by Removing Barriers and Reducing Implementation Costs.
14. The project has been designed as an integrated set of activities which, taken together, will address all of the barriers identified. These barriers and the ways in which the project addresses them are broken out below.
15. Institutional Barriers
There is no institutional
framework for private sector-based supply of electricity services, although the
present goals of the Government include establishment of a framework for private
sector participation in the power sector. A central task of the project will
be the development of a model private power contract framework for private
sector-based delivery of off-grid electricity services using low-carbon
technologies.
Decentralized electricity supply has not been effectively addressed in
national and international (bilateral, UNDP, other multilateral) social and
economic development support programs and projects. There is little knowledge of
or experience with renewables by NGOs; in-country bilaterals and multilaterals;
national, regional, district, and local institutions, etc. The project will
provide outreach to a wide ensemble of stakeholders, including the public and
private sectors, universities, and the NGO/PVO/CBO community. The project will
work to link the electrification activities with proactive microenterprise and
community development activities and investments. This will be done in
collaboration with NGOs, local and regional government, and others.
There is a public perception that any supply of electricity-based
services in which the Government of Ghana has a role must be provided at the
same price as electricity on the grid. The pilot communities will be offered
the opportunity to have electricity services for a cost equivalent to or below
what they are presently paying for candles, kerosene, dry cells, auto batteries,
and battery charging services.
16. Technical Barriers
There is no experience in
Ghana with renewable energy applications and projects on a scale that can permit
design and implementation of a renewable energy-based rural electricity services
program in the context of a national least-cost electricity services program.
The project will provide the necessary scale, training, and experience.
Ghana does not have national technical standards for commercial PV
systems and system components. With assistance from NREL, the project will
draw on U.S., European, and relevant African standards, such as those developed
in Botswana and Zimbabwe.
The project implementing agent, the Volta River Authority / Northern
Electricity Department, is not presently involved with PV technologies and lacks
expertise with these technologies and the analytical tools available to model
and assess the technical and financial performance of renewable energy-based
power supply options. The project will build on and extend the renewable
energy expertise in the MOME, and train key technical personnel at the MOME and
at VRA/NED.
There is almost no technical experience in either the public or private
sectors in Ghana with renewable energy-based electricity options for community
applications. Most of experience has been with PV power units for remote
Government telecommunications applications. The project provides the
framework and opportunity to gain this experience. In-village equipment
maintenance and repair capabilities will be established by trained and
supporting technician(s) in each village. Initially they will work as contractor
to NED and will be trained by NED.
17. Lack of information and experience: The government lacks the necessary experience with renewable energy-based technologies that can provide meaningful off-grid electricity services to rural communities. The project will support the reduction in implementation costs through appropriate training and networking activities, including the establishment of practical links among VRA/NED, leaders of relevant programs in other countries (eg. South Africa, Zimbabwe, Mexico, Brazil, the Dominican Republic, and Indonesia for dissemination of PV solar home systems, and with Brazil, Mexico, Indonesia, Malaysia, and Australia for use of renewable energy-based diesel hybrid power systems for community electrification). The Government also lacks financial information on how to price electricity services to be delivered as part of this project.
18. Commercial and Market-related Barriers
There is almost no
commercial renewable energy activity in Ghana, and private sector activities and
capabilities have almost disappeared. The project is expected to stimulate
the emergence of international joint ventures between international equipment
suppliers and local companies.
There are no mechanisms for market aggregation for renewable energy
products and services. The project will create a market-aggregating mechanism
to stimulate private sector supply of equipment and services, including local
production of key components (electronic ballast-equipped fluorescent lamps,
battery charge controllers, structural materials, etc.)
Ghana's commercial banks are highly reluctant to lend to the private
sector for solar energy systems. The project will work with the banking
community to identify the requirements and modalities for commercial support to
solar equipment suppliers and installers.
The value of the Cedi is steadily eroding relative to OECD
currencies.
Duty and taxes on imported equipment raise the cost of solar
installations (10% duty and 15-17.5% sales tax on solar products, including PV
modules at 17.5%). The project will request that the Government commit itself
to removing or lowering these fees.
Recovery of capital and operating costs may be a barrier to
sustainability. To support sustainability, the electricity services revenues
from the villages will go into a revolving fund for further local expansion of
the program. This will result in small-scale capitalization of a local
enterprise. The funds could be used to target the neighboring villages that were
passed over for electricity services in the first phase of the project. This
will respond to the need to have a financial institution between the communities
and VRA/NED.
19. Information, Education, and Training Barriers
There is no coherent national program to support education, training,
and enterprise in the solar energy field. UST and a few institutions have
some focused capabilities and experience with renewable energy technologies and
their applications in rural communities. The project will support training and
educational activities at UST and other academic institutions, and will involve
faculty and students in the project. The approach will be developed as part of
the preparation of the full project document project action plan.
There is no renewable energy center of expertise in Ghana. The
project will build on the focused expertise at UST and other universities, and
will establish a center of practical expertise at the project operations center,
proposed to be located at Nakpanduri on the site of the former Nakpanduri Guest
House.
PROJECT OBJECTIVES
Global Environment Objective
20. Ghana is expanding its thermal power generation due to the limitations of the existing hydropower facilities. Thermal power from fuel oil will be the marginal source of electrici ty for rural electrification. The proposed project will facilitate the widespread sustainable use of low-carbon renewable energy-based electricity supply technologies to meet electricity needs in the more than 3,000 presently unelectrified communities. The project will provide an effective model for large-scale use of such technologies, as well as significant ly reduce the growth in greenhouse gas emissions that would otherwise result from fossil-fuel based energy systems.
Anticipated Global Environmental Benefits
21. The project will facilitate significant reduction in the growth of CO2 emissions from electrification of off-grid communities, and through effective demonstration, will help catalyze similar processes elsewhere. Between one million and three million tons of CO2 emissions would be avoided over twenty years if renewable energy-based electricity services are provided to most of the villages in Ghana.
