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Energy Policy 48 (2012) 7682

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Energy Policy
journal homepage: www.elsevier.com/locate/enpol

2012 international year for sustainable energy for all: African Frontrunnership in rural electrication
Amadu Mahama n
NewEnergy, P.O. Box 811, Opposite SOS Village, Kumasi Rd, Tamale, Ghana

H I G H L I G H T S
c c c c

An analysis of innovative electricity access case studies from Ghana. Off-grid electrication options are keys to expanding electricity access in Africa. Base of the pyramid strategies for rural electrication has a niche in Africa. International collaboration will be crucial to achieve universal electricity access.

a r t i c l e i n f o
Article history: Received 18 January 2011 Accepted 20 February 2012 Available online 2 June 2012 Keywords: Electricity Access Ghana

a b s t r a c t
2012 has been declared the International Year for Sustainable Energy for All by the UN. While Africa remains the most underpowered continent, the prognosis for a brighter future is looking good, as key stakeholders (governments, private sector, civil society, and the donor community) have mobilized at an unprecedented scale to experiment with new policies, regulatory frameworks, and business models to rapidly upscale access to sustainable energy. The top-down, central grid expansion approach to increasing electricity access is very capital intensive and yet has gained considerable momentum at the expense of lower cost options that utilize decentralized off-grid solutions. A decentralized bottom-up approach could also use indigenous renewable energy sources and foster more signicant linkages with livelihood opportunities in the rural un-served territories. This paper evaluates the emerging experiments through the lenses of C.K. Prahalads bottom of the pyramid theory and Clayton Christensens disruptive technologies perspective. Three front-runner initiatives involving new business models, innovative technologies, and institutional capacity building will be analyzed. In addition, the paper examines a regulatory policy initiative designed to stimulate clean energy investments in Ghana. Though the examples are all from Ghana, they illustrate general challenges to sub-Saharan Africa as a whole. & 2012 Elsevier Ltd. All rights reserved.

1. Introduction Africa is a continent with abundant and diverse energy resources, yet it is also the continent with the lowest access to modern energy services necessary for socio-economic development (Davidson and Sokona, 2001). Energy access and energy security issues pose a major impediment to socio-economic development on the continent. The energy sector is aficted by severe problems that include frequent power blackouts, poor access to modern fuels and electricity, bankrupt energy utilities, and inadequate investment in infrastructure (Misana, 2001). Another important feature that distinguishes many African countries energy systems from those in most parts of the

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developing world are their overdependence on low quality energy sources such as rewood and charcoal to satisfy cooking needs (Davidson and Sokona, 2002). While the declaration of the year 2012 as the International Year for Sustainable Energy for All resonates very well among energy policy-makers, donors, and diplomats in the international development arena, the capacity of African policy-makers, politicians, project developers, and service providers to rise up to the challenge and make this declaration a reality remains unclear. The declaration comes at a time when Africa, the most underpowered continent is undergoing major transition in practically every sphere of social, economic, and national development. With respect to the climate challenge brought about largely by the use of fossil fuels, Africa is largely blameless with annual per capita electricity consumption at only 124 KWh and over 600 million people living in rural areas without access to electricity. Nevertheless the continent is expected to be one of the hardest hit

