SUS 6170 Renewable Energy: Business Plan for a New Renewable Energy Market Enterprise

Master of Business Administration, The Nexford University

GREMAR RENEWABLE ENERGY
SOLUTIONS LTD. (GRES)
BUSINESS PLAN
EXECUTIVE
SUMMARY
COMPANY
DESCRIPTION
• Gremar Renewable Energy Solutions (GRES)
is a green energy solutions company
delivering alternative energy solutions to
Sub-Saharan Africa. The firm seeks to
democratize energy access to underserved
low-income consumers in Ghana and the
rest of Africa.
• The company seeks to deliver innovative
solar power, bundled with payment plans
and credit systems that promote universal
access.
 MARKET
ANALYSIS
• Power generation in Ghana has evolved from diesel generating-
systems and stand-alone industrial systems to the construction
of the Akosombo hydro-electric dam, and subsequently, a gas/
light crude oil-powered thermal plant.
• Ghana has a perennial power crisis that has led to service
rationing and, consequently, slowing the country's economic
development. Although the government aims to attain universal
electricity access by 2020, the challenges of sufficiency in
production, efficiency in distribution, and sustainability of access
and pricing remain. (Kumi, 2017).
• Currently, the energy mix comprises biomass/charcoal (39.8%),
oil & gas-powered systems (46.6%), and electricity (13.6%). The
electricity consumption dynamics indicate the highest consumer
category are households/commercial/ industries (about 80%),
followed by Mines (10%), and others (10%). (Kemausuor, Obeng,
Brew-Hammond, & Duker, 2011).
• The country possesses a great, yet untapped renewable energy
potential with only 72% of the nation's population having some
form of access to electricity. (Mensah, Kemausuor, & Brew-
Hammond, 2014).
 MARKET
ANALYSIS
• Historically, the country has seen exploratory activities in
BioEnergy, Tidal and Wave power, Photo-Voltaic and Thermal,
Wind Power, and Hydropower of all scales.
• There is a preponderance of solar resources in Ghana. The
average irradiation rate is about 4.4 to 5.6 kWh/m2/day (16-20
MJ/m/day), and the country enjoys about 1,800 to 3,000 hours
of sunshine annually. Interestingly, these opportunities have
been unexploited for photovoltaic (PV) systems or Solar Water-
Heaters.
• In recent years, the prospects for the solar-power generation
industry have improved significantly with the drops in prices of
PV cells and components. Significant demand for the solutions is
generated by the following sectors: rural and urban solar
homes, schools and health centers, vaccine refrigeration, solar
water heaters, solar water pumps, telecommunication, mobile
phone battery charging stations, and streetlights.
• There are also significant opportunities for businesses for solar
water heaters, solar food driers, electricity and lighting
solutions, retail of PV equipment and solar LED lighting systems.
(Asumadu-Sarkodie, & Owusu, 2016).
 MANAGEMENT
TEAM
• The business will be managed by a
team of seasoned business
managers and entrepreneurs with
over 40 years of cumulative
business management experience.
• The firm will also engage the
services of experienced technical
experts to manage the core
technology operations. These
engineers will maintain oversight of
the infrastructure, installation, and
maintenance service operations.
 PRODUCTS &
SERVICES
• Gremar's offerings have four categories: Power Solutions,
Power Consumables, Maintenance Services, and Financing.
• Power solutions will include all forms of power generation
packages to be offered by the company. These solutions will
range from large-scale industrial or community power plants
to compact solutions for small homes or pico-business
enterprises. (Kuada, Mensah, Bujac, & Bentzen, 2019).
• Power consumables include all forms of appliances, materials,
parts, spares, and components for power equipment and
systems. This category will take the form of physical retail
store(s) and an online platform.
• Maintenance services will provide the expertise and skilled
labor required by consumers for such services as site
assessments, energy consulting, installation, repairs, and the
maintenance of power appliances and solutions.
• The firm will launch the financing category to create credit
 MARKETING PLAN
• Gremar's pricing will seek to project a "low-cost provider" image to
the consumers. This strategy aims at attracting and retaining low-
income mass markets across Ghana.
• The firm will also drive its promotions through mass media
channels like radio and television while maintaining a significant
presence on social media and online platforms.
• Gremar will channel customer-engagement through physical
neighborhood stalls and online channels like website and social
media pages. The firm will also seek to develop sales franchises in
different communities across the target area to drive and deepen
penetration and provide contact points and brand tangibility for
the target market.
• Gremar will work with developmental agencies to sponsor public
enlightenment initiatives to educate consumers. The initiatives will
highlight the economic benefits of renewable electricity in creating
sustainable future economic growth. (Steel, Anyidoho, Dadzie, &
Hosier, 2016).
 FUNDING AND FINANCIAL
PROJECTIONS
• The business will require $1 million
startup capital to fund consumables and
materials inventory, staff salaries,
administration, overhead expenses, and
marketing. Business break-even is
expected within fifteen months while
the firm should be profitable before the
end of year-two.
• The sources of funds for the business
include owners (40) and investors (60%).
BUSINESS RISKS
• While there are all the normal
risks of the business, the financial
and economic risk is small. The
trends of technology should make
the future of this segment of the
energy sector more profitable not
less, and future higher prices for
fossil-based energy make the
GRES project more attractive, not
less.
 KEYS TO
SUCCESS
GRES's success will be determined by the
ability of the managers to effectively match
operational competence and cost-efficiency.
The success of the business will also rely on
factors like:
• The level of sophistication and access to
modern technology at scale and within
affordable limits; and
• The capacity of managers to coordinate all
stakeholder assets, resources, and
opportunities to achieve the most effective
mix for productivity and profitability.
PROBLEM
STATEMENT
COMPANY
OVERVIEW
Gremar aims to sustainably democratize energy access
in Ghana by exploiting natural and inexhaustible
energy sources such as wind and sun. The company
hopes to provide retail energy supply to underserved
markets in affordable and equitable ways.

