Business News of Mon, 10 Aug 20153
Power projects to go through tender
Government wants to gain some leverage in the pricing of generated power as plans are underway to begin a process where Independent Power Producers (IPPs) would tender for various power projects in the country.
Power Minister Dr Kwabena Donkor told the B&FT that rather than allow IPPs to drive the market, government needs to be in the “driving seat” and invite bids for various power projects in a bid to get competitive prices and get value for money.
For a start, the minister said he has asked the Energy Commission to put measures in place to do a tender for 20 megawatts of solar and then find a benchmark price to guide future tenders.
Although government is currently spoilt for choice as a number of IPPs have proposed to carry out various power projects to help ease the niggling power crisis, it has found it difficult to accept the prices at which some of them want to generate the power.
“The United Arab Emirates did a tender for 200megawatts of solar and they got 6 cents per kilowatt hour, South Africa did a tender and they got about 12 cents per kilowatt hour, Uganda did a tender and they got under 20 cents. Meanwhile, solar companies in Ghana are asking for 23 cents etc,” the Power Minister said.
“The price for solar panels and other accessories are coming down and the quality is also improving and we believe this should be passed on to the consumer,” he added.
Asked whether the tendering for solar would not be hindered by the existence of a gazetted feed-in-tariff regime, Dr Donkor responded thus: “Fortunately the gazetted feed-in-tariff arises out of a Legislative Instrument. Amending an L.I is not a tedious process.”
At the time the L.I was passed, he said, the external environment was slightly different, in that prices were higher than now and that nothing stops the country from negotiating lower prices.
“Indeed the gazetted figure is the ceiling for the various renewable sources. So nothing stops us from negotiating below the ceiling. So even then there is some flexibility if we get our act right, and I have tasked the Energy Commission to come up with a paper on the tender process for a 20 megawatts solar project so that it will serve as a benchmark,” he added.
IPPs in the solar sector have been chasing a generous feed-in-tariff of GHp40.21/kwh and a short lead time for construction.
The Energy Commission has issued IPPs provisional licences for a total of 3,907 megawatts of renewable energy including wind, biomass and waste-to-energy. Out of this, over 2000megawatts are in respect of solar farms.
Meanwhile, government has said that due to “current constraints” national transmission infrastructure can accommodate only 550 megawatts of all forms of renewable energy, even as it envisions 10% penetration of renewable energy in the generation mix by 2020.