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in terms of the impact of climate change. With regard to infrastructure, the advancement of technologypartly driven by concern about climate changeholds special promise for Africa, as do new approaches toward project nance, such as public private partnerships and approaches based on regional cooperation. In terms of policy, African leaders are more pro-business than before, and they are eager to get away from dependence on foreign aid (Ramachandran et al., 2009). Initiatives to increase energy supply in developing countries have not necessarily reached the poor, and initiatives designed specically to increase energy access for the poor have not taken full advantage of clean energy technologies (Oil Change/Action Aid, 2011). This paper will present some views on current efforts for enhancing Africas access to electricity, evaluate some lessons from specic initiatives to expand electricity access, and explore the factors that can drive forward or impede the electricity access agenda, which aims to make modern energy in the form of sustainable electricity for all by 2030 a realistic goal for African countries. Brew-Hammond and Kemausuor have argued that efforts which succeed in integrating productive uses and income generation opportunities into energy access initiatives, whether based on conventional fuels or renewable energy, may hold the key to universal energy access in sub-Saharan Africa (BrewHammond and Kemausuor, 2009). Similarly, Douglas Barnes (1998) has emphasized that the greater the mix of end-uses for electricity, the greater the impact on rural development. He therefore cautions that very narrowly focused electrication initiatives should be avoided. These arguments bring into question the validity of some of the off-grid electrication experiments in Africa, most of which have focused on delivery of the basic services of lighting and the operation of small electrical appliances, but lack the capacity to support signicant productive uses. The mandate to provide energy services to the population has historically been entrusted to large, state-owned utilities or national oil companies (United Nations Economic Commission for Africa, 2007). Since the 1990s, reforms in the energy sector have introduced private sector participation in the energy sectors of many African countries. Nevertheless, the companies that emerged are still relatively large and tend to be conservative in their management philosophies. These companies make progress in their value creation by introducing incremental improvements in the technology, products, and business models that gave them competitive advantage in the past, and therefore focus on setting up the processes to meet the expressed needs of the customers they have attracted. This mind-set inevitably leads to failure on their part to adopt new technologies and business models that take a different approach from what their current customers are asking. This phenomenon is what Christensen (1997, 2003) describes as disruptive technological innovations. He points out that new technologies typically enter the marketplace with a functionality level that is much lower than what incumbents in the marketplace are providing, and therefore tend not to appeal to the bigger or more afuent customers, but are very appealing to low-end customers who are more value conscious. Disruptive technologies nd traction in emerging low-end markets. Christensen argues that innovative disruption is not an event, but rather a process in which it could take decades for a new product to penetrate the market. Nevertheless, he argues that such disruptive technologies have grown quite rapidly in several industries and eventually dominated the market. The response of the incumbent is usually to ignore this development because the market is judged to be small. Christensens original theory focused on disruptive technologies in the form of products, however, over time, the same theory has been used to explain how radically new business models and business processes can be used to penetrate new markets.

As if extending Christensens theory on disruptive technologies, Prahalad and Hart (2002) highlight the untapped market potential of over four billion customers in poorer regions of the world, whom he describes as the people at the base of the economic pyramid. Prahalad argues forcefully that businesses stand to prot greatly while at the same time affecting social change by developing products and business processes specically to meet the needs of the poor in the marketplace. Large companies, especially in the fast moving consumer goods industries (Unilever, Nike, and Coca-Cola) have since pounced on the idea of proting from customers at the base of the economic pyramid, and are rushing to this customer segment with custommade products and business models (Bushan, 2010). There are initiatives to respond to the energy poverty crisis in the developing world that involve stakeholders experimenting with a variety of disruptive energy service technologies, intent on engaging protably with the base of the pyramid customers in the energy services market. These stakeholders include governments, development agencies, nancial institutions, and small to medium size enterprises that form the backbone of the economies of most developing countries. However, these initiatives are often weak and face numerous hurdles. This paper will analyze three parallel energy access and development initiatives in Ghana, covering deployment of new technologies and innovative nancing schemes that have put this sub-Saharan African country well on the road to achieving universal access to electricity by the year 2020, a more ambitious national target than the UN goal of universal access by 2030. In addition, the paper examines a regulatory policy initiative designed to stimulate renewable energy markets. Although the examples are all from Ghana, they illustrate general challenges to the electricity situation in sub-Saharan Africa as a whole.

2. Country context Since 1989, Ghana has been implementing a National Electrication Master Plan to extend the reach of electricity to all parts of the country over a 30 year period. Over the last two decades, the NEP has electried over 4,000 communities and raised the national access rate from under 35% to over 72%. Thus far, grid extensions have been the principal modus operandi, even though the cost of connecting new communities to the national grid has become extremely expensive and difcult to justify on a costbenet criteria. Concerns about regional equity in the electrication investments are putting even more pressure on government to extend the grid to even more unprotable locations from the utilities perspective. In 2010, total generation capacity was 1930 MW with approximately 50% of this energy coming from hydro-power and the remainder from thermal generation sources. Renewable energy sources for electricity, mainly solar photovoltaics (PV), account for less than 1%. Low tariffs and inefciencies in the power sector have resulted in reduced reliability of the power system in general. In 2011 Ghanas Energy Minister pronounced that the country had exceeded a 72% rate of access to electricity (Oteng-Adjei, 2011). This is quite a remarkable feat given that the average access rate in most of sub-Saharan Africa is less than 20%. The National Electrication Scheme, instituted in 1990, is one of the cornerstones of Ghanas development strategy, and successive governments have worked consistently toward the goal of attaining universal access to electricity by the year 2020. Grid extension has been the principal means of extending electricity across the country, with decentralized, stand-alone solar PV systems increasingly deployed to reach remote locations with basic electricity services. Analysis of data from a recent review of the

