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| − | = Electricity Situation<br/> =
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| − | The Ghanaian electricity sector is in a period of transition. The Government is attempting to attract more private sector participation in the sector. Independent Power Producers (IPPs) have begun to enter the electricity generation market, previously dominated by the public sector. The state still owns both electricity distribution companies, as well as the electricity transmission company. Key problems in the sector include demand outstripping supply, poor state of transmission and distribution, and tariffs that have not covered costs.<br/>
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| − | Due to such issues in Ghana's energy sector, during the period 2014-2017, the country contracted three emergency power producers, and the government signed 43 power purchasing agreements<ref name="Sarkodie, S.A. (2019). Lessons to be learnt from Ghana's excess electricity shambles. Retrieved from: https://theconversation.com/lessons-to-be-learnt-from-ghanas-excess-electricity-shambles-121257">Sarkodie, S.A. (2019). Lessons to be learnt from Ghana's excess electricity shambles. Retrieved from: https://theconversation.com/lessons-to-be-learnt-from-ghanas-excess-electricity-shambles-121257</ref>. Most of the power purchased based on these agreements were take-or-pay based <span style="font-size: 10pt; line-height: 107%; font-family: Arial, sans-serif; background: white;">contracts</span>, which obligates Ghana to pay money for whatever amount of power produced, even if not <span style="font-size: 10pt; line-height: 107%; font-family: Arial, sans-serif; background: white;">consumed</span><ref name="Sarkodie, S.A. (2019). Lessons to be learnt from Ghana's excess electricity shambles. Retrieved from: https://theconversation.com/lessons-to-be-learnt-from-ghanas-excess-electricity-shambles-121257">Sarkodie, S.A. (2019). Lessons to be learnt from Ghana's excess electricity shambles. Retrieved from: https://theconversation.com/lessons-to-be-learnt-from-ghanas-excess-electricity-shambles-121257</ref>. Consequently, within five years, Ghana turned from a country struggling with producing enough power to meet demand, to a country struggling with excess power production, and a heavy bill to pay for this un-consumed power<ref name="Sarkodie, S.A. (2019). Lessons to be learnt from Ghana's excess electricity shambles. Retrieved from: https://theconversation.com/lessons-to-be-learnt-from-ghanas-excess-electricity-shambles-121257">Sarkodie, S.A. (2019). Lessons to be learnt from Ghana's excess electricity shambles. Retrieved from: https://theconversation.com/lessons-to-be-learnt-from-ghanas-excess-electricity-shambles-121257</ref> ([https://theconversation.com/lessons-to-be-learnt-from-ghanas-excess-electricity-shambles-121257 Read More]...).
| + | = Electricity Situation<br/> = |
| | + | |
| | + | The Ghanaian electricity sector is in a period of transition. The Government is attempting to attract more private sector participation in the sector. Independent Power Producers (IPPs) have begun to enter the electricity generation market, previously dominated by the public sector. The state still owns both electricity distribution companies, as well as the electricity transmission company. Key problems in the sector included demand outstripping supply, poor state of transmission and distribution, and tariffs that have not covered costs.<ref name="https://www.cgdev.org/sites/default/files/electricity-situation-ghana-challenges-and-opportunities.pdf p. 16">https://www.cgdev.org/sites/default/files/electricity-situation-ghana-challenges-and-opportunities.pdf p. 16ff</ref> |
| | + | |