Vision Statement
• To become the national leader in the development
of sustainable and profitable energy systems at
scale.

Mission Statement
• To profitably and sustainably deliver green energy to
underserved communities in Ghana and Sub-
Saharan Africa (SSA).
CURRENT
STATUS
Gremar Renewable Energy
Solutions will be registered and
organized as a limited liability
company, with an executive office
in Tamale, Ghana.

The firm will be a private

enterprise seeking collaborations
with underserved communities for
the establishment of RE projects.
MARKET AND
SERVICES
• Gremar will build expertise in
electricity and electric services for
rural communities, and will engage a
dual approach to the distribution of
power:
• The company will sell solar-powered
systems for home and commercial
uses with financing and credit
payment solutions provided to
consumers.
• The firm will also establish
community energy centers where
activities and facilities requiring
power and internet infrastructure
will be provided at affordable rates to
community clusters.
 BUSINESS
OBJECTIVES
• Gremar will pioneer its RE solutions in Tamale,
Ghana, a significant city in the northern region
of the country. From this base, the firm will
attempt to grow aggressively into a regional
supplier of RE systems, products, and services,
exploiting expansion opportunities in other
parts of SSA.
• The firm will establish a Research &
Development Unit to focus on the creation and
expansion of scalable and affordable
technologies for the African market
• This business plan presents the company’s roll-
out strategy.
PRODUCTS &
SERVICES
DESCRIPTION OF
SERVICES
• Power Solutions: Solar and wind systems contribute
negligible amounts of pollution to the environment.
The firm will capitalize on this to promote the
installation of innovative flexible power system options
for home (retail) and enterprise (small and medium
scale businesses) users.
• A future initiative of the business is designed to
generate consumer confidence and will be expressed
through the creation of a 15,000-watt solar/ wind
power station and community center in Tamale. The
community center will provide retail consumer services
like farm produce processing, appliance charging, food
storage, and refrigeration, water distilling, and
telecommunications and computing access.
DESCRIPTION OF
SERVICES