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status of the National Electrication Program indicates that the cost of electrication per household is now over USD 2000 (Ministry of Energy, 2010). Given that over 90% of rural customers are lifeline customers whose electricity consumption is subsidized, the state owned distribution utilities are struggling to maintain this customer base. In order to reach the remaining 30% of the population in a sustainable manner with clean energy, technological innovation and new business models will be crucial, as the costs of grid connections are continuing to rise due to reducing customer density and longer transmission and distribution lines. A number of initiatives in the areas of regulatory policies, business models, and technological innovations are already well underway to make universal access to electricity a reality by 2020. In the following sections, some of the on-going initiatives designed to accelerate the achievement of the goal of universal access to electricity by 2020 are discussed. The three case studies offer a set of ideas on which a uniquely African energy policy to accelerate clean energy access can be built. The rst case is a multi-million dollar donor-supported electricity access initiative using the traditional top-down approach of central grid extension coupled with a program to promote decentralized, off-grid solutions using micro-nance and alternative approaches to ownership and management of isolated mini-grids. The second case study is a private sector initiative led by a multi-national company that uses a bottom-up approach to deploy a base of the pyramid product for clean rural lighting. The approach targets meeting basic needs for lighting and enlists the participation of the local private sector, non-governmental organizations (NGOs), and community-based enterprises to create a robust supply chain to make the lighting products and services available where they are needed. The third case study can be described as bridging a mid-level case of a solar powered mini-grid to serve an isolated rural community with grid quality power using local entrepreneurs and new energy storage technologies that have a potential to revolutionize solar photovoltaic installations. The common denominator in the three approaches is the goal of expanding electricity access through the adoption of renewable energy technologies and new business models. The effectiveness of the programe has been hampered to some extent by the absence of a policy and legal framework to guide investment, involve consumers, and enable and encourage new participants to engage protably in the delivery of electricity services in underserved areas. 2.1. Case study 1: Ghana energy development and access project (GEDAP) 2.1.1. Project context In 2005, the government of Ghana initiated the Ghana Energy Development and Access Project (GEDAP) to accelerate the access to electricity in urban and peri-urban areas, strengthen the power sector management capacity, and introduce innovations in technology (off-grid supply options) and nancing using output-based aid and a new level of institutional collaboration into the power sector. The project mobilized funding from an impressive list of international nancial institutions such as the World Bank, African Development Bank, Global Energy Facility, and Global Partnership for Output-based Aid, Swiss Agency for Development Cooperation, and Africa Catalytic Growth Fund. 2.1.2. Project implementation GEDAP makes a bold attempt to position Ghana on a sustainable path to electricity access by strengthening the traditional grid-based state-owned electricity supply agencies with their

top-down approaches. It also introduces other actors from the private sector using more bottom-up approaches and new business models based on micro-nance, creates space for some innovative decentralized off-grid supply technologies based on renewable energy, and places high priority on delivery criteria that are cost-effective and meet basic needs (World Bank, 2007). The project has the ambitious objective to provide all unelectried clinics, schools and other public facilities in remote locations with solar PV supplies, provide over 133,000 new connections under the grid, 10,000 households with basic electricity using solar home systems, and a further 20,000 from connections through isolated mini-grids. The new connections under the grid are taking place mainly through the addition of new customers in urban and peri-urban areas to the existing distribution networks, under a program referred to as intensication. The distribution utilities have also been provided with resources to introduce pre-payment metering technology as a way to improve revenue collection and to encourage consumers to use electricity wisely. The solar PV component of the GEDAP has introduced several innovations; a) the entire procurement and execution is done through the private sector, b) a combination of loans with subsidies to households in target locations, also described as dealer sales/consumer credit model and c) the end-user credit arrangements being managed independently by rural and community banks. Only customers from participating rural and community banks can access the grants under this project. For the rst time, the government of Ghana is executing both on-grid and off-grid electrication alternatives that co-exist and complement each other. Under the off-grid program, when consumers or households purchase a solar home system, agreements with the service providers and the rural banks are signed with the customers. These agreements contain relevant information for the purchase, including system capacity, price, mode of payment, and location/address of customer. The off-grid solar products are all subsidized, at rates ranging from 25% to 50%. With a payment deposit of only 10% of the cost of any given solar home lighting package, the full cost of which can range from USD 80 for a basic solar lantern to over USD 2000 for a 100 W solar home system with inverter and television, a customer in the project districts can get instant access to solar power options of their choice. The customer is allowed up to three years to pay off the balance of the non-grant portion of the cost of the installation. Even though the project design has built in a number of quality control mechanisms through regular inspections and monitoring of installations, customer complaints are mounting that response time to faults are slow. It is doubtful whether there is sufcient incentive in the contract for the service provider to continue to provide maintenance services for three years. There is a very high risk of loan default if measures are not put in place to ensure that installed systems are functioning. Given that only a very small proportion of clients currently use the services of rural banks, the policy of providing only bank customers with credit will leave out a huge chunk of the potential market. Notwithstanding the high prole publicity of the solar PV program under GEDAP, the program has come to essentially cement Ghanas dependence on the central grid approach to electrication. Of the USD 210 million committed to the project, only USD 27 million (about 12%) has been allocated to the promotion of off-grid, decentralized solutions (World Bank, 2007). The skewed allocation of project funding and activities in favor of traditional central grid delivery strategy conrms that Ghanas electricity sector is still xated on the top-down supply strategy, with the deployment of innovative off-grid approaches being presented as temporary solutions with no clear sustainability safeguards for clients. The delays in the establishment of a

