CGD Policy Paper 109 September 2017: The Electricity Situation in Ghana: Challenges and Opportunities
CGD Policy Paper 109 September 2017: The Electricity Situation in Ghana: Challenges and Opportunities
Abstract
In the past decade, Ghana has experienced difficult for the utility companies to recover
severe electricity supply challenges costing the cost of electricity production.
the nation an average of US $2.1 million in
loss of production daily. This situation has In the face of these challenges, however,
developed even though installed generation Ghana could achieve universal access by
capacity has more than doubled over the the year 2020 with an annual electrification
period; increasing from 1,730 MW in 2006 rate of about 4.38 percent. 82.5 percent
to 3,795 MW in 2016. The peak electricity of Ghana’s population had access to
demand only increased by 50 percent during electricity by 2016. Solving Ghana’s
this same period, increasing from 1,393 MW electricity challenges would require measures
in 2006 to 2,087 MW in 2016. The electricity including, but not limited to, diversifying
supply challenges can be attributed to a the electricity generation mix through the
number of factors, including a high level development of other hydro power and
of losses in the distribution system, which renewable energy sources for which the
is mainly due to the obsolete nature of country has huge potential, expanding the
distribution equipment, as well as non- prepaid metering system to include all public
payment of revenue by consumers. Other and private institutions, restructuring the
factors are overdependence on thermal tariff regime to ensure utilities can recover
and hydro sources for electricity generation their cost of generation, and promoting
and a poor tariff structure, which makes it energy efficiency programs.
Center for Global Development
2055 L Street NW
Fifth Floor
Washington DC 20036 Ebenezer Nyarko Kumi. 2017. “The Electricity Situation in Ghana: Challenges and Opportunities.”
202-416-4000 CGD Policy Paper. Washington, DC: Center for Global Development. https://www.cgdev.org/
publication/electricity-situation-ghana-challenges-and-opportunities
www.cgdev.org
1
University of Energy and Natural Resources, Sunyani, Ghana
This work is made available under
the terms of the Creative Commons CGD is grateful for contributions from the Nathan Cummings Foundation and Pritzker Innovation
Fund in support of this work.
Attribution-NonCommercial 4.0
license.
Todd Moss
Senior Fellow
Center for Global Development
1
Executive Summary
Ghana’s electricity sector dates back to the Gold Coast era where electricity supply was
mainly from diesel generators owned by industrial establishments including factories and
mines as well as other institutions such as hospitals and schools. The sector was
revolutionised with the completion of the Akosombo Hydroelectric Power Station which
also saw the export of electricity to neighbouring countries including Togo, Burkina Faso
and Benin. Electricity demand has since grown significantly to the point where supply is not
enough to meet the demand, resulting in severe power crises over the last decade. In a bid to
solve the crisis, a power sector reform was implemented in the late 1990s to open up the
electricity market for private sector participation to help deal with the power crises.
Ghana committed to universal access to electricity as far back as 1989 when only 15–20
percent of the population had access to electricity. The National Electrification Scheme was
established to oversee and implement the National Electrification Master Plan which sought
to extend electricity to every part of the country by the year 2020. Through programmes like
the Self-Help Electrification Program (SHEP), the scheme has been able to extend electricity
to about 82.5 percent of the population as of the end of 2016. However, more efforts will be
needed to ensure universal access is attained by the year 2020.
Demand for electricity in Ghana has increased by about 52 percent over the last decade
(2006–2016) whiles installed generation capacity has more than doubled over the same
period. In spite of this, the country still suffers from persistent power supply challenges. This
situation can be attributed to the fact that most of the installed generation facilities are not
available for generation due to fuel supply challenges. Ghana’s electricity sector has been
heavily dependent on the Akosombo Dam which has seen water levels drop consistently
below acceptable operational levels. In recent times however, significant amounts of thermal
generation sources running on mostly natural gas have been introduced into the sector. The
problem with these sources is that supply of natural gas by the West African Gas Pipeline
(WAGP) has been very unreliable.