| | + | In 2016-17, severe electricity rationing, so-called "[https://en.wikipedia.org/wiki/Dumsor dumsor]", were necessary. The government over-reacted, and let several generation licences to IPPs with a long-term commitment to high prices (43 power purchasing agreements!). Most of the power purchased based on these agreements were take-or-pay based contracts, Ghana has to pay even for power not <span style="font-size: 10pt; line-height: 107%; font-family: Arial, sans-serif; background: white">consumed</span>. This led to an over-supply, and an inability to charge the market for the cost of generation. Within five years, Ghana turned from a country struggling with producing enough power to meet demand, to a country struggling with excess power production at a high price: Producing almost double the needed demand, Ghana pays annually over 500 million USD for power not even used. Lessons learnt include: flexible contracts, currency risks protection, corruption, transparency, political expediency.<ref name="Sarkodie, S.A. (2019). Lessons to be learnt from Ghana's excess electricity shambles. Retrieved from: https://theconversation.com/lessons-to-be-learnt-from-ghanas-excess-electricity-shambles-121257">Sarkodie, S.A. (2019). Lessons to be learnt from Ghana's excess electricity shambles. Retrieved from: https://theconversation.com/lessons-to-be-learnt-from-ghanas-excess-electricity-shambles-121257</ref> (for more information, [https://theconversation.com/lessons-to-be-learnt-from-ghanas-excess-electricity-shambles-121257 please refer to this article: "Lessons to be learnt from Ghana’s excess electricity shambles", August 5, 2019]...). |
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| | [[Ghana Energy Situation#toc|►Go to Top]] | | [[Ghana Energy Situation#toc|►Go to Top]] |
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| | <br/><u>'''Table 1: Installed Capacity in Ghana'''</u><br/> | | <br/><u>'''Table 1: Installed Capacity in Ghana'''</u><br/> |
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| − | {| cellspacing="0" cellpadding="0" border="0" align="center" style="width: 805px" | + | {| style="width: 805px" cellspacing="0" cellpadding="0" border="0" align="center" |
| | |- | | |- |
| − | | style="white-space: nowrap; width:142px" | | + | | style="white-space: nowrap; width:142px" | |
| | '''Name''' | | '''Name''' |
| | | | |
| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | '''Owner''' | | '''Owner''' |
| | | | |
| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | '''Phase Out (Year)''' | | '''Phase Out (Year)''' |
| | | | |
| − | | style="white-space: nowrap; width:95px" | | + | | style="white-space: nowrap; width:95px" | |
| | '''Installed Capacity (MW)''' | | '''Installed Capacity (MW)''' |
| | | | |
| − | | style="white-space: nowrap; width:99px" | | + | | style="white-space: nowrap; width:99px" | |
| | '''Reliable Capacity (MW)''' | | '''Reliable Capacity (MW)''' |
| | | | |
| − | | style="white-space: nowrap; width:60px" | | + | | style="white-space: nowrap; width:60px" | |
| | '''Fuel 1''' | | '''Fuel 1''' |
| | | | |
| − | | style="white-space: nowrap; width:54px" | | + | | style="white-space: nowrap; width:54px" | |
| | '''Fuel 2''' | | '''Fuel 2''' |
| | | | |
| | |- | | |- |
| − | | style="white-space: nowrap; width:142px" | | + | | style="white-space: nowrap; width:142px" | |
| | Akosombo<br/> | | Akosombo<br/> |
| | | | |
| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | VRA | | VRA |
| | | | |
| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | 2065 | | 2065 |
| | | | |
| − | | style="white-space: nowrap; width:95px" | | + | | style="white-space: nowrap; width:95px" | |
| | 1020 | | 1020 |
| | | | |
| − | | style="white-space: nowrap; width:99px" | | + | | style="white-space: nowrap; width:99px" | |
| | 900 | | 900 |
| | | | |
| − | | style="white-space: nowrap; width:60px" | | + | | style="white-space: nowrap; width:60px" | |
| | Hydro | | Hydro |
| | | | |
| − | | style="white-space: nowrap; width:54px" | | + | | style="white-space: nowrap; width:54px" | |
| | <br/> | | <br/> |
| | | | |
| | |- | | |- |
| − | | style="white-space: nowrap; width:142px" | | + | | style="white-space: nowrap; width:142px" | |