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Rural Electrication Agency to manage the task of rural electrication poses a signicant challenge to the sustainability of the program, partly because it will tend to be driven by same topdown approaches to service delivery which has proven to be quite inadequate for rural electrication. A case-in-point is the inability of the project to commence any work on establishing an isolated mini-grid using renewable energy options yet, even though there is budgetary provision for this technology option. The top-down approach of using external consultants to carry out studies and endless analysis has yielded no results even as the project is getting close to its end-date. A more pragmatic route could have focused on enabling entrepreneurs to present proposals on how to build, operate and maintain such mini-grids, recognizing that subsidies may be necessary to allow entrepreneurs in such locations to turn a reasonable prot. The use of cross-subsidization in the Ghana power sector is a well-established tradition that could be extended to isolated mini-grids. It is too early still to assess the sustainability of the off-grid delivery model under GEDAP, but the model has proved very successful in countries like Bangladesh and Sri Lanka where small and micro-enterprises are playing a central role in delivering micro-energy to rural areas. 2.2. Affordable lighting for all (ALFA project)a base of the- pyramid initiative (BoP) 2.2.1. Project context Affordable Lighting for All was a base of the pyramid (BoP) lighting initiated by Philips in Ghana in partnership with a number of non-governmental organizations and private solar lighting companies. The multinational electronics company signed an agreement with the Dutch Government to work with the private sector and NGO partners in Africa to: (1) provide affordable and sustainable energy products and services (like solar lighting and energy efcient cook stoves) for 10 million deprived people in Sub-Sahara Africa; and (2) develop commercially sustainable distribution chains for these products, in which local entrepreneurs in Sub-Sahara Africa play key-roles. Philips Base-of-the-Pyramid (BoP) Initiative, (called ALFA in Ghana) was focused on improving the quality of life of the 4 billion people living in poverty through innovative solutions and inclusive business models. Philips and its partners in Ghana point out that their initiative is not motivated by charity, but rather a business strategy to create value for business and society through multisector collaboration. Market development at the base of the pyramid creates an opportunity to enhance the economic situation of deprived people on the one hand and to expand the consumer market of companies on the other hand (Prahalad, 2004). Serving the base of the pyramid can be both protable for the companies involved and improve the living conditions of the poor if products match well with the needs of the target group. The benets of the poor being served by big business includes being empowered by choice and being freed from having to pay the currently widespread poverty penalty the poverty penalty the poor pay include a high price for poor quality lighting from kerosene lamps, and having to wait for years on end for the national electricity grid to reach them. 2.2.2. Project implementation The BoP initiative in Ghana, also called the Affordable Lighting for All (ALFA) project in Ghanainvolving Philips Lighting, four local non-governmental organizations (NGOs), and one of the leading solar distribution companies in Ghanawas implemented over a two-year period to develop distribution chains for sustainable lighting products. The specic objective of the pilot