Specific Project Objectives
22. The goal of the project is to facilitate the development of a national capacity, combining both private-sector and public-sector efforts, to use primarily renewable energy-based technologies, especially photovoltaics (PV) and PV/diesel hybrid power systems, to provide sustainable rural electric power services. These technologies would be used for both individual applications and centralized electrification of off-grid communities not technically or economically suitable for electrification via grid extension.
23. In this approach, the parastatal utility company VRA/NED will own and operate the power systems, and provide electricity services to the target villages, on a fee-for-service basis. Rural communities will not be expected to own, operate, or maintain the systems, although they will be expected to take good care of the equipment, and prevent it from being abused or damaged. They will also be expected to invest some "sweat equity" in the systems through contribution of labor and some capital for installation of power poles and assistance in the installation of PV units. Because the Government of Ghana is presently subsidizing electricity prices, especially in rural towns, the Government will cofinance the delivery of electricity services, while requiring a fee for service from the communities. There is some precedent (MOME-sponsored PV battery charging project in northwestern Ghana) in having rural communities pay for electricity services at a level comparable to current household payments (ca. $5 0 15/month equivalent) for candles, kerosene, dry cell batteries, used auto batteries, and battery charging services. The pricing of electricity services will be determined in the detailed project design, but the Government appears committed to moving towards cost recovery for electricity services as part of economic restructuring.
24. A supporting objective of this project is to determine and assess the technical and economic performance of these renewable energy options on a pilot scale that fully reflects the environment in which they would be used on a much larger scale in subsequent investment projects.
25. The project is intended to remove barriers to the introduction and widespread diffusion of renewable energy-based technologies for off-grid electricity supply in rural Ghana. The principal objectives are: To increase the Government of Ghana's understanding of the technical requirements, equipment options, and capital and operating costs for use of PV-based energy systems, both as stand-alone units and in hybrid power systems, for rural electric power delivery.
26. To demonstrate in Ghana, the technical, economic, institutional, and social feasibility of sustainable large-scale diffusion and application of small-scale PV units and hybrid power systems to the people of Ghana, government officials, the private sector, and the international development community.
27. To enable the Volta River Authority/Northern Electricity Department (VRA/NED) to integrate the use of renewable energy systems into its ongoing rural electrification activities.
28. To provide electric services to 13 off-grid communities in the northern regions of Ghana, as a pilot effort to confirm the technical, economic, social, and institutional requirements for large-scale diffusion of these technologies.
29. To catalyze large-scale use of these technologies in the country, with special emphasis on stimulating private sector participation.
PROJECT DESCRIPTION
30. Twelve villages in the Mamprusi East District of Northern Ghana and the village of Tenzug in Northern Ghana have been selected by the Government of Ghana for project participation. Micro-grids powered by PV/diesel-hybrid systems for low voltage power supply will be established in three villages in the country under this project, and free-standing photovoltaic units will be used in nine others in a pilot region identified by the Government. Market, and community, energy surveys and resource assessments will be conducted to identify potential renewable electricity resources, suppliers and users, technical standards will be established, local operators and NGOs will be trained, a local operation and maintenance center will be established to serve the pilot region, and standard contracts for private-sector based electricity service companies will be designed. The parastatal Volta River Authority / Northern Electricity District will play the central implementation role in spurring the widespread use of these technologies.
31. Case for hybrid diesel systems: Please see Annex IV.
Project Components
32. A market survey will focus on identification of individual and collective priority needs with regard to rural electric power services that can be provided through the use of photovoltaic and hybrid power generation in communities in the target region.
33. Community energy surveys will be conducted to assess likely energy consumption patterns, and community willingness and ability to pay for electricity. A community energy and socio-economic survey was initiated by the MOME in collaboration with VRA/NED and NREL for the target region.
34. Information will be developed for costs, training requirements, and operational problems and solutions encountered with the use of free-standing PV systems for hybrid power systems installed in the U.S., Brazil, Mexico, the Philippines, Dominican Republic, Zimbabwe, Indonesia, Malaysia, Australia, and elsewhere.
35. Practical technical standards for equipment and installation practices will be established for such systems for Ghana. Preliminary standards will be established for the hybrid systems, including rigorous standards for hybrid system components. Equipment specifications will be developed by the VRA/NED and MOME in collaboration with NREL and with technical experts from the private sector with extensive experience with free-standing PV systems and with PV/diesel hybrid power systems products and applications.
36. To the extent possible, locally-produced materials and equipments will be used in the project. Commercial equipment and appliances will be selected according to their simplicity, robustness, potential for local supply and eventual local production, and price. Particular attention will be paid to ease of maintenance in Ghana. Negotiations with suppliers will be held to consider their conditions for participating in joint ventures and technology transfer operations.
37. PV Systems for Household Applications: Household PV systems will be installed in all twelve of the pilot communities, because those communities suitable for village minigrids will still have many households that are too far from the minigrid to justify direct hookup. The lighting options will include high efficiency compact fluorescent units.
38. Three levels of residential energy service will be offered, providing different levels of service, to repond to the different levels of income and willingness and ability to pay for electricity. These will use (1) a basic 20-watt PV module, battery, and controller to provide a few lights, (2) a 50-watt PV module system with a battery capable of two days of autonomous operation and supply of several lights plus radio/cassette, or (3) a 100-watt PV module, larger batter, and capacity for 4-5 lights plus power points for radio/cassette and a DC television set. Under sunny conditions typical of the region, the systems will provide ca. 80, 200, and 400 watt-hours of electricity daily. Fees for service will reflect the level of service provided.
39. For communities without AC power, free-standing PV systems will be provided as appropriate for schools, health stations, and street lamps. The Government will bear the capital costs for these installations; the communities will be required to cost-share in their maintenance.
