CET collapsing renewable energy business

The ECOWAS Common External Tariff (CET) which was introduced in February this year is collapsing the renewable energy industry, the General Secretary of the Renewable Energy Association, Mr Enoch Yeboah Agyepong, has said.

He explained that unlike the previous tax regime, the CET had increased import duties on renewable energy products, thereby raising their costs to consumers.

As a result, he said the harmonised tariffs to a large extent had done a huge disservice to the renewable energy and energy efficiency industry.

Clean energy conference

This was at the 5th West African Clean Energy and Environment Exhibition and Conference (WACEE) in Accra.

WACEE is organised annually by the Delegation of German Industry and Commerce in Ghana (AHK Ghana) to promote Ghana and West Africa as a congenial business destination for German and European countries.

Solar, wind and gas powered generators which had a zero per cent import duty now carry an import duty of five per cent.

Also, Light Emitting Diode (LED) lamps and Compact Fluorescent Light (CFL) lamps which carried zero per cent import duty now have a 20 per cent import duty plus 17.5 per cent Valued Added Tax (VAT) slapped on them, with solar inverters also attracting five per cent import duty now.

Under the CET, there is also no separate classification for solar batteries so its treated the same as any other battery, while solar powered lamps which exited in the previous tariff book has also been deleted, which means anyone who brings solar powered lamps would pay the tariff applicable to any lamp which is 20 per cent import duty and 17.5 per cent VAT.

Mr Agyepong believed these tariffs were too high and unfriendly to the renewable energy industry.

ECOWAS CET

The CET is one of the instruments ECOWAS member states are using to strengthen its common market objective.

The law is composed of four tariff rates of custom duty, namely zero per cent for essential social goods, five per cent for goods of primary necessity, raw materials and specific inputs, 10 per cent for intermediate goods and 20 per cent for final consumption goods.

In Ghana, the law came into effect following the passage of the Customs (Amendment) Act, 2015 (Act 905) by the Ghana Revenue Authority.

New feed-in tariffs 

A Project Coordinator at the Energy Commission, Mr Frederick Appiah, said it would be introducing new feed-in tariffs by October this year.

The feed-in tariff scheme was established by the Renewable Energy Act for the pu­­­rpose of guaranteeing the sale of electricity generated from renewable energy sources. The scheme consists of renewable energy purchase, feed-in tariff rates, and a connection to transmission and distribution systems.

Mr Appiah said the new feed-in tariff would remove the capacity limit placed on solar and wind under the old system.

He said the grid operator would be at the point of connection and determine whether it was technically feasible to do the number of megawatts of solar the person wanted to install.

According to the law, the feed-in tariff was supposed to be for a period of 10 years and two years renewable but Mr Appiah said this would also change under the new system.

“We are going to have an addition where you can have 20 year tariff so you will know and can plan with it,” he said.

Power purchase agreement

He said the commission had also carried out a standardised power purchasing agreement because it realised that so many power purchase agreements were being signed with different structures and also some were not consistent with the law.

He said it had also opened access to the national grid that would allow private entities and individuals to offload the excess power they generate through renewable energy into the national grid and as a result, he said it had ,therefore, done the technical and renewable energy codes for transmission and distribution and had also put in place a net metering code.

“The pilot phase of the net metering scheme is completed, with about 35 installations done and the net metering guideline is what is left. By law, it has to be legalised by the Public Utility and Regulatory and I believe this will be ready by October,’” he noted.

“If you have a net metering scheme, then it means you have a special metre that gives you the ability to connect your renewable energy system to the grid so that when you have excess power, you can feed it into the grid and also take power from the grid when you need it,”

“It records everything you push into the grid or consume from the grid and it can come to a time that you will not pay any electricity bill because everything you consuming is being offset by the solar you producing,” he explained.