project was to develop and test commercially sustainable (nonexclusive) distribution and marketing, maintenance and aftersales service chains for electric lighting products and services for poor people in underserved areas of Ghana. The project provided the partners with valuable information regarding the market for solar lanterns designed for the population in the economic bottom of the pyramid. Specically, this information included clear insights regarding several parameters, such as the economic and nancial viability of the supply chain, the functioning of micro-nance, the preferred price points for different products and end-user insights regarding future product developments. Market exploration by the partner NGOs in Ghana revealed that end-user prices for solar lanterns should be in the range from USD 60 to USD 80 representing the costs for kerosene for an average household over two years. Customers desired other value-added services from the solar lights such as the capacity to charge cell phones and radios. The user expectations on the durability of the product were very high, often exceeding the 23 year life expectancy guaranteed by the manufacturer. The price of the agship productthe Uday lanternwas still out of the range of the majority of the base of the pyramid clients; and the product itself failed to provide other services like phone charging and energy to operate radios and television which are highly prioritized in the target communities. This challenge is fully consistent with the evolution of disruptive technologies, where it is recognized that the rst generation of such disruptive technologies tend to lack full functionality in meeting clients needs, but with time can be adjusted to meet them incrementally (Prahalad, 2004). Efforts to use micro-nance to encourage were not successful for a number of reasons. Firstly, most of the potential customers do not generally use banking services, but for those who do, the high interest rates (between four and six per cent per month) is considered prohibitive; moreover, the debt term ranged from six months to one year. Additionally, the costs of serving the clients in the target area were very high. Weak infrastructure (especially a bad road network and high transportation costs) further increased the cost of selling in this zone. What remains to be seen is whether Philips and its local partners will stay the course, invest in the development of new products to meet the needs of the base of the pyramid clients for a more comprehensive solution to basic lighting needs in Africa; or if not, the end of the ALFA project will have virtually ended this particular initiative to nd a pragmatic lighting solution for the base of the pyramid clients in Africa. 2.3. ZEM Ghana-isolated mini-grids initiative 2.3.1. Project context The ZEM Alliance (a Ghanaian and Norwegian partnership) has a commitment to play an active role in rural electricity issues and sustainable development. As an Initiative under the International Year of Sustainable Energy for All, members of the ZEM ALLIANCE have developed a mini-grid business model for making grid-quality electric energy accessible to isolated areas. The New Energy Center in Tamale, Northern Ghana (a local NGO focused since 1994 on improving access to sustainable energy services) is leading the effort in Ghana to adapt this technology and business model and make Ghana the rst African country to test and implement the concept in cooperation with the Norwegian group ZEM AS Norway and the Norwegian Business School (BI). The initiative in Ghana is focused particularly on the opportunity for the implementation of innovative forms of rural electrication using renewable energy mini-grids and advanced energy storage technologies in the form of Electric Vehicle batteries. The interest in this particular form of rural electrication comes from

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the demographic prole of many sub-Saharan African countries, which has a high proportion of isolated communities. Initial analysis conrms that it will be feasible to deliver a sustainable mini-grid solution in remote locations in Ghana notwithstanding the low cost of grid electricity. The pilot projects will provide valuable social information regarding mini-grid sustainability in sub-Saharan Africa and offer substantive proof of the extent to which the economics of a mini-grid approach will allow deployment of the mini-grid as a solution to rural electrication challenges in Ghana and other African countries. Key to successful development is long-term maintenance. The ZEM model therefore foresees the training of ZEM Entrepreneurs that will learn both the technical requirements of running not only a micro-grid system, but also the commercial task of operating a ZEM Center that sells the electricity to the local partners connected to the local micro-grid. Currently rural electrication in Ghana is subsidized. The initiative will provide a policy lesson on the extent of subsidy that will be required to support independent mini-girds. The rst mini-gird installation will be undertaken in the village of Jena in Northern Ghana. The system will consist of a 4.8 KWp solar PV system and a battery bank with four days of back-up capacity. Solar PV will be producing 100% of the power. The micro-grid will connect 25 users including one school, a community place of worship, a social center and one public lighting xture. An energy meter will be attached to each connection. The investment cost is expected to be provided from donor grants, and a small in-kind contribution of labor from the villagers. Users will be required to pay a connection fee to demonstrate their willingness and ability to pay future tariffs. The operation, maintenance, and replacement costs are expected to be nanced through the monthly tariffs paid by the users. The tariffs established will not exceed the lifeline tariffs for electricity consumers approved by the Public Utilities Regulatory Commission. The ownership of the generating equipment will be vested in the community, but the operation and maintenance will be privatized to a local technician or entrepreneur. In both cases, the community owns the power plant and the local grid. Since 1989 extension of the national electricity grid from the central hydro and thermal generating stations have been the principal means of extending electricity across the country, with decentralized stand-alone solar PV systems being increasingly deployed to isolated remote locations to provide basic electricity services (Kemausuor et al., 2011). Today it is estimated that over 70% of the population of Ghana has access to electricity from the national grid (Oteng-Adjei, 2011). The remaining 30% of the population that is yet to be electried are mainly located in rural areas, some at considerable distances away from the national grid, in settlements that are dispersed, with electrical loads that are very small. To reach the remaining 30% of the population in a sustainable manner with clean energy, technological innovation and new business models will be crucial. One such innovation is a proposal to include the establishment of isolated mini-grids using renewable indigenous energy supplies. An independent electricity mini-grid which can provide centralized electricity generation at the local level, using a village-wide distribution network is another option under consideration for rural electrication using renewable energy. Mini-grids provide capacity for both domestic appliances and local businesses, and have the potential to become the most powerful technological approach for accelerated rural electrication. Minigrids also offer an optimal solution for utilizing localized renewable energy resources. According to the Alliance for Rural Electrication, calculations of life-cycle costs show that mini-gridspowered by generating sets fueled chiey by renewable energy, (for example municipal waste or biomass)are usually a more competitive technical solution than generating sets running on diesel fuel (Alliance for Rural Electrication, 2011). However, translating this

