Ghana Power Investment & Business Opportunities

Presented by: TIMOTHY WORLANYO NYANU - SIPO

OUTLINE ! About Ghana

!  The Energy sector

!  The Sector Investment Opportunities

!  Investment Steps

!  Incentives and Guarantees

!  Why Ghana

!  Success Stories/Conclusion

! Contact us

Did you know? The “center of the world” is just off the coast of Ghana

GHANA

GHANA SALIENT FACTS

!  Middle income country

!  GDP 2015 US$ 37 bn

!  West Africa’s 2nd largest economy and market

!  Population 26m !  60% employed !  11% unemployment rate

!  27.24m mobile subscribership

!  GDP growth rate for 2015 is 4.6%

ENERGY

Universal access to electric power by 2020

OVERVIEW OF THE POWER SUB-SECTOR

MINISTRYOFPOWER ENERGYCOMMISSION PURC

!  IPP’s – SAP, CENIT, TICO

!  POWER ENCLAVE CO.

Source: Ministry of Energy and Power, June 2013

GENERATION- INSTALLED POWER CAPACITY

GHANA INSTALLED CAPACITY

Hydro (VRA) -1180 MW Hydro (non VRA) - 400 MW Thermal (VRA) -1031 MW Thermal (IPP) - 760 MW Solar (VRA) - 2.5 MW

TOTAL - 3373.5 MW

Takoradi Thermal Plant

Akosombo Hydro Plant

Solar Power - Navrongo

RENEWABLE ENERGY POTENTIAL IN GHANA

RENEWABLE ENERGY LAW HIGHLIGHTS

!  In 2011, the RE law was passed to create the enabling environment for RE development in the country.

!  Ghana’s target is to have 10% of her energy generation from RE by 2020.

!  All electricity distributors/bulk costumers are required to have 10% of their electricity needs from RE technologies.

Currently RE (Solar) constitutes ONLY 22.5 MW ie 0.45% of the Target.

!  The Grid operator (GRIDCo) is mandated by the law to connect RE plants to the grid.

!  A Feed-In-Tariff Scheme was developed to promote development of RE

RATIONALE FOR MINI-GRID IN GHANA

!  There are over 200 islands and more than 2000 communities in 23 districts along the Volta lake that cannot be immediately connected to the national grid by 2020.

!  Need for decentralized electrification options to achieve the goal of universal access by 2020

!  Free the National Grid to feed heavy industries (VALCO)

SOLAR RESOURCE MAP OF GHANA The northern regions and the northern parts of Brong-Ahafo and Volta Regions receive very high radiation levels with monthly average of between 4.0 and 6.5kWh/m2/day.

The average duration of sunshine varies from a minimum of 5.3 hours per day at Kumasi, which is in the cloudy semi-deciduous forest region, to 7.7 hours per day at Wa, which is in the dry savannah region.

WIND POWER

" Wind speeds in Ghana range from low – medium. VRA in 2013 initiated wind measurements at the following sites:

" Greater Accra : Lekpoguno, Akplanya

Volta Region : Anloga, Anloga West,

Eastern Region : Nsutapon

Brong Ahafo : Amoma North &South Northern Region : Gambaga.

" Also, the Energy Commission has undertaken measurements at some identified site.

" Results show that wind power projects are economically viable in the country.

" The wind data can be acquired by investors who seek to develop wind power in Ghana

A measurement mast at Anloga

Ghana has about 2,000MW of raw potential for wind energy as shown in the Wind Energy Resource Map of Ghana

It is currently reliably projected that over 300 MW installed capacity of wind farm could be established at the coastal part to generate over 500 GWh to supplement the nation’s energy supply.

MAP OF GHANA SHOWING VRA WIND MEASUREMENT SITES

EARMARKED PROJECTS #  93 MW Hemang Power Dam Feasibility study 85% complete.

Draft Final Report - By July 31, 2013.

!  48 MW Pwalugu Multipurpose Dam Feasibility study underway, Expected

to be completed by September, 2015.

!  90 MW Juale Power Dam Collaboration with Government of

Togo for joint development. Sourcing

for funding for Feasibility Studies # 21 hydro sites are yet to be developed

!  Solar – 150 MW (IPP)

!  Wind - 150 MW (IPP)

!  Biomass – 100MW (IPP)

BIOMASS

! Biomass is one of Ghana’s dominant energy resource in terms of endowment and consumption.

! Resources cover about 20.8 million hectares of the land mass of Ghana.

! Research by KNUST estimates over 110MW of power available countrywide

! Sources of biomass identified include agro and forest residues; municipal waste, wood waste and slabs, empty fruit branches and sawdust.

VRA’S RENEWABLE ENERGY DEVELOPMENT PLANS The Renewable Energy Development Programme was

initiated in March, 2010

The REDP is to be implemented in 2 Phases . Some of the plants are to be developed solely by VRA and others as

Joint Venture (JV).

Phase 1 (2010 – 2015)

!  Solar ( 15MWp)

! Wind measurement

! Hydro Dam Studies

Phase 2 (2015 – 2020)

!  Solar (100MWp)

! Wind (To be determined after wind measurements)

!  Biomass

STATUS OF VRA’S PROGRAMME

A 2.5MWp PV Plant has been developed in Navrongo

• A tender has been initiated for the development of 12MWp PV Plant in the northern part of Ghana.

Wind measurement have been undertaken at 8 sites and feasibility studies have commenced for the development of around 150MW of wind power.

• Feasibility studies on also on-going for the Pwalugu and Juale hydro projects.

VRA will be looking for investors and partners for the projects after the completion of the feasibility studies.

