CIPA has provided services that has seen investment of over $10M in clean energy Commercial & Industrial (C&I) in Ghana, West Africa.
The commercial and Industrial (C&I) solar sector currently accounts for more than 75% of power demand in Sub-Saharan Africa. However, due to unreliable nature of the energy supply from the grid, consumers under this segment have been forced to invest in alternative sources of energy, which they consider to be more reliable and less expensive, such as solar energy solution.
C&I electricity consumers have tapped into solar solutions for various reasons including to reduce electricity costs, to improve power supply and to replace existing off-grid generation sources such as diesel powered gensets by decarbonized generations sources for both economic and environmental reasons.
In Ghana, grid tariffs are often high even for C&I customers, mainly due to high cost of importing fuels, high losses in the Transmission & Distribution network as well as use of costly emergency diesel plants. This has resulted in high electricity cost for the C&I customers, who on average consume more than 100kWh every month. In a bid to reduce this cost and improve profitability, several C&I customers have resorted to solar solutions which provide a cheaper and more reliable source of power. In 2018, BloombergNEF estimated that the average price for a 250-kw solar project was between US$0.10 – 0.14/ kWh vs more than $0.25/kWh in Ghana for commercial customers connected to the grid.
Although solar is gradually becoming the energy choice for C&I customers, it also presents a challenge to them in adopting, as the capital expenditure involved in acquiring the power-producing asset is high. This challenge has resulted in two main implementation models; direct purchase where the C&I consumer buys, owns, and sometimes operates the solar system which is typically installed by an EPC contractor, and Power Purchase Agreement (PPA) model. The PPA model is usually used by an Energy Service Company (ESCO), based on a Power Purchase Agreement. The consumer buys power from the ESCO, a special purpose vehicle (“SPV”), at a price per kWh for a certain period based on the offtake. In this model, the ESCO takes the financial and technical risk, and investors can create more value by implementing a portfolio of projects with stable long-term cash flows.
CIPA works with Private equity, family offices, fund of funds, and other investors and financial institutions in the financing and acquisition of several clean energy C&I projects, that cash flow and present value to the C&I customers and investors.
CIPA’s clean energy practice envisions increasing the availability of investment for clean energy projects in Africa, contributing to low-carbon sustainable development, economic growth, poverty reduction, and climate change mitigation.
For more information on these projects email investors@capitalpartners.africa