Other challenges plaguing the sector include high levels of distribution losses, lack of
revenue due to the non-payment of bills and also poor tariff structure, which makes it
difficult for the power utilities to make significant investments to improve the sector due to
financial constraints. Opportunities, however, remain in the sector for the introduction of
renewable energy sources into the generation mix, seeing that the country has potential for
solar power generation and other renewable energy sources. In light of this, the necessary
regulatory frameworks have been provided notable among these is the passage of the
Renewable Energy Act in 2011.
2
Abbreviations
ACEP African Center for Energy Policy
AfDB African Development Bank Group
BPA Bui Power Authority
CIDA Canadian International Development Agency
CSO Civil Society Organisation
DFO Distillate Fuel Oil
EC Energy Commission
ECG Electricity Company of Ghana
ECREEE ECOWAS Centre for Renewable Energy and Energy Efficiency
ERERA ECOWAS Regional Electricity Regulatory Authority
GDP Gross Domestic Product
GEDAP Ghana Energy Development and Access Programme
GEF Global Environment Facility
GHG Green House Gas
GoG Government of Ghana
GRIDCo Ghana Grid Company
GWh Giga Watt Hour
HFO Heavy Fuel Oil
IEA International Energy Agency
IPP Independent Power Producer
IRENA International Renewable Energy Agency
ISSER Institute of Statistical, Social and Economic Research
kV Kilo Volt
kWh Kilo Watt Hour
LCO Light Crude Oil
LNG Liquified Natural Gas
MCC Millenium Challenge Corporation
MOFEP Ministry of Finance and Economic Planning
MOP Ministry of Power
Mscf Million Standard Cubic Feet
MW Mega Watt
NED Northern Electricity Department
NEDCo Northern Electricity Distribution Company
NES National Electrification Scheme
NG Natural Gas
NITS National Interconnected Transmission System
PURC Public Utilities Regulatory Commission
PWD Public Works Department
SHEP Self Help Electrification Programme
T&D Transmission and Distribution
UNEP United Nations Environment Programme
USAID United States Agency for International Development
VALCO Volta Aluminum Company
3
VRA Volta River Authority
WAGP West African Gas Pipeline
WAGP Co West African Gas Pipeline Company
WAPP West Africa Power Pool
4
Introduction
Electricity is one of the major determinants of the economic prosperity of any country. It
plays a significant role in undertaking daily activities from cooking, lighting, heating to
powering machines in the industrial sector. Electricity is also essential for quality healthcare
delivery, education, transport, effective communication, mineral exploration and many more;
serving as the building block on which every sector of a nation’s economy thrives. This
emphasizes how crucial and indispensable electricity is for human existence in the 21st
century.
Ghana’s electricity sector dates back to the colonial days of the Gold Coast, where electricity
supply was mostly from isolated diesel generator plants dispersed across the country.
Industrial establishments such as mines and factories, municipalities and other institutions
including hospitals and schools owned most of these systems. The Gold Coast Railway
Administration established the first public electricity generation system in 1914, to supply
electricity for the operations of the railway sector in Sekondi (ISSER, 2005). This was
extended to Takoradi in 1928. By the year 1955, electricity had been extended to some major
cities in Ghana including Kumasi, Tema, Accra, Nsawam, Tamale and Bolgatanga under the
auspices of the Public Works Department (PWD). However, in 1947, an Electricity
Department was established within the Ministry of Works and Housing to take over
electricity supplies from the Public Works Department and the Railways Administration.
The major electricity source during this period was Diesel Generator Plants.
The completion of the Akosombo Dam Project over the Volta River in 1972 provided a
total installed capacity of 912 MW for electricity generation. Although the primary aim of the
project was to provide electricity for the aluminium industry, it also made it possible for
most of the major electricity consumed to be switched from diesel generators to
hydroelectricity. The major consumers of electricity during this period were the Volta
Aluminum Company (VALCO) and the National Electricity Distribution Company. The
completion of the Akosombo Dam also saw the Volta River Authority (VRA), managers of
the Akosombo Hydroelectric Power Station, commence supply of electricity to neighbouring
Togo and Benin. In 1982, the Kpong Hydroelectric Power Station was commissioned,
increasing the installed generation capacity by 160 MW.