40. Three villages will be selected for local microgrids (for low-voltage AC power distribution) powered by PV/diesel hybrid power units. [These villages will also have some distributed PV systems for residential compounds and community functions that are located too far from the minigrid for hookup.] The projected consumption of electricity in the target communities is projected to be in the range of 50-200 kWh/day (about 500 Wh/household/day on average, plus community and productive use requirements for electricity). Both technical and economic criteria will be used to determine the most suitable power generation system and distribution system designs, performance, and costs. Electronic techniques that limit peak power and daily energy consumption will be considered as part of providing the electricity service on a fixed monthly fee basis. An alternative approach, using low-power prepayment meters will be carefully evaluated. Such meters, designed specifically for village power systems, are now being developed commercially.
Establishment of a Regional Operations and Maintenance Center
41. Providing highly reliable electricity services on a sustainable basis in rural areas requires a local operation and maintenance capability. An operations and maintenance center will be established near the pilot communities. A monitoring system for the hybrid power systems will permit diagnostics and early warning of potential problems. Quick-response maintenance and repair capabilities will be necessary to respond to technical problems with the hybrid power systems. The center will also support the PV solar home systems.
42. The operations and maintenance center will be established and staffed by trained VRA/NED technicians, and the power systems will be remotely monitored at the O&M center using commercial digital packet radio communications. [Commercial hybrid power systems have built-in monitoring and data aquisition systems which are easily connected to digital radio units]. The village power systems will be professionally operated and maintained by trained electric utility personnel, as an extension of the utility system.
43. A Government-owned former guest house is located in the town of Nakpanduri about 30 km. northwest of the center of the pilot region in the Mamprusi East District, and is less than 10 km from the nearest of the pilot communities (Bimbagu). This facility, visited by the UNDP / GEF / Government of Ghana team, appears to be an excellent site for the local operations and maintenance center. With renovation and equipment it will provide the facilities to support project implementation and post-project sustainability.
44. A hybrid power system will be installed at the operation facility to provide the high-quality full-time AC power required by the facility. This system will be used for test, evaluation, training, and demonstration.
Role of the Private Sector
45. In 1993 there were ca. 16 dealers involved in sales, installations, and after-sales services for PV systems. Most of the dealers provided only sales and installation services; there is little capacity for system design, and after-sales service has been poor. A comprehensive training program would be required for private sector participants in the GEF project. This training should be coordinated with training provided by the international suppliers that would be the joint-venture partners of the local Ghana companies. During the past few years there have been some sales of PV solar home systems in Ghana. However, there have been no government-sponsored projects using PV equipment, the present market is very small and fragmented, and there is little private sector capacity in Ghana to supply and support renewable energy technologies.
46. Consequently, the project will include technical and enterprise support for the private sector. Technical support will include training provided by specialized consultants and through training programs inside or outside Ghana, especially training provided by international suppliers of high-quality equipment. Training will be an integral part of the joint venture activities which the project will promote. The project will seek to identify and assist firms in gaining access to financial support including market-rate loans, preferential loans, conditional subsidies, or direct funding of certain activities. Loans will enable enterprises to make the necessary investments and to maintain adequate operating margins. However, it is not proposed that the UNDP/GEF project provide this financing directly.
47. Private Power Contract Framework for Low-Carbon Off-Grid Electricity Services: The Government of Ghana, specifically the Ministry of Finance and the Ministry of Mines and Energy, will prepare a private power contract for off-grid rural electricity services, with specific incentives for support of the use of low-carbon emission technologies such as photovoltaic, wind electric, hybrid, and biomass power units. There is no precedent for a renewable energy-focused off-grid private power contract framework, although one country (Argentina) has been attempting to develop such a framework. The purpose of the contract framework will be to establish conditions that will make it attractive for the private sector, both domestic and international, to develop and invest in enterprises that will provide affordable high-value electricity to rural communities.
48. The contract structure will be designed to provide very strong incentives for the use of low-carbon emission electricity supply technologies relative to pure fossil fuel equipment (eg. diesel- and kerosene-fueled gensets). The strategic goal of establishing such a framework is to permit the Government of Ghana to substantially reduce the subsidies required for meeting the goal of providing electricity services to virtually the entire population by the year 2010, to create a mechanism to attract private sector investment and services, and to facilitate the transition to significant private sector-based electricity services.
49. The Government of Ghana will work internationally with public and private sector experts who have the relevant experience and capacity. This task will be implemented through national and international workshops, the associated preparation of expert position papers, and close consultation with the interested private sector, both domestic and international. It is anticipated that the World Bank and others (eg. AfDB, UNDP, ..) will participate actively in this effort.
Testing and Training
50. Training: VRA/NED personnel will be extensively trained in all aspects of the systems that will be installed, operated, and maintained by them. NREL will organize and conduct this training program in collaboration with international equipment suppliers, specialized PV training companies, and with relevant institutions.
51. Equipment Test and Qualification: A qualification and testing facility and program will be established at VRA/NED Tamale. All equipment used in the project will first be screened and evaluated by this facility. This will be especially important for controllers and batteries; less important for PV modules obtained on the international market. The facility will also track and evaluate field failures of equipment, to replace existing equipment if necessary, and to support future procurements as part of a national program.
Information Dissemination
52. Renewable Energy Information Center: Renewable energy information centers will be established at the MOME and at UST, as well as at the operations center at Nakpanduri, and will provide information on technologies, applications, and projects, as well as providing current information on the GEF project.
The Role of NGOs and CBOs
53. NGO/CBO Participation: The project will involve several NGOs and CBOs directly. BILFACU, a national NGO located in the district has PV experience and local credit union which can provide a mechanism for training local communities in the best use of the PV installations, for collecting the payments, and managing the resulting fund, which will be used to support community training and equipment maintenance. It is also anticipated that the project will engage the Catholic health clinic at Bende in working with the communities, and perhaps in the rentals of PV-powered lanterns. The clinic has provided a few PV lanterns to local families, and finds these to be very useful in helping people avoid hazards (snakes, scorpions, etc.) at night. The project will also work with the clinic to expand its limited PV-powered lighting and vaccine refrigeration. A prominent national NGO, the 31st December Movement, has indicated interest in the project as well as a dozen other NGOs whose potential collaboration will be explored in detail during the formulation of the project document and project action plan.