| | Kpong | | Kpong |
| | | | |
| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | VRA | | VRA |
| | | | |
| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | 2042 | | 2042 |
| | | | |
| − | | style="white-space: nowrap; width:95px" | | + | | style="white-space: nowrap; width:95px" | |
| | 160 | | 160 |
| | | | |
| − | | style="white-space: nowrap; width:99px" | | + | | style="white-space: nowrap; width:99px" | |
| | 140 | | 140 |
| | | | |
| − | | style="white-space: nowrap; width:60px" | | + | | style="white-space: nowrap; width:60px" | |
| | Hydro | | Hydro |
| | | | |
| − | | style="white-space: nowrap; width:54px" | | + | | style="white-space: nowrap; width:54px" | |
| | <br/> | | <br/> |
| | | | |
| | |- | | |- |
| − | | style="white-space: nowrap; width:142px" | | + | | style="white-space: nowrap; width:142px" | |
| | BUI | | BUI |
| | | | |
| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | BPA | | BPA |
| | | | |
| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | 2065 | | 2065 |
| | | | |
| − | | style="white-space: nowrap; width:95px" | | + | | style="white-space: nowrap; width:95px" | |
| | 260 | | 260 |
| | | | |
| − | | style="white-space: nowrap; width:99px" | | + | | style="white-space: nowrap; width:99px" | |
| | 120 | | 120 |
| | | | |
| − | | style="white-space: nowrap; width:60px" | | + | | style="white-space: nowrap; width:60px" | |
| | Hydro | | Hydro |
| | | | |
| − | | style="white-space: nowrap; width:54px" | | + | | style="white-space: nowrap; width:54px" | |
| | <br/> | | <br/> |
| | | | |
| | |- | | |- |
| − | | style="white-space: nowrap; width:142px" | | + | | style="white-space: nowrap; width:142px" | |
| | Aboadze T1 | | Aboadze T1 |
| | | | |
| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | VRA | | VRA |
| | | | |
| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | 2011 | | 2011 |
| | | | |
| − | | style="white-space: nowrap; width:95px" | | + | | style="white-space: nowrap; width:95px" | |
| | 330 | | 330 |
| | | | |
| − | | style="white-space: nowrap; width:99px" | | + | | style="white-space: nowrap; width:99px" | |
| | 300 | | 300 |
| | | | |
| − | | style="white-space: nowrap; width:60px" | | + | | style="white-space: nowrap; width:60px" | |
| | NG | | NG |
| | | | |
| − | | style="white-space: nowrap; width:54px" | | + | | style="white-space: nowrap; width:54px" | |
| | LCO | | LCO |
| | | | |
| | |- | | |- |
| − | | style="white-space: nowrap; width:142px" | | + | | style="white-space: nowrap; width:142px" | |
| | Aboadze T2 (TICo) | | Aboadze T2 (TICo) |
| | | | |
| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | IPP<ref>Operated by VRA</ref><br/> | | IPP<ref>Operated by VRA</ref><br/> |
| | | | |
| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | 2013 | | 2013 |
| | | | |
| − | | style="white-space: nowrap; width:95px" | | + | | style="white-space: nowrap; width:95px" | |
| | 220 | | 220 |
| | | | |
| − | | style="white-space: nowrap; width:99px" | | + | | style="white-space: nowrap; width:99px" | |
| | 220 | | 220 |
| | | | |
| − | | style="white-space: nowrap; width:60px" | | + | | style="white-space: nowrap; width:60px" | |
| | NG | | NG |
| | | | |
| − | | style="white-space: nowrap; width:54px" | | + | | style="white-space: nowrap; width:54px" | |
| | LCO | | LCO |
| | | | |
| | |- | | |- |
| − | | style="white-space: nowrap; width:142px" | | + | | style="white-space: nowrap; width:142px" | |
| | Tema TT1PP | | Tema TT1PP |
| | | | |
| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | VRA | | VRA |
| | | | |
| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | 2014 | | 2014 |
| | | | |
| − | | style="white-space: nowrap; width:95px" | | + | | style="white-space: nowrap; width:95px" | |
| | 126 | | 126 |
| | | | |
| − | | style="white-space: nowrap; width:99px" | | + | | style="white-space: nowrap; width:99px" | |
| | 110 | | 110 |
| | | | |