Ghana, in spite of the increase in generation capacity, experienced its first electricity crisis in
1984. This was a result of a severe drought that occurred between 1982 and 1984, during
which the total inflow into the Akosombo Dam was less than 15 percent of the long term
expected total. The crisis led to the introduction of Thermal Power Plants into Ghana’s
generation mix. The first of these thermal plants was a 550 MW facility (Tapco and Tico) at
the Takoradi Thermal Plant managed by VRA. The total installed capacity of thermal power
plants in Ghana has increased to 2,053 MW as at the end of 2015 (Energy Commission of
Ghana, 2016a). Electricity crisis has become a household phenomenon in Ghana leading to
the adoption of the local word “Dumsor” to describe the situation. In December 2013, the
400 MW Bui Hydroelectric Power Station was commissioned to provide electricity to
support the peak load of the country, which has been on an ever-increasing trajectory.
5
This paper presents the state of the electricity sector in Ghana and discusses the roles of the
various stakeholders in the sector. It also discusses pertinent issues relating to demand and
supply of electricity including unfulfilled and future demand for electricity. The paper
concludes with a discussion of the challenges plaguing the electricity sector and the
opportunities available in sector.
6
Ghana’s committment to achieving universal access to electricity by the year 2020, started in
1989 with the establishment of the National Electrification Scheme (Ministry of Energy,
2010). The National Electrification Scheme (NES), which is one of Ghana’s flagship
projects, serves as the principal instrument leading the efforts to extend electricity to all parts
of the country over a thirty-year period from 1990–2020. At the start of the scheme, only 15-
20 percent of Ghana’s population had access to electricity (Ministry of Power, 2016). Recent
electricity access reviews have put access rates at 66.7 percent in 2009, 80.51 percent in 2015
and 82.5 percent in 2016 (Ministry of Power, 2016). The trend shown in Figure 1 indicates
an annual increase in electricity access rate of 2.60 percent. At this rate, Ghana is likely to
miss its target of attaining universal access to electricity by the year 2020 by a 5 percent
margin. Universal access can, however, be attained by the year 2022, unless measures are put
in place to accelerate the process; in which case the target could be achieved by 2020 with an
annual increase of 4.38 percent in electrification rate.
100.0
90.0
80.0
70.0
Access Rate (%)
60.0
50.0
40.0
30.0
20.0
10.0
0.0
1985 1990 1995 2000 2005 2010 2015 2020 2025
The high electricity access rate is the result of the combined efforts of the National
Electrification Scheme (NES) and the Ghana Energy Development and Access Project
(GEDAP). Under the NES, the National Electrification Master Plan was developed which
laid out strategies to extend electricity access to cover the entire country by 2020. During the
first phase of the NES, all District Capitals and towns/villages enroute to the district capitals
were connected to the grid. The scheme has been a significant driver of electricity access
through discrete programs including the Self-Help Electrification Scheme (SHEP). Under
the SHEP, communities seeking to be connected to the national grid ealier than scheduled in
7
the National Electrification Master Plan were expected to contribute some of the logistics
required to complement government’s efforts. These communities had to provide low
voltage electricity poles and electricity meters in addition to ensuring that at least 30 percent
of households in the community were wired (Kemausuor & Ackom, 2016). This made
electricity extension to some communities take place earlier than it would have, if the
government alone were to bare the full cost.
The objective of the Ghana Energy Development and Access Project (GEDAP), which
commenced in 2007 and funded by the World Bank, is to improve the operational efficiency
of the electricity distribution system and increase the population’s access to electricity
through improving the distribution network to reduce losses, enhancing the capacity of the
managers of the distribution system and introducing renewable energy as a means of
improving access to electricity.
It is, however, important to note that electricity access does not only mean having a house
connected to the electricity grid but also ensuring the reliable supply of affordable electricity
to the household (Mensah, Kemausuor, & Brew-Hammond, 2014). Unfortunately, Ghana’s
power sector seems to be suffering the curse of unreliable power supply, which could
negatively impact the achievements made towards universal access. Ghana suffered severe
power rationing/load shedding in the years 1983–1984, 1997–1998, 2003, 2006–2007, 2011–
date; a situation that could be largely attributed to fuel supply challenges including the low
levels of water in the Akosombo dam and natural gas shortages.