RATIONALE FOR GEF FINANCING
Project Eligibility
54. The proposed project is consistent with the GEF Climate Change Operational Programme number 6 "Promoting the adoption of renewable energy by removing barriers and reducing implementation costs". A PDF Block B of $59,000 for its preparation was approved by the GEF Council at its meeting on 25-27 October 1995. Ghana ratified the United Nations Framework Convention on Climate Change (UNFCCC) on September 6, 1995. The government requested assistance from UNDP/GEF to design and implement a programme for decentralized rural delivery of renewable energy-based services to support social and economic development.
55. GEF support is needed in order for a project of sufficient size to be implemented to establish the technical, institutional, financial, and other requirements for the sustainable application of renewable energy-based electric supply technologies on a national scale to presently unelectrified rural communities.
56. The proposed UNDP/GEF project is in effect a preinvestment project which will lead to the design and financing of a national program to use low-carbon energy technologies to support rural development.
Host Country Government Support
57. The Government of Ghana is providing substantial support to the development, implementation, and long-term sustainability of the project. The Ministry of Mines and Energy and VRA/NED have selected the pilot region for the project, have surveyed and mapped each of the villages in great detail, and are conducting socio-economic and rural energy surveys for the pilot communities.
58. The Government has provided key MOME and VRA staff to participate in the design of the project and its implementation, and provided extensive professional and logistic support to the UNDP consultant team. The Government will provide senior staff from MOME and VRA/NED for the duration of the project, and will renovate and adapt the Nakpanduri guest house to be used as the project implementation center.
59. The Government will cofinance the renewable energy installations and their maintenance through the use of the national rural energy fund that is derived from a 1% levy on commercial electricity sales. The extent of cofinancing from the Government of Ghana, bilaterals, and multilaterals (eg. European Community) will be worked out during the detailed project design effort.
Innovation and Demonstration
60. The project has significant innovation and demonstration value. The project will be unique in Africa (and in the GEF portfolio) in the elements that it will combine. These include (1) a national electric utility parastatal company will assume the primary responsibility for the dissemination and support of the renewable energy-based electric supply equipment and systems, (2) the project will combine both decentralized stand-alone applications and the use of renewable energy-based village AC electric power systems, (3) local communities, NGOs, and the private sector will participate actively in the project, (4) will demonstrate the financial and economic advantages of the use of decentralized renewable energy-based electricity supply in contrast to the much higher costs and longer implementation periods for central grid expansion to rural areas, and (5) to the extent possible, investments in power systems will be linked with investments in social and economic development.
Financial Leverage
61. The project will leverage resources of the Government of Ghana that have been established to support rural electrification and the use of renewable energy resources.
Integrating Global Environment Issues into Development Assistance
62. The project addresses social and economic development goals of the Government of Ghana through the use of low-carbon energy technologies; the project is "win-win" in this regard, since the incremental costs of providing electricity in rural communities via these technologies is less than of grid-based supply, and avoids the CO2 emissions associated with fossil-based power generation (at the margin) for expanded rural electricity services.
SUSTAINABILITY AND PARTICIPATION
Government Commitment
63. The project is strongly country-driven. The Government of Ghana has requested the assistance of UNDP/GEF in preparation and financing of the proposed project. The project has the full support and approval of the Government (Ministry of Mines and Energy and VRA/NED). At the request of the Government, the U.S. National Rural Electric Cooperative Association (NRECA) sponsored an in-country mission to prepare an initial project brief with the Government. Many of NRECA's recommendations are incorporated in the present proposal. The present project brief was prepared after a UNDP/GEF-sponsored project definitional and design mission conducted in close collaboration with the Ministry of Mines and Energy and VRA/NED.
64. The Government of Ghana (MOME and VRA/NED) has invested in the preparation of the project. A significant effort was made to identify, survey, and map the 13 villages that were selected as the pilot communities for the project. In July 1996 the Government of Ghana, in collaboration with NREL, initiated a household and community energy survey in the Mamprusi East District pilot region, to determine the technical requirements for the free-standing PV units and the hybrid power systems.
Technical and Financial Support after GEF Project Completion
65. Direct technical support will be provided by VRA/NED as the ongoing implementing agency, and to the extent feasible by the private sector, with financial support from the Government of Ghana. "Backstopping" technical support will be provided by the U.S. National Renewable Energy Laboratory and by the International Centre for Applications of Solar Energy (CASE) in Australia, and through the institutional linkages with public agencies and private organizations in other countries such as South Africa, Brazil, the Dominican Republic, India, and Indonesia.
66. Ongoing financial support will be provided from several sources including the revenues from the fees collected from the communities and additional funds provided by the Government of Ghana using the national rural electrification fund.
Institutional Provisions
67. The Ministry of Mines and Energy (MOME) will be the Executing Agency and will be responsible for project coordination. The Volta River Authority/Northern Electricity Department (VRA/NED) will be the principal implementing agency.
68. The U.S. National Renewable Energy Laboratory (NREL) will be a principal international collaborating institution, with in-kind cofinancing for the project. The UNDP Country Office in Accra will provide support to the project, including convening the Tripartite Reviews, providing assistance in the design and conduct of international competitive bids for equipment and services under UNDP ICB rules, in the procurement of expert technical assistance, and in the arrangements for in-country collaboration with the National Renewable Energy Laboratory.
69. The International Centre for Applications of Solar Energy (CASE) in Perth, Western Australia, has also agreed to be a collaborating institution, adding its support and its expertise in hybrid power systems for village power applications.