• Power Consumables: The firm will partner

with producers of consumer electronics to
retail RE-powered electronics and consumer
products in the target market. The products
will be durable, useful, and affordable
everyday appliances.
DESCRIPTION OF
SERVICES
• Maintenance Services: The
company will engage a
team of on-site technicians
to support the smooth
operations of customer
installations and provide
interventions in cases of
disruptions.
DESCRIPTION OF
SERVICES
• Power Financing: Gremar will offer
financing solutions to home and
commercial-scale consumers of RE systems.
With the average retail price of retail solar
solutions around $800, the financing
solution will facilitate access to Tamale
consumers to purchase energy in cheap
monthly installments. This option is
expected to stimulate mass adoption in low-
income settings like Tamale, where
affordability is a deciding factor in buying
decisions.
MARKET OVERVIEW
 POWER SECTOR
CHALLENGES
1. Inefficient Transmission and Distribution: The country suffers from
aging and unreliable infrastructure with most of the transmission
system that was built decades ago without any significant modern
upgrades.
2. Poor Sectoral Commercial Performance: The sector has performed
poorly in both operations and commercial terms and has not been
able to recoup distribution costs from revenues. This is exacerbated
by challenges with metering, billing, product leakages and theft, and
inefficient revenue collection systems leading to financial losses and
gradual decay.
3. Demand in outstripping electricity supply: This is creating service
disruptions and frequent load shedding.
4. Poor rainfall and interruptions in the flow of the West African Gas
Pipeline (WAGP) have limited the generation capacity of the largest
power plants in the country. This has also enforced the replacement
of natural gas with light crude oil as a more expensive fuel source
increasing monthly production costs by about US$27 million and
generating additional losses.
5. The legacy debts and generally poor financial status of the sector
coupled with the lack of creditworthiness of the utilities.
6. Other challenges include corruption and over-contracting of new
plants, non-transparency in procurement, and a weak regulatory
environment.
 MARKET NEEDS
• Development of transparent policy frameworks
on the exploitation ad conversion of the
country’s natural energy resources.
• Setup of systems that facilitates transparency
and cost efficiency in the expansion of
generation capacity.
• Creation of a fair, efficient, and enabling pricing/
tariff regime
• Efficient integration of supply chain players
(generation, transmission, and distribution
sectors).
• Improvement in energy efficiency and
management of demand.
• The deliberate expansion and investment in
renewable energy sources.
 TARGET
MARKET
• Tamale is the largest city in the Northern Region of Ghana
and has led the growth for the region, becoming the
country's third-largest city, with the second-highest growth
rates since independence in 1957, and currently has an
estimated population of about 537,986.
• Economic activities in the area are predominantly trading,
automobile works, civil constructions, farming, food
processing, and crafts.
• “Tamaleans” live in large households, with buildings mostly
made of brick and concrete. Each apartment averages 3
bedrooms with utility areas like a kitchen, living room, and
washrooms installed. Commercial activities here are mostly
represented by bars, restaurants, and grocery stores. While
income levels are low in this area, Tamaleans retain up to
half of their annual income.
• Residents of the area are reasonably educated and
understand the benefits of solar electricity, including its
clean, safe, and reliable delivery of power to consumers.
However, the retail cost of solar solutions (averaging about
$800 per unit) puts the solution out of reach of the majority.
 COMPETITOR LANDSCAPE
• Competing Technologies. Most residents of the target market make use of
kerosene and dry-cell batteries to augment their energy or lighting requirements.
While these are not necessarily cheaper than solar systems in the long run the
price points at fifty cents per liter of kerosene allows consumers to buy and use
about five liters per month for households and thirty-five liters per month for
commercial establishments. Dry-cell batteries costs around $3 per set and are
only bought twice-monthly to power mostly torches and radios. A few families
own gasoline generating sets which also adds an extra layer to their power
expenses.
• Kerosene and disposable batteries offer the strongest competition to Gremar’s
products and the main attraction is the perception of lower acquisition costs for
these alternatives. However, a simple analysis reveals that an average household
will expend about $800 on kerosine and batteries in ten years (not factoring
inflation) while the solar system has an average lifespan of twenty years.
• Beyond the long-term cost advantage, Gremar’s solutions are cleaner, safer,
quiet, and more sustainable than current alternatives available in the market.
• Other forms of competition are provided by other RE retail and supplies
businesses in Ghana. However, all other existing competitors are located in Accra
and Kumasi and have a focus on capturing the markets in the large coastal cities.
• This provides Gremar with the unique opportunity of attaining a first-mover’s
advantage in the northern part of the country.
• The advantages of Gremar’s solar electric systems include the ability to power
any electric device, its modularity, flexibility, and scalability, and the extreme