8
Figure 2: Peak electricity demand versus installed generation capacity from 2006 to
2016
4,000
3,500
3,000
2,500
MW
2,000
1,500
1,000
500
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Peak Electricity Demand Installed Generation Capacity
Source: (Energy Commission of Ghana, 2016a; VRA, 2015; Energy Commission of Ghana, 2017)
Gross electricity consumption in Ghana took a rather sharp decline from 9,059 GWh in
2006 to 7,413 GWh in 2007 (a reduction of 18.2 percent of the 2006 figure) before rising
steadily by an annual average of 10.8 percent till 2014. This trend, however, declined by 11.3
percent from 2014 to 2015 before increasing by 15.3 percent in 2016, as shown in Figure 3
(Energy Commission of Ghana, 2016a; Energy Commission of Ghana, 2017).
Electricity consumers in Ghana are classified into industrial, residential, non-residential and
street lighting by the Energy Commission of Ghana. Industrial, sometimes referred to as
Special Load Tarrif (SLT), consumers are those who use electricity for industrial purposes
including VALCO, the mining companies and other production and manufacturing facilities.
Residential consumers refer to homes in both rural and urban sectors of the country whereas
non-residential consumers are mostly commercial facilities. The electricity consumed by
street lights across the country is captured under the street lighting class. The electricity
consumption trend shown in Figure 3 indicates that, the past decade has seen the industrial
sector, the residential sector, and non-residential sector emerge as the three top consumers
of the electricity in the country. Export and street lighting account for the least in terms of
electricity consumption. It is interesting to note that the amount of electricity lost in
transmission and distribution (including commercial losses) was higher than the
consumption for the non-residential sector. On average, transmission and distribution losses
account for 21.9 percent of total electricity comsumption annually.
9
Figure 3: Electricity consumption pattern for Ghana from 2006 to 2016
16,000
14,000
12,000
Electricity (GWh)
10,000
8,000
6,000
4,000
2,000
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Industrial Residential Non-residential
Street lighting Export T & D Losses
One of the major problems plaguing Ghana’s electricity sector is the amount of electricity
not accounted for in terms of transmission and distribution losses. The historic trend of
these losses are presented in Figure 4. Transmission losses account for only 3.9 percent.
However, distribution and commercial losses by the Electricity Company of Ghana account
for as much as 16.2 percent of the gross electricity supply.
10
Figure 4: Transmission and distribution losses as a percentage of gross electricity
supply
25%
20%
15%
Losses (%)
10%
5%
0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
The electricity consumption pattern for Ghana has been heavily impacted by the challenges
that the Volta Aluminium Company (VALCO) has been facing over the past 2 decades.
VALCO has, since its establishment, been the largest individual consumer of electricity in
Ghana. As of 2001, the peak power demand for VALCO was 27 percent of total peak
demand in Ghana whereas its energy demand was 33 percent of the total energy demand for
Ghana (Power Systems Energy Consulting (PSEC) & Ghana Grid Company (GRIDCo),
2010). Following the electricity crises, the operations of VALCO were severely hampered
resulting in the complete shutdown in 2004. VALCO, however, resumed operations in 2011
at 20 percent capacity (1 potline), accounting for 3.5 percent of total electricity consumption
of Ghana (VALCO, 2017).
11
kW biogas electricity generation facility was connected to the national grid in 2016. The
Energy Commission of Ghana reports a total of 500 kW of installed solar PV systems (both
grid connected and with battery backup) owned by individuals and institutions (EADTF,
2014). Figure 5 shows a clear drift from heavy dependence on hydro sources to thermal
sources with the details of the generating facilities outlined in Table 2.