Stakeholder Commitment
70. The Ministry of Mines and Energy and VRA/NED are important stakeholders; they are responding to a national commitment to supply electricity to all communities before the year 2020. They also have a stake in providing such services at the lowest possible cost, and view renewable energy-based electricity supply options as potentially superior to grid-based supply in economic, environmental, and logistic terms.
71. Local communities, beginning with the target villages in the Mamprusi East District, have a real stake in contributing to the implementation and protection of the renewable energy systems, and will benefit directly from their availability, not only for household uses of electricity, but for important community services (expanded potable and agricultural water supply, potable water disinfection, health posts, schools, street lights) and economically productive activities (especially in increased and improved agricultural production.) It is expected that local communities will contribute a minority portion of the equity in the electricity supply systems (a mix of "sweat equity" and money), and provide a substantial portion of the operating costs.
Public Involvement and Local Participation
72. Village committees will be established for each of the pilot communities, to ensure that all of the community residents understand how to use (and not to abuse) the energy systems, and to ensure that the community pays the agreed-upon fees for service.
73. The local NGO BILFACU, with its rural credit union (planned to expand to be a rural bank) will provide important financial services and will facilitate revenue collection, as well as expand its activities to support economic development of the local communities in the pilot region.
74. The Catholic health clinic that serves the pilot region has extensive experience with PV technologies, both for its own electricity needs and for some assistance to local communities, and is the "nerve center" for the local residents, most of whom are registered with the clinic. The project will expand the capabilities of this clinic, which is the most important health center for the pilot villages, and make use of the clinic for informing and educating members of the pilot communities in the use and basic maintenance of the renewable energy equipment.
Information Dissemination
75. Information centers will be set up at the Nakpanduri implementation center as well as at universities and other facilities, through collaboration of Government, NGOs, colleges and universities, and with the renewable energy information resources of NREL.
Incentive and Regulatory Issues
76. There is a serious lack of private sector capacity in the renewable energy area, and the Government is likely to require that local companies have well-established international joint venture partners in order to participate in project implementation. The project will work to design incentives for private sector participation, and will provide technical assistance to qualified local firms.
77. Electricity prices in Ghana are heavily subsidized in rural areas. Rural communities expect that they will be offered electricity at the same subsidized rates as in urban areas; the Government is therefore planning to cofinance electricity supply via renewable energy, recognizing that the costs of supply to many of the unelectrified communities will cost far more if it is accomplished through grid extension.
78. There is no policy or regulatory framework for private sector participation in rural electricity supply or services; the project will support the Government's development of such a framework.
LESSONS LEARNED AND TECHNICAL REVIEW
Lessons Learned
79. Countless technical demonstration projects using renewable energy in rural community settings have demonstrated that (1) local communities and cooperatives are rarely able on their own to operate and maintain renewable energy systems on a sustainable basis, (2) a local professional capacity for installation, operation, maintenance, and repair of renewable energy equipment such as PV solar home systems and small wind electric installations is essential for sustainability, and (3) local communities often have the financial resources to pay for operation and maintenance if the O&M infrastructure is available.
80. Other lessons are that (1) sustainable provision of electricity and modern energy services in rural areas generally requires that energy services be provided by public and/or private energy service companies (including parastatal regional electric utilities such as VRA/NED), rather than expecting rural communities to own and operate the equipment on their own, (2) the suppliers of energy services must establish partnerships with local communities, and provide training to community members to ensure that the equipment is not abused, and (3) the local communities must be willing and able to pay for energy services, at least at the level of covering operation and maintenance costs.
Technical Review
81. An earlier draft of the proposal was reviewed by an external technical expert from the STAP Roster of Experts. The technical review made several points, including (1) describe how the activities of the project mesh to address the various barriers in a coherent way, (2) address issues related to household income stratification and related levels of willingness and ability to pay for electricity services, (3) discuss the degree to which the Government of Ghana will share the costs with the pilot communities, and how revenues will be collected, (4) discuss the means for monitoring the performance of the hybrid power systems, (5) indicate how the proposed approach will support productive uses load growth in the electrified communities, and (6) discuss the implicationsof the high rate of population growth (ca. 3%/year) on the ability of the Government and the private sector to meet the year 2020 target for providing electricity to all communities of greaterthan 500 population. The project brief in its current form is responsive to each of these points. Point 1 is addressed in paragraphs 14 - 19. Paragraphs 37 - 39 addresses point 2 on household income stratification and the need to offer several levels of electricity service to match income and willingness to pay for service. Paragraphs 23, 59 and 77 are responsive to point 3. Point 4 is addressed in paragraph 41. The issue (point 5) of facilitating development of productive users of electricity is addressed in paragraph 71, The project will work to attract coinvestments by NGOs and others in helping local communities develop microenterprise, improve the quality of agricultural produce and bring surplusses to market, improve the quality of education, and in other socially and economically productive activities. Point 6 highlights the very considerable challenges associated with continued population growth at about 3%/year. The issue is mentioned in paragraph 8 but no solution was proposed.
Project Financing and Budget
82. The estimated total project cost is $3,072,000. The GEF Component is $2,472,000. The cost of project preparation to date, not including cofinancing, is $59,000 using PDF Financing (Block B). Cofinancing of the preparation of the project has included in-kind participation of NREL at ca. $5,000, including cofinancing of the rural energy surveys with the Government of Ghana.
BUDGET
Expenditure Year 1 Year 2 Year 3 Total Category 1. Personnel 250,000 150,000 100,000 500,000 2. Sub-Contracts 150,000 130,000 120,000 400,000 3. Training 175,000 150,000 140,000 465,000 4. Equipment 400,000 200,000 200,000 800,000 5. International 40,000 25,000 20,000 85,000 Travel 6. Contingency 50,000 50,000 50,000 150,000 Sub-total 1,065,000 705,000 630,000 2,400,000 Project Support 24,000 24,000 24,000 72,000 Services (3%) Total GEF Budget 1,089,000 729,000 654,000 2,472,000
Incremental Costs
See Annex I.