reliability of the systems. Also, the systems require minimal maintenance and are
known to last for up to thirty years. While they appear costlier than conventional
alternatives momentarily, they offer a far more superior value for the money in
the long run.
COMPETITOR
PROFILES
There are currently no businesses or
organizations providing solar electricity in
Tamale. Additionally, there are no
businesses in all of northern Ghana
offering financing for solar electric systems.
The national utility is also handicapped in
its capacity to scale at the moment.
Currently, there are about 150 businesses
registered as RE providers in Ghana with
only about 35 of these operations. The top-
4 firms in the space are Dutch & Co, PEG
Africa, Strategic Power Solutions, and Sun-
In Limited.
MARKETING PLAN
 PRICE STRATEGY
• To drive product affordability, Gremar will offer
installment payment plans to consumers. Depending on
the scale of uptake, the credit facilities will either be
managed by the company or collaborations might be
sought with financial institutions with friendly rates.
• Product pricing will range from $24.00 per month for the
smallest units. Gremar's primary target market is families
earning a minimum of $600 annually. Estimates place
about 30% of households in the target market within this
range.
• Gremar will source products from original equipment
manufacturers and seek bargain options to keep cost
prices low. With the pricing strategy, consumers pay
significantly lesser than comparable systems while also
allowing for convenient payment options.
 PROMOTION
STRATEGY
• Awareness will be driven largely by traditional above-the-
line and word-of-mouth advertising to promote the
financing options. The future establishment of the 15,000-
watt solar/wind power station and community center will
further generate a lot of buzz in Tamale, and this will be
exploited to promote the business in other regions.
• Gremar will also erect billboards in high-density and high-
traffic districts in the area to educate customers about the
business's products and the community center. Posters,
brochures, and other relevant literature will also be printed
to deliver general information about solar energy.
• The projected target market in Tamale is about 25,000
households and Gremar projects the acquisition of 250
families in the first year of operation. The demand is
expected to grow aggressively after the delivery of the
initial batch of solutions.
 PRODUCT STRATEGY
• Financing Terms: The firm will offer "co-payment" options to customers. This
will require customers will have to pay a portion of the product cost (between
5% and 20%) before taking possession of their systems. These credit facilities
will also be insured to mitigate credit risks.
• Multiple Product Packages: Gremar's systems will be offered in various sizes
to fit the needs of different customer types and capacities. While some
consumers will only power a few fluorescent lights and a radio, others will
require systems that can provide continuous refrigeration of groceries or
power processing equipment.
• Pre-Assembly: Every system requires components like solar panels, deep-cycle
batteries, a charge controller, lighting, wiring, connectors, and mounting
materials. Gremar will offer all systems as pre-assembled kits designed to
deliver simplicity that enables end-users to self-install.
• Customizations: Customization options will be provided to consumers with
demand for bespoke solutions or adjustments to standard offerings. Gremar
will continuously readjust this product line according to customers' power
needs.
• Trade-Ins and Upgrades: customers will have the opportunity to trade-in and
upgrade plans and products after purchase.
 CRITICAL SUCCESS
FACTORS
Identification of Cost-Effective Financing.
• Ghanaian commercial banks offer interest rates in the excess of 25% per annum and this becomes
a stumbling block for local developers and off-takers. There is a need for government support, and
creative access to alternative financing sources in the country to stimulate the ecosystem.
Price determination
• The retail price setting for products in the country is impacted by the current retail tariff of the
public electricity generating company and the operating cost of the alternative. These factors
coupled with macro-economic elements like inflation, cost of capital, and policy frameworks will
impact price setting and investors' ability to recoup their funds eventually.
Retail Distribution Infrastructure
• Developing a local network of skilled-installers is very difficult in Ghana's business conditions.
Developers must establish these sales and operational channels to reach desired levels of scale.
The Ministry of Power and Energy Commission has a certification process in place to qualify
installers – this should be leveraged as a channel to provide support and resources to these
suppliers. Additionally, clear expectations are needed for warranty and repair/maintenance
activity.
Marketing
• While the benefits and advantages of the proposed project are self-evident, it is imperative to
develop a strategic marketing system to ensure that the target market understands, appreciates,
and adopts the initiative.
 SWOT ANALYSIS
• A more stable political climate than
most other nations in the region. • High-interest rates (above 25%) and
funding difficulties.
• Public sector commitment to the
sector through regulatory policies • Corruption.
promoting investments in solar • Heavy taxation regime on imported
projects. components.
• A high growth forecast (8% annually)
and coupled with a fast-growing
economy.

