Local content requirements for the transfer of knowledge and skills in the solar photovoltaic industry in Ghana

Abstract

The implementation of local content requirements (LCRs) to drive local manufacturing of renewable energy technologies in developing economies have produced mixed results. LCRs facilitate the development of linkages that enable the transfer of skills, technology, and finance between countries and businesses. In Ghana, full enforcement of the LCRs for the solar industry is challenged by issues such as limited local capability, infrastructure, and incentives to support local manufacturing of solar components. Research on the impact of LCRs in the solar industry, particularly in facilitating linkages between foreign and domestic companies remains sparse. The growing involvement of multinational companies in Ghana’'s solar industry raises critical questions about their impact on linkages development and local capability building in solar photovoltaic (PV) technologies. This study employs a case study design and draws on interviews with 16 persons across 11 solar companies, 2 associations, 2 development finance institutions (DFIs) and a public institution. The findings show mutually beneficial linkages between foreign and local solar companies, resulting in the development of a pool of skilled labour. The procurement practices of solar companies are shaped by environmental, sustainability and governance policies of DFIs, and they contribute to local capability building in solar PV technologies. The study also identified niche markets for local supply of auxiliary products such as direct current (DC) cables and mounting structures which have the potential to evolve into regional supply chains leveraging mechanisms under the African Continental Free Trade Agreement (AfCFTA). It is recommended that LCRs for goods be reviewed to target local supply of auxiliary products, while leveraging foreign investments under AfCFTA to establish regional supply chains for these products.