Issues, Actions and Risks
Key Issues and Project Response
83. The Government of Ghana lacks the technical and policy experience to invest in large-scale diffusion of low-carbon community energy projects on its own. The project responds to this by providing the training, local capacity, experience, and means to design and implement large-scale diffusion of renewables for village electricity services.
Project Risks and Risk Mitigation
84. The use of rapidly evolving commercial equipment such as hybrid power systems requires considerable technical capability and experience. Otherwise, there is a strong risk of technical problems delaying the project and limiting its effectiveness. The project has been designed to ensure that the necessary in-country technical expertise will be established, and that the organizations implementing the project have full technical support from collaborating institutions (eg. NREL, CASE).
85. The Ghana private sector does not presently have the capacity necessary to support implementation of the project goals; there is a risk that the project may not catalyze sufficient private sector participation to ensure in-country supply of equipment and associated services during the post-project period. Special efforts will be made to provide information and training to qualified local companies, and to facilitate or broker joint ventures with the private sector internationally.
Institutional Framework and Project Implementation
Implementation and Oversight
86. Project implementation will be led and coordinated by VRA/NED, under the direction of the Ministry of Mines and Energy. VRA enjoys a strong reputation for corporate efficiency and is considered a well-managed, technically efficient, and financially sound institution, with the technical resources and infrastructure to implement the project. VRA/NED will work with and coordinate the contributions of other participating organizations and institutions, both national and international, including NGOs, academic institutions, and the private sector.
87. For the freestanding PV systems, VRA/NED will participate in the design/specification of the PV systems, install or supervise installation of the systems, instruct users in their operation, provide maintenance, stock spare parts, prepare monthly bills, and collect fees from customers. For the hybrid power systems the utility will have overall responsibility for specification, procurement, installation, commissioning, operation, and maintenance of the systems, including the local low-voltage power distribution system and connections to end users. For both technologies, especially the hybrids, the suppliers will work closely with VRA/NED in all aspects of the project. VRA/NED will manage the operational aspects of the project and participate in program evaluation.
88. VRA/NED is well-equipped to handle all aspects of international procurement, including a department that deals just with customs clearance. Imported equipment would be brought in 20 foot containers by ship to Tema, and then transported by truck to the operations center and to the installation sites. A small test facility will be established at NED's facilities in Tamale for training of the project technical team and test and evaluation of the equipment.
89. The Ministry of Mines and Energy will be responsible for oversight and support of VRA/NED's implementation role.
Monitoring and Evaluation
90. The project will be monitored by the Ministry of Mines and Energy, by NREL, and by a team of independent experts to be selected by UNDP/GEF upon recommendations from STAP and World Bank staff.
UNDP/GEF Collaboration
91. The project team will collaborate with several other related UNDP/GEF and World Bank/GEF projects, including UNDP/GEF projects in Zimbabwe (PV home systems diffusion), Mauritania (sustainable applications of small wind electric technologies), and World Bank/GEF renewable energy projects in India, Indonesia, and Sri Lanka.
Annex I
INCREMENTAL COSTS
Broad Developmental Goals
1. The broad development goal being pursued by this project is the provision of energy services to the rural population of Ghana. This is accorded a high priority by the Government, which has commited itself to providing electricityto all villages of 500 people or more by the year 2020. Given the expense involved in achieving this goal through conventional grid extension, the VRA/NED is eager to identify renewable options to achieve this goal which will eventually be cheaper than the more conventional alternative.
Baseline:
2. Under the baseline as it is currently envisaged, the 12 villages (1661 households) in Mamprusi East District will be electrified through conventional grid connections at a very high cost. They will be provided with electricity supplies sufficient to meet their household needs for lighting, radios, and other small uses. In some cases, there may be electrification of small businesses in the villages. According to the estimates produced by VRA/NRA, the cost per household connection will be approximately US$2800, including the value of the grid extension. The electricity to be supplied to the villages will add to Ghana's rapidly expanding load which has been growing at a rate of 15% in recent years. It will therefore be generated by thermal sources, most likely from fuel oil. The Government has decided not to consider stand-alone diesel generation for village electrification as the operation and maintenance of these systems in remote areas is viewed as being very difficult for logistical reasons.
3. Although a more detailed survey of energy use and expenditures is currently being undertaken, households in the region are estimated to spend about $10 per month for kerosene, candles, and batteries for lighting.
Global Environmental Objective:
4. The global environmental objective pursued in this project is the long-term reduction of greenhouse gases emissions from Ghana. The project is designed to remove barriers to the widespread adoption of renewable energy supplies in Ghana. It is therefore intended to support activities under the GEF Operational Programme #6, Promoting the Adoption of Renewable Energy by Removing Barriers and Reducing Implementation Costs.
GEF Alternatives
5. Under the GEF alternative, VRA/NED's capabilities to manage decentralized rural electrification will be enhanced and strengthened through an exercise focusing on meeting the electricity needs of the 12 villages in Mamprusi East via renewable electrification. Nine of the villages incorporating 827 households will be electrified using stand-alone PV systems. The three largest villages, containing 834 households will be electrified using a PV/diesel hybrid which operates on the PV cells most of the time and uses the diesel genset only for peaking power. VRA/NED are evaluating both the stand-alone systems and the PV/diesel hybrid for effectiveness and costs in their larger electrification plans.
6. It is anticipated that the users will pay back the costs of the systems through a monthly billing for successful delivery of service agreement. The details of the payment schedule have yet to be finalized. Although the Government does not wish to charge more per kilowatt hour to rural users than it does to urban users, the costs will have to be increased to make the system sustainable. At the total cost of slightly more than $1700 per household discounted over 20 years, this works out to approximately $85 per household per year. It is possible, depending upon the financial terms finally reached, that the project will result in a savings for rural households over the current situation. More analysis will be possible when the current survey is completed and the data are fully analyzed.
System Boundary
7. The project is viewed in the context of Ghana's electricity system and its likely expansion to include more rural and village consumers.