• Data paucity for credit analysis

• Very high solar irradiance in the target • Presence of a low-quality off-taker
area creates an opportunity for
(Electricity Company of Ghana)
production maximization.
• The combination of solar and storage • Regulatory weakness
systems with microgrids provides a
speedy and reliable route to
community electrification.
RISK MITIGATION
Mitigating the identified risks in this project will require
managers to follow a 5-point process enumerated below:
1. Establishment of strategic objectives and quality baseline
assessments
2. Identification of risk sources
3. Assessment of identified risk factors
4. Design of risk mitigation and hedging strategies
5. Project initiation and ongoing control
To ensure success, the project will develop renewable roadmaps
with immediate targets that rely on proper planning and
resource assessments. The project will also seek to entrench
transparent procurement practices to address country and
project risk. (Agrawal, 2012).
OPERATIONS PLAN
 BUSINESS STRUCTURE
& ESTABLISHMENT
• The business will be located in Tamale, Ghana while
subsequent branches will be established as close to
consumer clusters as possible.
• The firm will operate as a limited liability company with
partners sharing equity and decision-making powers in
line with predetermined ownership structures of the
business. The founding partner will be actively involved
in the day-to-day operations of the business.
• The sources of capital financing will be partners’ savings
and credit financing.
MANAGEMENT
STRUCTURE
• The company will be headed by a board of directors, who
will oversee the affairs of a team of managers,
administrative staff, engineers, and other operational staff.
• The Management Team will comprise experts with long,
useful experience in RE-power installation, generation, and
customer relationship management.
• The Research and Development Unit of the business will
execute a reconnaissance survey to capture the latest solar
radiation data in the target area to ensure the rapid
installation of customized power plants/ solutions and
efficient distribution of the energy generated by the
company’s main distribution network.
ORGANIZATIONAL STRUCTURE
Board of Directors

To be appointed

Board Chair

To be appointed

Managing Director

Oludare Dipe

Research & Business

Corporate Services
Senior Engineer Development Finance Manager Development
Manager
Manager Manager
To be hired To be hired To be hired To be hired To be hired

Admin and
Installation Maintenance & Sales and
Legal officer Procurement Payables officer REceivables Officer
Engineers support Engineers Marketing officers
officer
To be hired To be hired To be hired To be hired To be hired To be hired To be hired
FINANCIAL PLAN
 YEAR 1 YEAR 2 YEAR 3

