Tell me about the first steps towards this project?
The Ghanaian government passed a law at the end of 2011 with a view to having an aspiration to have 10% of their generation coming from renewables by 2020. In the anticipation of that law, we started development of that project in 2010, to put together all the project rights that we would need to acquire land, get environmental permits, get a generating license, geological license and a whole raft of other things.
Theyve now been put in place and now we have the FIT law. The renewable energy law provided for the off take from qualifying renewable energy assets to be made under a FIT arrangement. That FIT is specific to a specific installation and project.
Once you have your project developed, you create a financial model and the independent regulator in Ghana, the Public Utilities Regulatory Commission (PURC), rigorously interrogates that. The PURC set the tariffs, not just for renewables but also for any generating source. After a year of discussion and review, a FIT stage one was awarded to the project in late October.
Take me through the particulars of the project.
The project is a peak capacity 155 MW. It has an annual export generation expected to be in the order of 240,000 MWh p.a. It involves 630,000 245W crystalline panels.
Where will the modules be sourced?
There are a number of suppliers being considered at the moment. The project has not committed to a single source of supply yet. Were looking at having a competitive process underway in the next few months.
Will you use one supplier or will you use a number of technologies, to spread the risk?
The project is currently expecting to use a single supplier.
For a utility scale plant this size grid connection becomes a major issue. How is that challenge going to be met?
We are connecting directly into the West African interconnector, so were connecting in transmission voltage (161 kV). There is capacity in the transmission network in Western Ghana with some reinforcement to accept load at the point at where were constructing the plant.
The location was chosen for three reasons. One is stable irradiation levels, which are very good in the region generally. The stability of the network which is adjacent to the project, 30 meters away, with sufficient capacity available in the network to allow us to inject the load. And finally close proximity to the deep water port of Takoradi, in the west of Ghana, given that the majority of components will be imported, because there is very little domestic manufacture or the components that well need.
What will the one-off FIT be paying for the project?
At the moment it is commercially confidential between the regulator and the government and the project, but it well be gazette and published locally. This is where Ghana has shown itself, in my eyes, to be particularly astute. Instead of publishing a single tariff, they realize that the capital cost of renewables, particularly solar, is not fixed, it moves with time as costs become lower. So the government arranged itself in such a way that it will award a tariff based on a plant based on its CAPEX, OPEX and other factors.
Does the project have a 20-year PPA?
The project will have the benefit of a PPA from the distribution company local to the project but the independent regulator fixes the price for the export.
Looking then at finance, how will that be secured?
The project will be putting in place security mechanisms, such that investors have comfort that the PPA will be safe and secure.
Is the development bank financing as a part of the mix?
Were talking to a number of development banks, as well as infrastructure funds. There will be quite a basket of funders for this project.
What is the mix between equity and debt?
We will be looking to have around 30% equity and 70% debt and of course the debt will be syndicated.
What would your advice be to other firms who may be interested in developing projects in Africa?
Particularly in West Africa and South West Africa essentially photovoltaics works very well, which means we can provide an energy source that has a highly predictable output. Thats really important for governments to be able to plan for the reliability of the solar photovoltaics. This is particularly true with grids and distribution networks that are developing and emerging; we need to be able to provide a solar resource that delivers the least stress to those assets as possible. Solar photovoltaics match that requirement perfectly.
The Nzema project is planned to be completed by the end of 2015. It will be installed in 10 MW zones on the one site. Financial closure planned for mid 2013. For more information, pick up the January edition of pv magazine.