Additional Domestic Benefits:
8. In addition to the benefits identified in the above discussion, there will be a reduction in the use of fuel oil used for power generation. This will result in the reduction of some local pollution (SOx), which is not currently considered a problem in the current Ghanaian situation.
Costs:
9. The numbers in Annex Table I-1 document that low-load electrification using solar home systems is cheaper than electrification via grid extension. At higher loads, grid connection becomes more attractive, but the PV hybrid system is an attractive alternative in these cases.
10. Based upon the incremental cost calculations in Annex Table I-2, the project will result in a net savings to the Ghanaian power authorities VRA/NED of nearly $1 million over twenty years. At present, this is seen as a savings on paper alone, as the activity is unlikely to be implemented without support from GEF.
11. Because of the lack of information about the renewable options in Ghana, the lack of familiarity with their application, and the limited institutional capability to launch a new and innovative initiative like this, the project is unlikely to take place without the support of the GEF. The total project costs of US$3.072 million include a substantial contribution from the Ghanian government. The GEF funds are targeted at technical assistance activities to overcome the barriers to the implementation of these activities. These barriers have been discussed in detail in the remainder of the project brief.
Table I-1 Costs of Options for Rural Electrification of Mamprusi District East
Measure\ Grid Diesel PV/Diesel Hybrid PV Home Systems
Option Connection mini-grid
Costs per US$2893 US$2966 US$2829 US$1706
household1
Cost per kWh2 $1.3/kWh $1.4/kWh $1.3/kWh $0.8/kWh
Emissions per 2190 tonnes 2190 tonnes CO2 547.5 tonnes CO2 0 tonnes CO2
household CO2
Total Costs $4,805,733 $4,925,746 $2,359,469 $1,410,642
(1661 hh's) (1661 hh's) (834 hh's) (827 hh's)
1 The total costs per household are calculated on the basis of a 20 year project horizon, discounted at 10%.
2 The costs per kWh assume that the household consumes 0.3 kWh per day under all options. This is liable to be the case for the PV options, but under the grid and mini-grid options, the consumption may rise above this level.
Table I-2 Incremental Cost Matrix
Costs National Benefits Global Benefits
Baseline For electrification Electricity provided 3.6 million tons CO2
of all 1661 via thermal emitted from thermal
households in generation using fuel generation over 20 years
Mamprusi East via oil
grid connection and
supplying power
over 20years (10%
discount rate), the
cost comes to $2893
per household. The
cost per kWh at low
loads (0.3 kWh/day)
equals $1.3/kWh.
The total cost
therefore comes to
US$4,805,733.
Project For electrification Electricity provided 0.4 million tonnes CO2
Case of 834 households via solar energy and emitted from diesel
in the larger diesel used only for hybrid used for peaking
villages by limited peaking power
diesel/PV hybrid
systems, the costs
come to $2829 per
household or
$2,359,469 total.
The cost for the
remaining
households, to be
electrified via
stand-alone PV
systems is about
$1706 per household
or $1,410,642 for
827 households.
The costs,
therefore, for the
total
electrification of
the villages in the
District comes to
US$3,770,111.
Increment The incremental savings of fuel oil Reduction of 3.2 million
costs are therefore tonnes CO2
negative:
($1,035,622)
Annex II
TECHNICAL REVIEW OF GEF PROPOSAL ON
"RENEWABLE ENERGYBASED ELECTRICITY FOR RURAL SOCIAL AND
ECONOMIC DEVELOPMENT IN GHANA"
Relevance to GEF
1. This is a technically sound proposal. The project is directly relevant to the GEF goal of intervention to assist in developmental activities in such a way as to reduce the greenhouse gas emissions and associated climate change. Ghana is presently powered almost exclusively with hydroelectric power. Since the demand for electricity is rising rapidly, and in parallel, the government seeks to electrify all rural communities within a fixed timehorizon, additional power must be made available, probably through fossilfuel burning power plants. This project seeks to develop and strengthen the option of rural household electrification using renewable (Photovoltaic or PV) power in either standalone or hybrid mode.
2. The project is well thought out, and broadly addresses many of the key issues (many of them organizational, institutional, and infrastructural) that must be essential components of introduction of PV and PVhybrid power options in the developing world.
Objectives
3. The project objectives are valid and well focused. It is in the direct interest of GEF (and sponsor countries) to reduce greenhouse gas (GHG) emissions. However, the main focus of the developing countries is not GHG reduction, it is rural, social, and economic development. This project has put the key goals of Ghana up front, and offers to provide a solution to these goals through a PV and PVhybrid strategy so as to offer a low carbon emissions energy developmental trajectory.
4. The project objectives are likely to be successful given the comprehensive approach that this proposal takes to address the problem.
Approach
5. The approach is clearly defined in the project brief. The approach is
appropriate and technically sound for the stated project objectives (but see
specific comments below). No obvious environmental opportunities or problems
have been overlooked.
The approach suggested in the project is
comprehensive, however, it could be better defined in the brief. Specifically,
paragraph 13 states that "the project will identify the barriers [to
decentralized electrification] and will devise a programme to overcome them.
However, the authors then define the barriers quite adequately right on the next
page in paragraph 17, and also define ways to overcome them. Thus current
paragraph 13 should be deleted or modified.
The present approach is described in paragraph 17 of the brief in a
purely reactive manner: by stating the barriers one by one, and stating how the
project activities will address each of the barriers. However, this manner of
presentation causes the reader to lose sight of the interconnected and
integrated nature of the activities proposed for the project. It would be useful
to describe in a separate paragraph or in a diagram how they mesh together and
form an integral whole.
The approach needs to explicitly provide consideration of one more
level of organization below the electricity service providers: the community
electricity committee. This committee needs to be organized to ensure that the
physical components of the PV and PVhybrid energy systems are not vandalized or
abused, that the community members are charged equitable shares of community
system costs and that they actually pay their shares promptly, and that the
maintenance and operation receives prompt attention.