| − | | style="white-space: nowrap; width:60px" | | + | | style="white-space: nowrap; width:60px" | |
| | NG | | NG |
| | | | |
| − | | style="white-space: nowrap; width:54px" | | + | | style="white-space: nowrap; width:54px" | |
| | LCO | | LCO |
| | | | |
| | |- | | |- |
| − | | style="white-space: nowrap; width:142px" | | + | | style="white-space: nowrap; width:142px" | |
| | TEMA TT2PP | | TEMA TT2PP |
| | | | |
| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | IPP<ref>VRA has a ten percent stake in Aboadze 2</ref> | | IPP<ref>VRA has a ten percent stake in Aboadze 2</ref> |
| | | | |
| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | 2035 | | 2035 |
| | | | |
| − | | style="white-space: nowrap; width:95px" | | + | | style="white-space: nowrap; width:95px" | |
| | 49.5 | | 49.5 |
| | | | |
| − | | style="white-space: nowrap; width:99px" | | + | | style="white-space: nowrap; width:99px" | |
| | 45 | | 45 |
| | | | |
| − | | style="white-space: nowrap; width:60px" | | + | | style="white-space: nowrap; width:60px" | |
| | NG | | NG |
| | | | |
| − | | style="white-space: nowrap; width:54px" | | + | | style="white-space: nowrap; width:54px" | |
| | Diesel | | Diesel |
| | | | |
| | |- | | |- |
| − | | style="white-space: nowrap; width:142px" | | + | | style="white-space: nowrap; width:142px" | |
| | OSONOR (CENIT) | | OSONOR (CENIT) |
| | | | |
| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | IPP | | IPP |
| | | | |
| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | 2037 | | 2037 |
| | | | |
| − | | style="white-space: nowrap; width:95px" | | + | | style="white-space: nowrap; width:95px" | |
| | 126 | | 126 |
| | | | |
| − | | style="white-space: nowrap; width:99px" | | + | | style="white-space: nowrap; width:99px" | |
| | 120 | | 120 |
| | | | |
| − | | style="white-space: nowrap; width:60px" | | + | | style="white-space: nowrap; width:60px" | |
| | NG | | NG |
| | | | |
| − | | style="white-space: nowrap; width:54px" | | + | | style="white-space: nowrap; width:54px" | |
| | LCO | | LCO |
| | | | |
| | |- | | |- |
| − | | style="white-space: nowrap; width:142px" | | + | | style="white-space: nowrap; width:142px" | |
| | Tokaradi 3 | | Tokaradi 3 |
| | | | |
| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | VRA | | VRA |
| | | | |
| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | 2038 | | 2038 |
| | | | |
| − | | style="white-space: nowrap; width:95px" | | + | | style="white-space: nowrap; width:95px" | |
| | 132 | | 132 |
| | | | |
| − | | style="white-space: nowrap; width:99px" | | + | | style="white-space: nowrap; width:99px" | |
| | 120 | | 120 |
| | | | |
| − | | style="white-space: nowrap; width:60px" | | + | | style="white-space: nowrap; width:60px" | |
| | NG | | NG |
| | | | |
| − | | style="white-space: nowrap; width:54px" | | + | | style="white-space: nowrap; width:54px" | |
| | LCO | | LCO |
| | | | |
| | |- | | |- |
| − | | style="white-space: nowrap; width:142px" | | + | | style="white-space: nowrap; width:142px" | |
| | Tema Mine Reserve Plant | | Tema Mine Reserve Plant |
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| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | IPP<ref>VRA has a ten percent stake in Aboadze 2</ref> | | IPP<ref>VRA has a ten percent stake in Aboadze 2</ref> |
| | | | |
| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | 2032 | | 2032 |
| | | | |
| − | | style="white-space: nowrap; width:95px" | | + | | style="white-space: nowrap; width:95px" | |
| | 80 | | 80 |
| | | | |
| − | | style="white-space: nowrap; width:99px" | | + | | style="white-space: nowrap; width:99px" | |
| | 40 | | 40 |
| | | | |
| − | | style="white-space: nowrap; width:60px" | | + | | style="white-space: nowrap; width:60px" | |
| | NG | | NG |
| | | | |
| − | | style="white-space: nowrap; width:54px" | | + | | style="white-space: nowrap; width:54px" | |
| | Diesel | | Diesel |
| | | | |
| | |- | | |- |
| − | | style="white-space: nowrap; width:142px" | | + | | style="white-space: nowrap; width:142px" | |