THE MARKET

INVESTMENT OPPORTUNITIES

!  Current electricity penetration 80% and 100% penetration is expected to be achieved by 2020. Government’s policy is to reach 5000mw by 2015. To fill in the gap, government is encouraging Independent Power Producers (IPPs)

!  There is opportunity for IPPs to fill the remaining gap which can be a combination of Thermal, Hydro and Renewable Energy

!  Ghana has a huge potential for electricity generation from renewable energy sources such as solar, wind, biomass and small hydro.

INVESTMENT OPPORTUNITIES – CONT.

!  Independent Power Producers

a.  Supply to distribution utilities and bulk customers

b.  Export to neighboring countries

c. Provision of ancillary services e.g. Reactive power; reserve capacity.

$  Investment in Transmission infrastructure

$ Natural gas infrastructure such as transmission pipelines.

STEPS TO INVEST IN GHANA

STEP 1 – Registration with Registrar General’s Department

!  Incorporate a company at the Registrar General’s Department and obtain the following:

! Certificate of incorporation

! Company Regulation

! Certificate to commence Business

!  The department has five (5) working days to complete formalities if all documents are in order.

STEPS TO INVEST IN GHANA - CONT

STEP 2 – Minimum Equity Contribution

!  Foreign investors should comply with the GIPC Act 865 regarding minimum equity requirements either in cash or in kind .

!  STEP 3 – Registration with GIPC

The investor then registers with the GIPC (after paying the relevant fees) for the process to be completed. This procedure takes five (5) statutory working days to complete, provided the registration forms are in order.

REQUIREMENTS FOR DEVELOPING RE

• The Energy Commission (EC)

• The Environmental Protection Agency (EPA)

GIPC

• The Public Utilities and Regulatory Commission

• ECG, NEDCo, Bulk Customers

GIPC • Wild life Society, Water Resources Commission,

•  Ghana Forestry Commission

GIPC

PROCEDURE FOR SIGNING PPA WITH ECG

1. Letter of Intent and Report on Prefeasibility

2. ECG due diligence process (i.e. Legal, Financial & Technical diligence including site visits)

3. Signing of Memorandum of Understanding (MoU)

4. Stakeholder Consultation for both Investor & Off-Taker (i.e. MoP, PURC, EC, GRIDCo, Fuel Supplier, EPA, EPC, etc.)

5. Inspections of licenses (i.e. Provisional license from EC & EPA Site Clearance)

6. Indicative pricing from PURC (***for RE Projects, the PURC has gazetted FIT's for each technology)

7. Submission of final report on project feasibility

PROCEDURE FOR SIGNING PPA WITH ECG

8. Discussion and Negotiations on technical feasibility, financial proposals and legal issues

9. PPA Negotiations

10. Initialing of draft PPA

11. Submission of initialed draft PPA to AG's Office for review and

comments

12. ECG Management & Board Approval

13. Distribution of signed PPAs to relevant stakeholders

INCENTIVES AND GUARANTEES

Ghana is a safe investment destination. Guarantees against expropriation of private investments provided under law are buttressed by the Ghanaian Constitution. Some investment guarantees are detailed below;

$  Free transferability of capacity, profits and dividends

$  Insurance against non-commercial risks- Ghana is a signatory to the World Bank’s Multilateral Investment Guarantee Agency (MIGA) Convention

$  Loss carry forward for 3 years and incentives for R&D

INCENTIVES AND GUARANTEES- CONT

!  The Ministry of Energy and Petroleum has put in place the Renewable Energy Feed – in – Rates schemes to encourage investments in the Renewable Energy Sector.

!  The Renewable Energy Act 2011 (Act 832) mandates the PURC to set preferential guaranteed rates for renewable energy known as Feed – in – tariff (FIT).

! Custom duties exemptions for plant, machinery, equipments and part thereof.

!  Relief from double taxation for foreign investors and employees where applicable

FEED-IN-TARIFFS (FIT)

!  FIT was 1st announced in August 2013 and reviewed in October 2014.

!  FIT to be guaranteed for 10 years and it is to be reviewed periodically subsequently be reviewed every two years.

Technology *2013 FIT (GHp/kwh)

**2014 FIT (GHp/kwh)

Solar 40.2100 58.3629 Wind 32.1085 51.4334 Biomass 31.4696 56.0073 Hydro ≤ 10MW 26.5574 53.6223

Hydro (10-100MW)

22.7436 53.884

* GH¢ 1.9968 = US$ 1.0000 ** GH¢ 3.1986 = US$ 1.0000

WHY GHANA

!  A stable political environment within the West African sub region with established democratic institutions and systems to ensure good governance in the Country

!  Abundant, adaptable and easily trainable labour force

!  100% foreign ownership of Companies

!  A committed and progressive government/private sector participation

! A dynamic private sector willing to collaborate with foreign partners

! A high degree of personal safety

SUCCESS STORY

SUNON ASOGLI POWER PLANT LIMITED

$ A privately owned Chinese power generating company, delivering 200 megawatts of electricity to the national grid

$ The second phase of the Sunon Asogli Power Plant Project has commenced with feasibility studies. The $360-mlllion project will produce 360 megawatts of electricity on completion.

THINK GHANA, MAKE IT HAPPEN

%  Ghana is diversifying its generation portfolio to meet some of the power requirements of Ghana in an environmentally friendly manner.

%  There is a lot of RE potential in the country especially in solar, wind, biomass

%  There is transparent and functional legal framework to ensure the success of every investment.

%  Think Ghana, Think Endless Possibilities

%  Think Ghana, Make it Happen

Contact us today www.gipcghana.com

Ghana Investment Promotion Centre, Public Services Commission Building, Ministries, Accra, Ghana

P.O. Box M193 Accra, Ghana T +233 302 66 5125 – 9 F +233 302 66 3801

E info@gipcghana.com wnyanu@gipcghana.com

Thank you

Ghana Investment Promotion Centre

www.gipcghana.com