UNIVERSITY OF GHANA

DEPARTMENT OF GEOGRAPHY AND RESOURCE DEVELOPMENT

B.A LONG ESSAY PROPOSAL

Barriers to Renewable Energy Reforms and

Transfer Technology to Ghana
Lewis Blagogie
lewisblagogie@gmail.com

Introduction
Energy production is critical for human sustenance. However, its unsustainable production could
harm the environment, mankind, and compromise future production. Energy is pivotal to
achieving the 2030 Agenda for Sustainable Development and the Paris Agreement on Climate
Change. Sustainable Development Goal (SDG) 7 which calls for 'ensuring access to affordable,
reliable, sustainable, and modern energy for all is the first-ever universal goal on energy (Global
Roadmap for Accelerated SDG7 Action in Support of the 2030 Agenda for Sustainable Development and
the Paris Agreement on Climate Change 1, n.d.) The increasing global population has created a high
demand for energy use thus requiring innovative ways of energy generation as current
conventional energy sources may not be the most efficient. Global energy demand is foreseen to
double until 2050, while the energy sector would undergo major structural transformations like
decarbonization, electrification, and decentralization of production (Triantafyllos et al., 2020) .
There are increased calls for alternate energy production of which renewable energy sources
have been proposed to be better substitutes for conventional energy sources. "Society will
eventually adopt Renewable Energy since fossil fuels are limited in supply and only created over
geologic time" (Timmons et al., 2014, p.3) . Renewable energy is energy generated partially or
entirely from non-depleting energy sources for direct end-use or electricity generation (Epa,
2018) . Some examples of renewable energy include; solar energy, geothermal energy, wind
energy, biomass, and hydropower. Renewable energy has great potential and is particularly
advantageous because of its ability to control and or decrease the emission of greenhouse gases
(GHG) and subsequent effects on global warming (Edenhofer et al., 2012).

Problem Statement
Ghana is well endowed with under-exploited renewable energy resources including biomass,
hydropower potentials, wind potentials along the coast, and high solar irradiation. Although the
aim is to achieve 10% renewable in the mix by 2020, Ghana’s renewable energy currently
contributes 1% to the energy mix (Sector Overview | Ministry of Energy, n.d.). Ghana's energy sector
over the years has seen significant advances in policies geared toward more sustainable energy
production and consumption. This is particularly evident with the establishment of the Energy
Commission of Ghana which was set up by an Act of Parliament, the Energy Commission Act,
1997 (Act 541) with functions relating to the regulation, management, development, and
utilization of energy resources in Ghana, and technically regulating Ghana’s electricity, natural
gas and renewable industries. It is also the advisor to Government on energy matters among
other responsibilities (Mandate and Functions | Energy Commission n.d.) . Also, the renewable
energy Act passed in 2011, has the object of providing for the development, management and
utilization of renewable energy sources for the production of heat and power in an efficient and
environmentally friendly manner, encompassing the (a) provision of (i) a framework to support
the development and utilization of renewable energy sources; and (ii) an enabling environment to
attract investment in renewable energy sources; (b) the promotion for the use of renewable
energy; (c) the diversification of supplies to safeguard energy security; (d) improved access to
electricity through the use of renewable energy sources; (e) the building of indigenous capacity
in technology for renewable energy sources; (f) public education on renewable energy production
and utilization; and (g) the regulation of the production and supply of wood fuel and bio-fuel
(RENEWABLE ENERGY ACT 2011 (ACT 832), 2011).

Regardless of the efforts made so far towards diversifying Ghana’s energy sector,
implementation is still sadly at a snail’s pace. There is however little literature on constraints
specifically facing Ghana’s renewable energy transition. This study, therefore, attempts to
identify and critically assess some key impediments to Ghana's renewable energy reforms and
transfer technology.
Research Questions
 What are the typical constraints of Renewable Energy transition in Ghana?
 Can Ghana thrive on Renewable Energy?

Objectives
 Identify the setbacks of the implementation of Ghana’s Renewable Energy reforms.
 Understand how these setbacks retard progress toward Renewable Energy transition.
 Make some recommendations to policymakers and other stakeholders based on the
findings of the research.

