A study by the Institute of Industrial Research at the Council for Scientific and Industrial Research (CSIR) has revealed that the Renewable Energy subsector is unattractive to private investors.
The Institute cited low returns on tariff, lack of access to long term financing by the private sector and the high cost of extending grid to remote areas as some of the reasons, private businesses are not encouraged to invest in renewable energy.
Currently, the penetration of renewable energy in the country is only 0.2 percent which is lower than the 39.92 percent of hydropower and 59.88 percent of thermal power.
The study has also revealed that inadequate electricity infrastructure and the inability of distribution companies to recover the cost of operation are some of the reasons private businesses have refused to invest in renewable energy.
Director of Renewable Energy at the Institute of Industrial Research at the CSIR, Dr. Francis Boateng Agyenim said government would have to incentive the private sector to increase renewable energy penetration in the country.
“A private company would want to go into any business to make profit. But most of the energy systems we have in the country, the private sector cannot make profit. Government would have to create a conducive enabling environment that supports private sector participation. There should be clear policies that support new businesses to start up,” he said.
The most popular alternative power aside thermal and hydro is solar, however, that is yet to be embraced by both consumers and distributors.