| | Sunon Asogli | | Sunon Asogli |
| | | | |
| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | IPP | | IPP |
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| − | | style="white-space: nowrap; width:69px" | | + | | style="white-space: nowrap; width:69px" | |
| | 2035 | | 2035 |
| | | | |
| − | | style="white-space: nowrap; width:95px" | | + | | style="white-space: nowrap; width:95px" | |
| | 200 | | 200 |
| | | | |
| − | | style="white-space: nowrap; width:99px" | | + | | style="white-space: nowrap; width:99px" | |
| | 180 | | 180 |
| | | | |
| − | | style="white-space: nowrap; width:60px" | | + | | style="white-space: nowrap; width:60px" | |
| | NG | | NG |
| | | | |
| − | | style="white-space: nowrap; width:54px" | | + | | style="white-space: nowrap; width:54px" | |
| | <br/> | | <br/> |
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| | <br/> | | <br/> |
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| | = Key Challenges in the Energy Sector = | | = Key Challenges in the Energy Sector = |
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| | [[Ghana Energy Situation#toc|►Go to Top]] | | [[Ghana Energy Situation#toc|►Go to Top]] |
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| | *[[Ghana - Information Sources|Ghana - Information Sources]] | | *[[Ghana - Information Sources|Ghana - Information Sources]] |
| | *USAID Power Africa: [https://www.usaid.gov/sites/default/files/documents/1860/Ghana_-_November_2018_Country_Fact_Sheet.pdf Ghana Factsheet] | | *USAID Power Africa: [https://www.usaid.gov/sites/default/files/documents/1860/Ghana_-_November_2018_Country_Fact_Sheet.pdf Ghana Factsheet] |
| − | *[https://theconversation.com/lessons-to-be-learnt-from-ghanas-excess-electricity-shambles-121257 Lessons to be learnt from Ghana’s excess electricity shambles] | + | *[https://theconversation.com/lessons-to-be-learnt-from-ghanas-excess-electricity-shambles-121257 Lessons to be learnt from Ghana’s excess electricity shambles] (2019) |
| − | *[http://documents.worldbank.org/curated/en/293271531711852754/pdf/GHANA-ENERGY-PAD-06252018.pdf Project Appraisal Document on a Proposed Credit in the Amount of SDR 14.2 Million (US$20.0 Million Equivalent) to the Republic of Ghana for the Ghana Energy Sector Transformation Initiative Project] | + | *[http://documents.worldbank.org/curated/en/293271531711852754/pdf/GHANA-ENERGY-PAD-06252018.pdf Project Appraisal Document on a Proposed Credit in the Amount of SDR 14.2 Million (US$20.0 Million Equivalent) to the Republic of Ghana for the Ghana Energy Sector Transformation Initiative Project] (2018) |
| − | *[https://openknowledge.worldbank.org/bitstream/handle/10986/23970/9781464808005.pdf?sequence=2&isAllowed=y Independent Power Projects in Sub-Saharan Africa: Lessons from Five Key Countries] | + | *[https://openknowledge.worldbank.org/bitstream/handle/10986/23970/9781464808005.pdf?sequence=2&isAllowed=y Independent Power Projects in Sub-Saharan Africa: Lessons from Five Key Countries] (2016) |
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| | <br/> | | <br/> |
Electricity in Ghana is a key determinant of the country’s continued economic growth, but supply has recently struggled to keep up with demand. Sustained demand growth of over 6 percent per year has strained the already overburdened electricity system. A major power crisis in 2006–7 is estimated to have reduced GDP growth by one percent.[1]
The Government of Ghana, with the help of international donors, has sought to strengthen the electricity sector in response to this challenge. The Government has outlined two key objectives for solving existing problems in the sector and allowing it to power sustainable, inclusive economic growth in the future: (i) double installed generation capacity by 2015; and (ii) extend universal access to electricity by 2020.[2]
The last section summarizes the efforts of donor agencies to improve outcomes in the electricity sector.