great technical potential into real success stories on the ground has turned out to be extremely challenging. The proposed project is not without risks. The rst concern is that despite the training to be provided and the small local structure set up for operation and maintenance, if a major technical problem occurs, the community is unlikely to be able to resolve the issues or quickly nd replacement components. Secondly, mini-grid investment needs to remain isolated from grid supplies for a considerable period into the future in order to justify the investment. The remaining zones that could be suitable for mini-grid deployment are mainly situated in the northern regions of Ghana and island communities on Lake Volta. The ambitious and unpredictable nature of current roll-out of the national electrication program could result in such isolated communities getting connected to the grid much sooner than currently envisaged, effectively reducing the opportunities of deploying and up scaling a mini-grid solution for rural electrication.

3. Discussion 3.1. What are the key drivers of the energy access agenda? Ghanas electricity sector has many strengths that will support the rapid up-scaling of electricity access programes using both the central grid expansion strategy and decentralized approaches in parallel. From an institutional and political perspective, key assets include: (i) existence of core policy documents governing the sector; (ii) the recent reforms unbundling generation1, transmission and distribution functions, and the opening up of the power sector to private operators. The political will for the development of the sector is very strong, and public interest and participation in the evolution of key programes and policies is very high. Finally at the international level there is a growing consensus that increasing energy access in developing countries will be crucial to achieving every single one of the Millennium Development Goals (UN Millennium Project, 2005). To increase the penetration of clean energy in the national energy mix and particularly improve access for the underserved, the Government has formulated a number of key energy sector policies and programes, namely; a) the Strategic National Energy Plan (20062020), b) the National Energy Policy and Action Plan as well as c) the 2009 Sustainable Development Action Plan for Ghana. More recently, the Renewable Energy Law has also been approved by Parliament. While the passage of the Renewable Energy Law was considered a break-through in the energy sector policy agenda, it remains at best an empty shell for the time being. The key instruments in the law such as the introduction of feed-in-tariffs, scal incentives to attract investors, and the establishment of a Renewable Energy Fund are still works-in-progress. The feed-intariff is also intended only for grid-connected renewables. This is problematic because it will not benet promising initiatives like the isolated mini-grid technology, which will need such tariffs, especially in situations where distribution utilities begin to consider this technology in their expansion plans. Furthermore there is no innovation in the nancing mechanisms for the feedin-tariffs because the impact of the incremental costs of the clean energy sources is expected to pass through directly to electricity end-users. This will lead to the addition of only small quotas to renewable energy to prevent sharp hikes on end-user tariffs.
1 Unbundling in the power sector refers to the regulatory practice of disaggregating electric utility service into its basic components and offering each component separately. For example, generation, transmission and distribution could be unbundled and offered as discrete services.

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Ghanas efforts to access carbon nance to improve the viability of energy investments have been very poor, and at the moment none of our energy policy documents targets the carbon nance market as a signicant potential source of additional resources to expand energy services; this is true for the entire continent of Africa, where the share of projects on the carbon market (Clean Development Mechanism) is only 3%. The Clean Development Mechanism (CDM) is one of mechanisms established within the framework of the Kyoto Protocol intended to meet multiple objectives: to assist developing countries in achieving sustainable development while at the same time contributing to the ultimate objective of preventing dangerous climate change and assisting developed countries to achieve compliance with their emission reduction commitments. The World Bank, as a key nancier of the power sector in Ghana and other African countries, has a major inuence in the electricity access agenda. According to a recent report by civil society organizations on the activities of the World Bank, only 9% of the Bank Groups energy portfolio in the years 2009 and 2010 targeted increasing energy access for the worlds poorest, and only 30% of its portfolio went into clean energy investments (Oil Change/Action Aid, 2011). What is clear then is that the Bank is in fact not prioritizing either energy access or clean energy in its lending at the moment. 3.2. What are the prospects for universal access to electricity by 2020? Notwithstanding recent declarations from the Minister of Energy in Ghana that the electrication access rate had increased to 72% in 2011, there is still some concern that the target of universal access to electricity for Ghanaians by the year 2020 may not be achieved (Kemausuor et al., 2011). Fig. 1 shows that in a business as usual scenario, universal access to electricity in Ghana will not be achieved in 2020. This point is further re-enforced in an IMF report which notes that the annual rate of new electricity connections in sub-Saharan Africa at less than 1% is not keeping pace with the new household formation rate of 1.9% (IMF, 2006). The UN declaration of 2012 as the International Year for Sustainable Energy has made a strong political statement signaling the end of a business as usual approach to energy access in Africa. Other important declarations have been made in by the European Union Africa Energy Partnerships, the Ecowas whitepaper on increasing energy access in West Africa and the NEPAD Energy initiative. While these initiatives have all focused on the transfer of real resources to Africa and other developing countries to assist the countries in making a sustainable transition to clean energy, the way forward should be an energy policy and action agenda which is driven by African experts. Even though Africa has the capacity for energy policy analysis this is often not utilized. Due to the link with ofcial development assistance (ODA) and multilateral money in energy development, most policy advice is provided by external technical experts who are frequently not
100% Mauritius South Africa 50% Ghana Africa (average) Uganda, The Gambia, etc 0 1990 1995 2000 2005 2010