Proposition

Technical skill dissemination on Renewable Energy technologies through designated learning

institutions and global partnership is an impetus for Renewable Energy diffusion.

Literature Review
A thorough review of scholarly materials indicates that barriers to Renewable Energy are often
classified into themes. Themes are more often than not in the broad scope of (i) Financing and (ii)
legal Concerns.

Financing

Although Beck, (2003) admits that barriers are often situation-specific in any given region or
country, he maintains that they could be classified into the broad themes of Cost and Pricing,
Legal and Regulatory, and Market Performance. The author further disintegrates the main
themes into sub-themes, where under Cost and Pricing, he points out that large subsidies both
direct and indirect for competing energy sources such as fossil fuels in the forms of direct
budgetary transfers, tax incentives, liability insurance, leases, land right-of-way, waste disposal,
and guarantees to mitigate project financing or fuel price risks can significantly lower the final
energy prices, thereby putting renewable energy at a competitive disadvantage if it does not
equally enjoy subsidies. Also, Renewable Energy transition requires high initial capital costs and
high taxes and import duties for Renewable Energy technologies. As a consequence, capital
markets may demand a premium in lending rates for financing Renewable Energy initiatives
since more capital is relatively being risked upfront than in conventional energy projects. Lauber,
(2005) agrees with massive subsidies benefiting conventional energy systems. Whereas clean
energy technologies typically have a higher investment cost offset by lower or near zero
operating costs, cost comparisons are distorted by previous and current subsidies for
conventional fuels (Lauber 2005, p.89). He further blames the lack of start-up finance for
renewables in developing countries on the inefficiency of the financial arrangements of such
countries. Similarly, in a study by Dorian et al. (2006) on the global challenges in energy, it is
asserted that although record-high oil prices and increasing environmental awareness are
boosting the interest in Renewable Energy, no rapid transition from fossil fuels is expected
worldwide. Renewable Energy including solar, wind and geothermal energy accounts for only
3% of current world energy demand, excluding biomass (Dorian et al., 2006). The authors blame
this phenomenon on the relatively high costs of most renewables, the lack of government-
provided economic incentives, and easy access to oil, gas, and coal. They maintain that the cost
of a unit of electrical output generated by solar, wind, or geothermal energy generally exceeds
that of oil, coal, or gas-fired electricity and until the costs become more competitive with fossil
fuels, their use would remain stunted. Owusu-Manu et al. (2021) identify three main themes
concerning the barriers to Renewable Energy transitioning and financing. Firstly, they identify
intrinsic economic challenges, commercial challenges, and regulatory challenges. They state risk
vs reward imbalance, long payback periods of Renewable Energy, limited knowledge and
expertise in the industry, uncertainty with profitability, uncompetitive nature with conventional
energy, high upfront capital costs of Renewable Energy Projects, and limited track record of
Renewable Energy projects as key variables of intrinsic economic challenges and identify them
as turn-offs to investors. They maintain that this phenomenon is prevalent in low-income
countries where investments seem to be greatly influenced by socio-economic conditions. They
go on to attribute the lack of knowledge in the Ghanaian environment as the impetus for the lack
of will to finance Renewable Energy projects in the country. The marginal expertise and
experience in Renewable Energy projects make for a reticent investor market that has no clear
incentive to invest, particularly given the expected unattractive investor returns, payback period
and risks (Owusu-Manu et al., 2021).
Legal Concern