The Ghanaian electricity sector is in a period of transition. The Government is attempting to attract more private sector participation in the sector. Independent Power Producers (IPPs) have begun to enter the electricity generation market, previously dominated by the public sector. The state still owns both electricity distribution companies, as well as the electricity transmission company. Key problems in the sector included demand outstripping supply, poor state of transmission and distribution, and tariffs that have not covered costs.[1]
Ghana’s electricity generation has traditionally been dominated by hydro assets; however, in recent years hydro has been complemented by fossil fuel generation to meet rapidly growing demand. Total installed capacity to date is about 2,703.5MW. 50 percent of installed capacity comes from hydropower installations, with the rest coming from thermal plants burning Natural Gas (NG), Light Crude Oil (LCO), or diesel. The generating units are owned and operated primarily by the Volta River Authority (VRA); however, some IPPs have begun to enter the market.
The table below shows the mix of thermal generation assets and hydro generation assets in GHana. Each thermal generation unit can use NG, which is less expensive than LCO or diesel. However, due to an ongoing interruption in the West African Gas Pipeline (WAGP), all thermal units are currently operating using diesel or LCO (as listed in column ‘Fuel 2’) except for Sunon Asogli. Sunon Asogli can only run on NG.
VRA = Volta River Authority; BPA = Bui River Authority; IPP = Independent Power Producer
The VRA, established in 1961 by the Volta River Development Act (Act 46), is the state-owned electricity utility responsible for generating electricity in Ghana and supplying electricity in bulk to Ghana Grid Company Limited (GridCo). VRA owns and operates the Akosombo hydro power station, the Kpong hydro power station, the Aboadze T1 plant, the Tema TT1PP plant, and the Takoradi Thermal Power Plant (T3) located at Aboadze. VRA is also a minority joint partner with TAQA, which owns and operates the Takoradi International Power Company (TICO) thermal power plant also located at Aboadze. In addition to the plants that VRA owns, VRA also operates the Tema TT2PP plant and Mine Reserves plant for their respective owners.[1]
In recent years, VRA’s role in the Ghanaian power sector has evolved significantly from generation, transmission, and distribution to focus on generation. In 2006, VRA ceded its transmission responsibilities to GridCo. In May 2012, VRA restructured its distribution department, Northern Electricity Distribution (NED), into a semi-independent, wholly owned subsidiary company of VRA, known as Northern Electricity Distribution Company of Ghana (NEDCo). Finally, VRA’s responsibility for all hydro resources within the Volta Basin—which includes the White Volta, Black Volta, and Red Volta rivers—was curtailed by the Bui Power Authority (BPA). BPA, a state-owned enterprise, was created to develop a hydroelectric plant at Bui, which lies within on the Black Volta.[2]
Three IPPs have developed conventional generation units in Ghana, and more are planning to do so—including for renewable energy. The three IPPs operating in Ghana are:
In addition, a Government Consent and Support Agreement for a fourth IPP, Cenpower, received Parliamentary approval in October 2012.[1]
Over the last two decades the demand for electricity has been growing by 10-15 percent annually. The expanding commercial and industrial sectors are, together with the high population growth, the main drivers of electricity demand. Current demand forecasts project that electricity demand will continue to grow at least seven percent per year.
