Regulation Starts To Take Shape For Renewables In West Africa

Principles for regulating clean energy in the ECOWAS region have been prepared by NARUC.
Published: Tue 27 Jan 2015

With its Renewable Energy Policy (EREP) adopted in July 2013 the Economic Community of West African States (ECOWAS) introduced the development of renewable energy as a policy goal for the region. Under EREP, the aim is to increase the share of renewable energy in the region’s overall electricity mix to 10% (2,425MW) by 2020 and to 19% (7,606MW) by 2030.

Further, all ECOWAS member states are asked to introduce national policies and instruments to achieve these targets.

The 15 ECOWAS member states are Benin, Burkina Faso, Cape Verde, Côte d’Ivoire, Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo.

Regulation for renewables

To support ECOWAS regulatory agencies the USAID/NARUC West Africa Regional Regulatory Partnership has developed a document, Principles of Regulating Clean Energy in the ECOWAS Region.This document is based on lessons learned and experiences of regulators from Burkina Faso, Cape Verde, Côte d’Ivoire, Ghana, Mali, Senegal, Gambia, and Togo.

Among these countries Cape Verde, Ghana, Senegal and Gambia have approved, or are in the process of approving, renewable energy policies. Other countries have been focusing on anticipating market developments and building institutional infrastructures in response to the EREP.

The document states that ECOWAS, which encompasses a population of 300 million people, is an economic region with significant potential to attract investment in renewable energy. The process of establishing a regional electricity market has begun, but the various electricity systems in the 15 member states have different market structures and rules. Integrating the electricity markets as well as regulatory and technical rules would be advantageous for ECOWAS member states.

While this level of integration will take time to develop fully, any lack of harmonization at the regional level should not obstruct the integration of renewable energies into existing national electricity markets.

The document also notes that the electricity systems in most ECOWAS countries are vertically integrated and dominated by national utilities. Because the few IPPs that exist are confined to a handful of power purchase agreements (PPAs), there are a limited number of active stakeholders in the electricity sector. Typically, some degree of liberalization in the energy generation sector would be a prerequisite for the introduction of renewable-friendly legislation to allow IPPs to enter into the market. However, even without new legislation specifically focused on renewable energy, existing legislation might give the regulator enough powers to facilitate renewable energy integration.

Principles for renewables

The Principles outlines general standards of regulation for renewable energy sources, focusing on the role of regulatory authorities. These include how to establish a strong institutional environment in which roles and responsibilities are clearly defined among the three main actors, i.e. government, regulator and grid operator; the economic rules of regulation; and the concept of defining connection rights and connection costs methodology.

Among local cases cited is the establishment in Ghana of a steering committee to guide the implementation of a renewable energy policy in the electricity market. The committee, composed of main stakeholder representatives, advises the regulator and other key stakeholder institutions on policy, socio-economic, technological, and environmental concerns regarding the uptake of renewable energy.

Noted also is the interest in the region of a feed-in tariff. The document states this to be possibly the most effective option to promote renewable energy sources within ECOWAS electricity markets, which are characterized by limited competition in the generating and supply sectors and by the small size of national markets. Net metering is also noted as an effective way to promote renewable energy sources because unlike a feed-in mechanism, it only requires one meter to net the generation and usage.

Further reading

USAID/NARUC: Principles of Regulating Clean Energy in the ECOWAS Region