For many years solar seemed like a potential solution for millions without access to electricity in Ghana, but high costs and slow technology left it largely out of reach.
In the past few years, however, that has changed. With increased investment, cheaper products, innovative business models and, most importantly, unstable supply of electricity from the national grid, solar is not only on the rise, but could transform the way the country is powered.
This growth is being driven by private companies who look at the over 24 million people in Ghana, or the 600million people in Africa or the 1.3 billion people in the world who lack access to power and see the vast market opportunity.
“Energy access and infrastructure are fundamental to eliminating poverty and improving people’s lives,” said Dr. Kwabena Donkor, Former Minister of Power, at the first renewable energy conference held in the country last year
“Building an electric grid and having centralized power is untenable for much of the world — particularly sub Saharan Africa.” He added.
It’s a sentiment that seems to be echoed more widely these days. And there are examples across the spectrum, from inexpensive solar lanterns, to home solar systems, to microgrids or commercial-scale projects.
What’s helped create this progress is a mix of factors: technology costs have dropped making pricing more competitive, investment has increased and, in some cases, the government has created favorable environments for progress.
When IFC first began working to explore solar technology 15 or 20 years ago, home solar systems cost $500 to $1,000, which, even with the most creative leasing model, was still unaffordable to those living on less than $2 a day, particularly sub-Saharan Africa.
But between 2000 and 2013 the efficiency of these systems improved by about 10,000 percent and the costs of batteries, LED lights, and photovoltaic cells, all dropped more than 80 percent, according to Sturm.
LED lights, along with an emerging set of appliances, are also dramatically more efficient. This means that, the same 40 watt solar panel that 10 years ago could power one 25 watt light bulb can today power four LED lights, a color tv, a phone charger and a radio.
As those prices went down and efficiency went up, a market opportunity emerged. If only those products could be marketed in a way that competed with products people were using (which in most cases were kerosene or battery-powered flashlights). That’s where some early funding from the development industry helped — IFC started working on setting quality standards, providing market intelligence, business assistance and education programs for consumers.
From solar lanterns, consumers can step up to home solar panels or microgrids, though their set up has proven more complex.
“What we see is governments slowly picking up that there is more to access than grid extension,” said Koen Peters, executive director of the Global Off-Grid Lighting Association. “The market is developing in a very dynamic way.”
And this shift on the part of the local government has led to a slew of recent announcements and commitments designed to bring more funding and attention to the industry. Several of these new investments by the government fall under the renewable energy initiatives, which with these announcements and other funding, is clearly now going to support solar, off-grid power. That’s a big departure from the early days of the initiative. While the launch of Power Africa Initiative by the US Government included both megawatt and access targets, many of the early announcements focused on large-scale, grid-connected generation.
“What I think has happened is there has been a maturity of business models for OPIC (Overseas Private Investment Corporation) to credibly finance,” said John Morton, the Overseas Private Investment Corp’s chief operating officer. “We want to grow the access piece of our portfolio.”
“The industry is still young and the market opportunity is massive. That means that issues of financing, ensuring quality standards, developing metrics and enabling scale all need to be on the agenda.” said Mawuli Tse, Director, Solar Light Company Limited in an interview.