Environment and Development

Barriers and drivers for the

deployment of renewable energy

technology in developing countries

Case study: Deployment of solar water pumps in Ghana

Assignment Question:

`Describe the main drivers and barriers for the deployment of renewable energy

technologies in developing countries. Critically assess the impact of renewable

energy technologies in those countries, as well as in relation to the fulfilment of

international targets for the reduction of greenhouse gas emissions.′

Date of submission: 11.01.2008

Module: MA International Development - Economics and Management of Rural Devel-

opment (EMRD) 2007/2008

Contents

1. Introduction 3

2. Drivers for the deployment of RET in developing countries 4

2.1. Drivers for developing countries 4

2.2. Drivers for developed countries 6

3. Barriers to the deployment of RET in developing countries 8

4. Case study: Barriers to the deployment of solar water pumps in Ghana 9

4.1. Energy in Ghana 9

4.2. Case study: Solar water pumps in Ghana 10

5. Conclusion 12

Literature 13

2

1. Introduction

Renewable energy technology (RET)1 are considered as "one of the strong contenders to

improve plight" (Painuly 2001: 73) for more than 2 billion people in developing coun-

tries who don′t have access to the clean modern energy which is essential to social and

economic development (BMZ 2006). RET are increasingly recognised for their contri-

bution to development especially in rural areas, increasing health, energy independence

and climate change mitigation.2

Due to massive technological improvements in recent years, economies of scale in pro-

duction3 and given the absence of market distortions4, RET can be cost competitive with

conventional energy sources. This counts especially for off-grid RET in rural and re-

mote areas where costs for grid connection are excessively expensive and where 80% of

people without access to electricity live. RET become even more competitive if envi-

ronmental externalities5 are factored into the market price of competing fuels (Martinot

et al. 2002). Despite those advantages, RET in developing and developed countries are

only tapped to a small amount of their potential as there are several types of barriers to

their deployment (Painuly 2001). While traditional renewable energy sources like bio-

mass (i.e. fuel wood, animal wastes and crop residues) provide 30 - 45% of the energy

supply in developing countries (up to 90 % in rural Sub-Sahara-Africa) RET produce

only about 2 % of the global energy supply, mostly in developed countries (REN21

2005).

This paper aims to identify major drivers and barriers to the deployment of renewable

energy technology in developing countries. In chapter two the main drivers for RET, as

well as their ability to contribute to development aims and poverty reduction, will be

discussed in general, as there are a number of incentives for developing as well as de-

veloped countries. Barriers, however, depend more on the particular technology and

conditions in countries or regions (Martinot et al. 2002). The second part of this paper

will look at a specific case study: The deployment of solar water pumps in Ghana.

1 Renewable energy is defined as an energy source which is replaced within a human lifetime. Technol-

ogy to harness this energy is referred to RET such as biomass, solar photovoltaic (PV), hydro, wind or

geothermal technology.

2 With proper management RET have nearly no impact on the environment as they produce little of no

emission of green house gases (GHG) or solid waste (Edjekumhene et al. 2002).

3 Reduction in cost per unit resulting from increased production, realized through operational efficiencies.

4 Market distortions occur through market interventions of governments through price ceilings, price

floors or tax subsidies.

5 Environmental externalities are negative side effects of production like air pollution whose costs are not

borne by the producer but by the whole society.

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2. Drivers for the deployment of RET in developing countries

There are different drivers for the promotion of RET in developing countries. For de-

veloping countries RET can bring major benefits for economic and social development,

especially in rural areas. A switch from oil to renewable resources and energy technol-

ogy can reduce dependency on oil imports. For developed countries, the advantages of

the deployment of RET in the South derive from international climate change agree-

ments like the Kyoto Protocol and from economic interests.

2.1. Drivers for developing countries

Most of the developing countries are facing major changes in their energy supply. Fast

growing economies like China, India or Brazil have to meet enormous growth rates of

their energy demand and poorer nations have to meet international poverty reduction

goals, which implies reduction of energy poverty especially in rural areas (BMZ 2006).

Besides international pressure and support there are other important incentives for meet-

ing the growing energy demand in developing countries with RET.

One of the arguments for developing as well as developed countries to switch to renew-

able resources is the opportunity of gaining independency from oil and fossil fuels. Es-

pecially after the oil price shocks and the oil price increases of the 1970s there was a

rising awareness about the vulnerability of economies. Renewable energies can support

developing countries to gain independency from fossil fuels (BMZ 2006). One of Bai-

ley′s arguments for introducing RET in Ghana is that its oil imports are a major con-

tributor to the country′s excessive debt as 10 % of its GDP are spent for oil imports

(Bailey 2007). This implies a high vulnerability of the power industry and economy.

There is also a great incentive for developed countries to support independence from oil

and other fossil fuels as those resources are scarce and if the growing energy demand of

developing countries was to be met with fossil fuels, world market prices would rise and

resources would decrease even faster. That wouldn′t meet the interest of developed

countries which are themselves highly dependant on the fossil fuel markets.

Regarding social and economic development, there are important benefits of RET. First

is its potential for decentralised power supply. In the next few decades, large numbers of

poor people in rural areas or in urban slums will remain unserved by grid-based electric-

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