On the supply side, the power sector has consistently fallen short of capacity targets. In 2008, the Ghanaian Minister of Energy set a target of 3500MW of installed capacity by 2013.[1] At the end of 2013, the Ghanaian grid had 2,703.5MW of installed capacity, 200MW of which is idled due to a shortage of natui, and only 2295MW of dependable power. Assuming a reasonable reserve margin of 20 percent, Ghana would have required 2500MW of installed capacity in 2013.[2] Absent significant investments, the shortfalls will continue and become more severe.
Much of the country’s high voltage transmission system is ageing badly, and is increasingly unreliable. The majority of Ghana’s transmission system was built in the decades ago. The transmission system has not been significantly upgraded since construction. As a result, in recent years the transmission infrastructure has caused several total system collapses.
The electricity distribution sub-sector suffers from poor commercial and operational performance. Ghana’s two distribution companies do not recover their cost of distributing electricity through established electricity tariffs. In addition, high losses due to old and overloaded networks in many areas; and problems with metering, billing, electricity theft, and inadequate revenue collection generate additional losses for the distribution companies. This leads the distribution companies to fall behind on payments to the transmission grid and power generators.[1]
The electricity infrastructure in Ghana is not developed to its potential because of pressure on both the supply and demand sides. One study concluded that between 2013 and 2023 the Ghanaian power sector requires US$4 billion in investment to upgrade the transmission, distribution, and generation assets of the system.[1] The electricity sector faces several key challenges:
At present, the Ghanaian power sector cannot meet demand for electricity. An interruption in the West African Gas Pipeline (WAGP) has contributed to this problem. Poor rainfall in past years has also limited the capacity of Ghana’s large hydro generation units leading to blackouts.
Furthermore, the interruption in the WAGP has led to replacing natural gas with expensive light crude oil (LCO) in plants that can burn either NG or LCO. This has increased costs around US$27 million per month. This additional cost is not recovered through tariffs, increasing the distribution companies’ losses. In turn, this limits the funds available for investments in new generation and transmission system upgrades.[2]
Furthermore, Power Africa highlights the following five bottlenecks as the biggest issues facing Ghana's energy sector[6]:
The electricity sector is overseen by three interrelated institutions. The Ministry of Energy and Petroleum (the Ministry) and the Energy Commission (EC) are government agencies. The Public Utilities Regulatory Commission (PURC) is a government funded independent regulator.
The Ministry is responsible for the overall development and utilization of energy resources in Ghana. In the power sector the Ministry is charged with:
In addition, in 2010 the Ministry established a directorate to focus exclusively on developing and promoting renewable energy generation in Ghana.
The EC was established in 1997 by the Energy Commission Act (Act 541) to provide technical advice to the Ministry on regulating, managing, developing, and utilizing energy resources in Ghana. The EC’s regulatory mandates are:
The desired result of the efforts of the EC is to prepare the power sector for greater private sector participation.[1]
Ghana’s power sector is governed by a well-developed framework of laws, policies, and regulations, which the Government is continuing to develop. In particular, the EC is developing a distribution code as well as several regulations related to integrating renewable energy into the grid.
Energy policy provides the general setting for the Government’s approach to the sector. National policy is issued by the Ministry, with advice and counsel from the EC. Regional policy documents are also relevant to Ghana’s power sector.
The National Energy Policy (Policy) outlines the Government’s policy direction for the energy sector. In the power sector the Policy:
The Government intends for the Policy to guide its efforts in achieving its objectives to:
Collectively, the Policy aims to achieve its vision of Ghana becoming a net electricity exporter by 2015.[1]