aware of the socio-economic circumstances of the continent. The result most often is the implementation of programes that fail to meet the needs of the continent.

4. Conclusions and recommendations One key nding of Clayton Christensens research is that disruptive innovations always emerge at the fringes of existing markets in response to the needs of people overlooked by the dominant paradigm, essentially locked out of the benets enjoyed by mainstream consumers (Christensen, 1997). The deployment of disruptive technologies and innovative delivery mechanisms to improve access to electricity services in Ghana is a recurring theme in all the three case studies. The cases also have elements and strategies for making electricity services accessible with minimum harm to the environment. In a way, these all lead to a path for sustainable electricity. The approaches offer only ideas on which a comprehensive energy policy can be built. There are potential tensions and contradictions in the top-down and bottom-up approaches that these initiatives present, especially because there are entrenched interests that support the status quo. The Ghana Energy Development and Access Project (GEDAP) has injected new resources and new ideas to tackle the challenge of electricity access; while most of the resources will go into traditional top-down grid expansion efforts using the stateowned utilities, important innovations to improve management efciency have been introduced in the area of bill collection using prepaid metering technology. GEDAP has left procurement of solar equipment for the whole of Ghana up to several dozen solar companies in the country. While this appears on the surface to be an effective way to engage the private sector in a more bottom-up approach, it misses out on the obvious economies of scale in the procurement of solar equipment if some other top down approach were used to effect bulk procurement of solar equipment. This could be a serious drawback to the goal of making solar technology products affordable, as unit prices could be reduced by 4050% for most solar equipment if procurement is in the tens of thousands as envisaged in Ghana. The move to more effective and efcient policies on electrication in remote locations is made even more arduous by a set of equity issues such as promoting regional development, national cohesion and equal access to the nations resources. The Philips Affordable Lighting for All initiative in Ghana has exposed one of the weaknesses of large multi-nationals in producing goods specically for the Base of the Pyramid customers. While the supply channels have been fully developed making lighting products available in some of the remotest locations in Ghana, sales have been slow because the price points are too high for customers income levels. For customers who can afford the products, the functionality remains too limited. While the Base of the Pyramid theory recognizes low initial functionality as a stage in the development of appropriate products, whether or
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Fig. 1. Electrication status and trajectories for Ghana and selected African countries. Source: Kemausuor et al. (2011).

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82 A. Mahama / Energy Policy 48 (2012) 7682

not a truly tting product for lighting and other value added services like phone charging can emerge from the Philips initiative will depend on the willingness of the project Partners to commit themselves to a longer-term effort to rene the designs and costs down to the point where the product meets the price and functionality of the target market. The direction of national policy on taxes and duties must necessarily recognize these environmentally friendly goods and make them eligible for exemptions. Finding the political will for change is always difcult, which explains the four years it took to get the Renewable Energy law passed. The law is silent on renewable energy targets, and at this point of time it offers few incentives for benecial innovations in the renewable energy sector. The provisions of the law are not innovative at all, rather a top down adaptation of renewable energy laws from developed countries like Germany. Therefore, the implementation of some of its key provisions such as nancing of feed-in tariffs could become a serious stumbling block in the implementation of the Renewable energy law, primarily because of the potentially unacceptable end-user electricity tariff hikes that could result. The ZEM Ghana initiative combines a bottom up approach with a host of technological innovations to bring electrication in remote communities to new levels through the implementation of mini-grids for small isolated communities. That this approach is technically compatible with future grid integration is particularly appealing. At the risk of appearing utopian but in fact, cognizant of the complexity of pursuing a clean energy agenda, the following scenario of the future is well achievable. My vision is deliberately optimistic, but by no means guaranteed. But I am condent that it is still useful as an illustration of the changes in the energy policy landscape that might unfold with right mix of regulations and projects. The government of Ghana needs to consider placing a moratorium on further expansion of the central grid for rural electrication for at least two years and initiate a national debate involving major stakeholders to examine the progress, challenges and options for continuing with the National Electrication Program. At current costs of more than USD 2000 per connection2, the pursuit of rural electrication largely via grid extension needs careful and impartial analysis as there are economically superior options. Next, the option of rural electrication using solar PV is given a more prominent role, with a view to integrating solar PV in the national electrication program on a more sustainable, equitable and affordable basis. The government should adopt the recommendations of the Renewable Energy Master Plan study for Rural Electrication using Renewables in the Northern parts of Ghana (Ministry of Energy/Nomoura Research Institute, 2006), which conrms that small dispersed loads in rural areas can be sustainably supplied from solar photovoltaic energy far more efciently than grid supply. The implementation plan of the feed-in tariffs needs to be linked with a sustainable source of nancing, and target not only central grid connected renewables, but also mini-grids to supply rural clients. The formation of the Ghana Rural Electrication Agency (REA) is long overdue. As part of the strategy to optimize the implementation processes to achieve