The legal and regulatory concern is one theme that is ubiquitous in the discourse on the barriers
to Renewable Energy reforms. Beck, (2003) maintains that in many countries, there is a lack of a
legal framework for independent power producers. He argues that power utilities still control a
monopoly on electricity production and distribution wherein the absence of a legal framework,
independent power producers may not be able to invest in renewable facilities and sell power to
the utility or third parties. Utilities may also negotiate power purchase agreements on an
individual ad-hoc basis making it difficult for project developers to plan and finance projects
based on known consistent rules. Again, he identifies restrictions associated with the sitting and
construction of Renewable facilities. Wind turbines, roof-top solar, photovoltaic installations,
and biomass combustion facilities may all face building restrictions based on height, aesthetic,
height, noise or safety, especially in urban centers (Beck, 2003). He cautions that competition for
scenic, recreational, and agricultural land use or development interest may occur. Baffoe &
Sarpong, (2016) in their work on selecting suitable sites for wind energy development in Ghana,
point out land requirements, noise, and safety, as key issues for the diffusion of Renewable
Energy projects. Owusu-Manu et al. (2021) identify the variables loaded under regulatory
challenges as limited corporate bond markets and a lack of appropriate regulatory structures,
where they lament the bond market's ability to keep pace with investment needs and the
government’s reluctance in fast-tracking Renewable Energy projects as compared with fossil fuel
plants in the Ghanaian context. They argue that there would be confusion and further hindrance
to the rollout of Renewable Energy projects in the absence of standards and certifications.

Notwithstanding the invaluable contribution of the literature to the discourse on Renewable

Energy barriers, the ‘human’ aspect of the overall challenge seems to be ignored. The knowledge
and skilled labour required to manage and run Renewable Energy technologies are as equally
important.
 Conceptual Framework
Concept Map for the barriers to Renewable Energy
reforms and technology transfer to Ghana

Infrastructure

Renewable
Energy
Technical
Constraints
Skills
(REC)

Market
Condition

Figure 1

As Renewable Energy policies, markets and industries develop, they increasingly face new
barriers which are multifaceted and highly complex (Kochtcheeva, 2016). The concept map
above depicts a framework for Renewable Energy constraints in the Ghanaian context.
Renewable Energy barriers vary across space. This study identifies and classifies interrelated
variables; Infrastructure, Technical Skills, Monopoly, and Market Condition as core barriers to
the diffusion of Renewable Energy reforms and the transfer of technology to Ghana.

According to the International Energy Agency, Renewable Energy technologies have mainly
been adopted by countries with relatively high Gross Domestic Product (GDP) per capita and
also high energy security concerns (Muller et al., 2011) as cited by (Kochtcheeva, 2016).
Developed countries have the capacity and infrastructure to engage in Renewable Energy.
Kochtcheeva, 2016 maintains that the wealth of such countries also influences the choice of the
technology generating renewables. This implies that countries without relevant infrastructure
would face a challenge in developing and running Renewable Energy projects.

Closely related to infrastructure are technical skills. The knowledge and skills to manage and run
Renewable Energy projects are crucial for successful diffusion. Increased technological capacity
and the accumulation of technological knowledge and experience are necessary for building local
capacity for production, poverty reduction, and socio-economic development (Kochtcheeva,
2016).

The market condition allows for the flow of investments into Renewable Energy projects.
Renewable Energy sources are introduced into an uneven playfield where their energy prices do
not fully reflect externalities (Kochtcheeva, 2016). Market barriers on the other hand are
disincentives. For example, market failures and the high cost of Renewable Energy technology.
Market failures are deviations from perfect markets due to some element of the functioning of
the market structure (Gillingham & Sweeney, 2010).
Methodology
The primary research method for this study would be a comprehensive review of literature from
secondary sources on the constraints specific to Ghana’s Renewable Energy reforms and transfer
technology. To make meaning of the data collected and suggest appropriate solutions,
Goldratt’s Theory of constraints (TOC) would be used to identify the bottlenecks of Renewable
Energy transition. The theory of Constraints is a management philosophy which is centred on the
weakest ring(s) in the chain to improve the performance of systems (Şimşit et al., 2014). TOC is
based on the notion that every system has at least one bottleneck which can be defined as any
kind of situation that impedes the system to reach a high-performance level in terms of its
purposes (Goldratt, 1990) as cited in (Şimşit et al., 2014) . TOC consists of five steps called the
process of ongoing improvement. (i) identify the system’s constraints, (ii) decide how to exploit
the system’s constraints, (iii) subordinate everything else to the above decision, (iv) elevate the
system’s constraints, (v) if any of the previous steps is broken, go back to step one. It is
important to admit that this study only attempts to highlight very key barriers at the forefront of
Ghana’s Renewable Energy transition and therefore due to constraints such as time, not
everything would be covered.
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