Paragraph 35 should address the issues related to household income
stratification. Not all households have equal willingness and ability to pay for
electricity services, nor are their electricity service demands all equal. The
paragraph needs to address how many actual household systems will be installed
in the 12 villages. This will doubtless depend on the cofinancing from the
government, any connectionfees levied, and the actual household income
distribution in the villages. However, estimates can be given in the brief. This
is an important dimension of the social developmental theme of the proposal and
should not be ignored.
Paragraph 36 should address various possible options of who will pay
for the 11 communities that will not be provided with microgrids. How much
payment is expected? How much of it will come from the Government of Ghana? Can
the community agree to pay for the rest over a fewyears duration, with financing
from an appropriate institution? Who will be responsible from the communityside
to collect the payments from the households and deliver them? What happens to
the social services electrified under this arrangement if some of the social
strata are unable (or refuse) to pay?
Paragraph 37 refers to three villages which will have microgrids
powered with hybrid PVdiesel systems. Typical communities will have 100 to 200
households. If each household consumes 0.5 kWh, and the total community
consumption is stated to be 50 200 kWh/ day, then it appears that the authors
envisage electrifying all the households. This is surely desirable, but can be
done only if all the households are able and willing to pay. This will be an
interesting experiment to observe!
Paragraph 38 refers to lowcost satellite communications for automatic
monitoring and diagnostics. This could be an expensive option. Perhaps packet
radio would be enough. It is unclear if only the 3 PV hybrid systems will be so
monitored, or some monitoring is planned in the other 11 villages with only
individual household level systems.
The activities should address the technical issues related to the
commonly observed loadgrowth seen in rural communities that are electrified. The
newly electrified communities sprout several micro enterprises using the
electric power (e.g., milling grain, welding). This quickly increases both
economic development, but also the electricity demand. Similarly, segmenting the
household market by system size (and cost), and by daily consumption may provide
a better fit to the distribution of household incomes than offering a single
sized system.
Background Information
6. The project proposal provides adequate background information. However, in the Annex C, Table1, the total number of villages in Ghana (in the last column) is shown to be 4,221 from 1970 through 2020. Given the dynamics of rural population, and a 3% annual population growth, this is unlikely. Some caveat may be stated with the table, such as this is the official government estimate, the actual numbers will differ depending on urban migration and rural population dynamics.
Funding Level
7. The funding level requested is appropriate.
Innovation
8. This proposal addresses in a comprehensive manner the problem of developing technical, infrastructural and institutional arrangements, and governmentprivate sector partnerships to supply rural electricity with PV and PVhybrid systems, powered lighting.
Strengths/Weaknesses
9. As discussed above, the strengths of the proposal are the attention it gives to a comprehensive multidimensional approach to building up the necessary institutional and technical infrastructure to make the technology successful in the market.
10. One weakness of the proposal is its necessary reliance on NREL=D5s being funded in the next fiscal year by US Dept of Energy for collaborating with the Ghana government on this project. This is an uncertainly that has to be lived with under the current circumstances.
Annex IV
THE RENEWABLE ENERGY TECHNOLOGIES PROPOSED FOR THE PROJECT
1. Free-standing PV systems for residential lighting and entertainement, and for larger applications such as water pumping or public lighting, are well-established commercial products and are widely used throughout much of the developing world. However, there are only a few countries (eg, Mexico and Brazil) in which a regional or national electric utility is responsible for providing PV systems to rural communities. There are no such programs in Africa. The proposed project, in which distribution and support would be the responsiblity of a national utility, with collaboration by the local private sector, will be unique in Africa.
2. PV/wind/diesel hybrid power systems combine renewable energy components, primarily PV panels and wind turbines, with batteries, DC/AC inverters, and control systems, to provide reliable, high-quality full-time AC power. These systems have significant operational advantages over freestanding small (typically 10-50 kWe) diesel genets for village power applications. These advantages include (1) operation of the diesel genset at its rated capacity and highest efficiency, for only a few hours a day, (2) dramatically improved efficiency in power generation (up to 10 kWh per liter of diesel fuel, vs. ca 1-1.5 kWh/liter for a load-following free-standing genset ), (3) automatic and unattended operation, and (4) equipment lifetime of 20 years, with replacement of batteries every 5-7 years.
3. Hybrid units can provide daytime AC power from the battery/inverter system (without the need to operate the diesel genset during the day) to supply power for social loads (electrified schools, clinics, community facilities, government offices, etc.) and for economically productive daytime loads. Since daytimeloads are typically 10-20% of the evening lighting and entertainment peak for an electrified village, hybrid power systems can supply the daytime electricity requirements much more efficiently than can isolated diesel gensets.
4. All of the major components of hybrid power systems (PV arrays, wind turbines, deep-cycle batteries, DC/AC inverters, and solid state control systems) are fully commercial products. PV/wind/diesel hybrid power systems designed for 24-hour AC power community electrification are commercially available from a half dozen suppliers in Europe, Asia, Australia and the United States. However, only a small number of communities (perhaps two dozens) have been electrified using this technology. Other current commercial markets include homesteads and cattle ranches in Australia electrified by PV/diesel units.
5. This technology has substantial strategic potential to provide a low-carbon alternative for entry-level electrification in rural communities in Africa, Asia, and Latin America. However, in order for hybrid power systems to be used effectively, reliably, and on a scale that can make a difference in the rural milieu, they must be operated and maintained by a network of professionally staffed operations centers. Rural communities will not be expected to own or to operate these units; electricity services will be provided from a public/private infrastructure, starting with VRA/NED as the implementing agency for the GEF project.
6. A pilot project, conducted under suitable field conditions, is essential to assess fully the technical, economic, financial and institutional performance of this class of renewable energy options. The proposed project will provide the information and experience required to design investment projects in which such power systems can be used for rural power supply. The project will also identify the technical and economic requirements for sustainable use of this technology to meet local power needs.