universal access, the REA needs a clear mandate from the beginning and resources to provide oversight for the completion of the electrication access by 2020. Furthermore, the government needs to heed the advice of many experts who have expressed concern about the poor returns on investments in electrication, principally because not enough attention is being paid to promoting productive uses of electricity. Consequently, an electricity productive uses program targeting irrigation and rural small scale enterprises, such as agro-processing must be implemented. Finally, the point must be stressed that unless countries of the world fulll their promises from the recent COP17 in Durban, South Africa, as well as previous climate conferences, and actually begin to funnel some of the USD 100 billion that rich countries have promised to make available to poor ones by 2020, efforts to achieve universal access to electricity with clean energy may not succeed. References
Alliance for Rural Electrication, 2011. Hybrid mini-grids for rural electrication: lessons learned. Barnes, D.F., 1998. Electric power for rural growthhow electricity affects rural life in developing countries. Brew-Hammond, A., Kemausuor, F., 2009. Energy for all in Africato be or not to be? Current Opinion in Environmental Sustainability. Bushan, R., 2010. GSK, Nestle, Coca-Cola & Dabur top up effort to tap rural consumers. The Economic Times, Jan 11, 2010 [online]. Accessed Jan 12, 2012 from /http:// articles.economictimes.indiatimes.com/2010-01-11/news/28469254_1_rural-con sumers-horlicks-maggiS. Christensen, C.M., 1997. The innovators dilemma: when new technologies cause great rms to fail. Davidson, O., Sokona, Y., 2002. A new sustainable energy path for African development: think bigger act faster. EDRC Cape Town. Davidson, O., Sokona, Y., 2001. Energy and sustainable development: key issues for Africa, in: Wamukonya, N. (Ed.), Proceedings of the high-level regional meeting on energy and sustainable development for the ninth session of the commission on sustainable development. IMF, 2006. An investment framework for clean energy and development: progress report. Kemausuor, F., et al., 2011. A review of trends, policies and plans for increasing energy access in Ghana. Renewable and Sustainable Energy Reviews 15 (2011), 51435154. Ministry of Energy, 2010. National Electrication Scheme Master Plan Review, 9201192020. Ministry of Energy/Nomoura Research Institute, 2006. The master plan study on rural electrication using renewable energy in the northern part of Ghana. Misana, S., 2001. Gender Concerns in accessing energy for sustainable development, in: Wamukonya, N. (Ed.), Proceedings of the High-level Regional Meeting on Energy and Sustainable Development for the ninth session of the Commission on Sustainable Development. Prahalad, C.K., 2004. The fortune at the bottom of the pyramid: eradicating poverty through prots. Knowledge@Wharton, Phildelphia. Oil Change/Action Aid, 2011. Access to energy for the poor: Clean Energy Option, 2011. Oteng-Adjei, J., 2011. Energy for growth: vision and agenda. (Energy Minister Meet the Press, 6 Oct 2011). Accessed Jan 13, 2012 from. /http://www.ghana.gov.gh/index. php/information/meet-the-press/7977-energy-for-growth-vision-and-agendaS. Ramachandran, V., Gelb, A., Kedia Shah, M., 2009. Africas private sector: whats wrong with the business environment and what to do about it? United Nations Economic Commission for Africa, 2007. Making Africas Power Sector. UN Millennium Project, 2005. Energy Services for the Millennium Development Goals: Achieving the Millennium Development Goals. United Nations Development Programme. World Bank, 2007. Ghana Energy Development and Access Project: Project Appraisal Document.

2 Calculated from data provided in Ministry of Energy (2010) National Electrication Scheme Master Plan Review 92011-2020.