Revenue 2,000,000.00 3,000,000.00 4,500,000.00

COGS 1,434,640.00 2,099,040.00 2,708,640.00

Gross Profit 565,360.00 900,960.00 1,791,360.00

INCOME EBITDA
(28,500.00) 124,176.00 900,353.40

STATEMEN
EBITDA margin -1% 4% 20%

T Depreciation &
amortization 18,833.33 21,658.33 24,907.08

-
Other expenses
- -

Operating expenses 612,693.33 798,442.33 915,913.68

-
- -

Operating profit (loss)

(47,333.33) 102,517.67 875,446.32

EBIT margin -2% 3% 19%

 YEAR 1 YEAR 2 YEAR 3
Cashflow from operating activities $ $ $

EBIT (Earnings before interest and taxes) (47,333) 102,518 875,446

Depreciation & amortization 18,833 21,658 24,907

CASHFLO Trade and other receivables (500,000) (250,000) (375,000)

W Trade Payables 149,525 64,032 9,122

STATEMEN
Net cashflow from operating activities (538,975) (301,792) 89,633

T Purchase of Equipments (62,000) (71,300) (81,995)

Netcashflow from Investing activities (62,000) (71,300) (81,995)

Net Cashflow (600,975) (373,092) 7,638

Cash and equivalents @ the beginning of the year 1,000,000 399,025 25,933

Cash and equivalents @ the end of the year 399,025 25,933 33,571
   Year 1 Year 2 Year 3
$ $ $
Assets
Current Assets
Cash and cash equivalents 399,025 25,933 33,571
Accounts receivables 500,000 750,000 1,125,000
Total current assets 899,025 775,933 1,158,571
Property, Plant & Equipment

BALANCE PPE
Total non-current assets
43,167
43,167
92,808
92,808
149,896
149,896

SHEET Total Assets

Liabilities & Shareholder Funds

942,192 868,741 1,308,468

Current Liabilities
Tax payable - 84,842 95,460
Trade Payables 149,525 213,557 222,679
Total current liabilities 149,525 298,399 318,139
Shareholder Funds
Issued and fully-paid share capital 1,000,000 1,000,000 1,000,000
Retained earnings (207,333) (429,657) (9,672)
Total shareholder funds 792,667 570,343 990,328
Total Liabilities & Shareholder Funds 942,192 868,741 1,308,468
 $

Investor Funding 1,000,000

FINANCIN
Loans -

G Other Funding (prepayments, etc.) -

Variable Expenses (1 year) (210,060)

Staff Salaries (1 year) (426,600)

DIFFERENCE 363,340
SUSTAINABILITY
PLAN
COST
• Sub-Saharan Africa (SSA) nations are susceptible to the
environmental problems associated with the use of dirty
energy. The abundance of renewable energy resources in
SSA.
• The proposed thermal energy storage system is projected
to supply over 90,000 kWh per year, representing an annual
decline of 63 metric tons of carbon emissions and cost
savings over $8000 annually on consumers’ electric bill,
over a period of 11.2 years.
CONSERVATION
• This project will meet MDGs #7 and #13
with the power plant generating an average
of about 300 kWh per day and emitting 0.03
to 0.09 kilogram of CO2 per kilowatt-hour.
• This emission is significantly lesser than that
of natural gas (0.3-0.9 Kgs of CO2-e/kWh),
or coal (0.6-1.6 Kgs of CO2-e/kWh).
(Chirambo, 2018).
CONSUMER
REORIENTATION
• As part of the business rollout, an
educational center will be created to train
technicians and consumers on electricity
usage, and technology.
• This is intended to contribute to a
behavioral change to responsible energy
consumption and conservation practices
while providing new avenues for Tamale
residents to augment their incomes.
COMMUNITY ENGAGEMENT
& DEVELOPMENT

• By this, Gremar hopes to stimulate

economic activity and prosperity within
the host community.
• This business plan will not describe the
community center aspect of Gremar's
operation in detail, but the offering of
these services represents a significant part
of the company's long-term goals for
development in Tamale.
THANK YOU
REFERENCES
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Chirambo, D. (2018). Towards the achievement of SDG 7 in sub-Saharan Africa: Creating synergies between Power Africa, Sustainable Energy for All,

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