100%
90%
80%
70%
Generation Mix (%)
60%
50%
40%
30%
20%
10%
0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Hydro Thermal Renewable
12
Table 2: Installed generation facilities in Ghana as of 2016
Installed Dependable
% of Installed
Plant Capacity Capacity
Capacity
(MW) (MW)
Hydro
Akosombo 1,020 1,000
Bui 400 360 41.6%
Kpong 160 148
Sub-Total 1,580 1,508
Thermal
13
The Structure of Ghana’s Power Sector
Ghana’s power sector, before the late 1990s, was a vertically integrated monopoly, which
had the Volta River Authority (VRA), generating and transmitting electricity to every region
of the country while also distributing to the Northern Sector through its subsidiary the
Northern Electricity Department (NED). The Electricity Company of Ghana was
responsible for electricity distribution in the southern sector of the country. Power sector
reform in the late 1990s saw the Volta River Authority (VRA), split into a separate
generation and transmission system operations which also made it possible for other
Independent Power Producers (IPP) to enter the market. Edjekumhene, Amadu and Brew-
Hammond (2001) identify power supply constraints vis-à-vis growing electricity demand as
well as the difficulties associated with securing financial support from the traditional
financiers of the sector, including the World Bank, as the major drivers of the power sector
reform in Ghana. Stakeholders in Ghana’s power sector cut across national, regional and
international institutions as demonstrated in Figure 6. They include policy making and
implemention institutions, regulatory agencies, generation, transmission and distribution
companies, consumers, research and advocacy groups as well as financial institutions.
National Stakeholders
The Ministry of Energy is responsible for formulating, monitoring and evaluating policies,
programmes and projects for the power sector in Ghana with financial support from the
Ministry of Finance and Economic Planning (MOFEP). The Ministry is also directly
responsible for the implementation of the National Electrification Scheme in various parts
of the country.
The Energy Commission (EC) and the Public Utilities Regulatory Commission (PURC) are
responsible for regulating the activities of the power sector. The EC is responsible for
technical regulation of the power sector, including licensing of operators and also advising
the Minister of Energy on matters relating to energy policy and planning. The PURC, on the
other hand, is an independent regulatory agency responsible for economic regulation of the
power sector, specifically approving rates for electricity sold by distribution utilities to the
public. PURC is also responsible for monitoring the quality of electricity services delivered
to consumers.
14
Figure 6: Stakeholders in Ghana’s power sector
Policy Makers
& Ministry of Ministry of Finance &
Authority (ERERA)
ECOWAS Regional
Implementers
Regulatory
Electricity
Northern Electricity
Renewable Energy and
Electricity Company
ECOWAS Centre for
15
Power generation in Ghana is carried out by three major groups; the Volta River Authority
(VRA), Bui Power Authority (BPA) and Independent Power Producers (IPP). The sources
of generation include hydro power plants, thermal power plants and solar photovoltaic
power plants. The Volta River Authority, a state-owned company, is the largest electricity
generation company in Ghana with a total installed capacity of 2,435 MW as at the end of
2015 , which makes up 66.1 percent of the country’s total installed capacity (VRA, 2015;
Energy Commission of Ghana, 2016b). VRA also owns what used to be the largest solar
photovoltaic plant in the country, a 2.5 MW plant situated in Navrongo. The Bui Power
Authority manages the Bui Hydro Power Plant whose installed capacity is 400 MW. The
Independent Power producers together contribute a total installed capacity of 850 MW to
the generation mix including a newly installed 20 MW solar photovoltaic plant owned by
BXC Ghana. In 2016, a 100 kW biogas electricity generation facility was connected to the
grid (Energy Commission of Ghana, 2017).
The transmission of electricity from the generation companies to the distribution companies
is done through the National Interconnected Transmission System (NITS) owned and
operated by the state-owned Ghana Grid Company Ltd (GRIDCo).
KITE, Energy Foundation (EF), The Energy Center – KNUST and other non-
governmental organizations including the African Center for Energy Policy (ACEP) in
Ghana provide different kinds of support to the power sector including research, advocacy
and the promotion of energy efficiency and renewable energy solutions.
Regional Stakeholders
Regional bodies like the West African Power Pool (WAPP) and the ECOWAS Regional
Electricity Regulatory Authority (ERERA) promote interstate electricity trade in the West
African sub-region. Whereas WAPP supports the development of power generation and
transmission facilities, ERERA provides the regulations for these interstate electricity
exchanges. ECOWAS Centre for Renewable Energy & Energy Efficiency (ECREEE) on the
other hand contributes to improving access to modern, reliable and affordable energy
services, energy security as well as the reduction of energy related externalities such as GHG
emissions and local pollution.
International Agencies
Ghana’s power sector has received enormous support from international agencies. The
support ranges from technical assistance in developing power infrastructure to financing
power infrastructure projects. There has also been support towards the development of the
renewable energy sector from these international agencies.
16
International Development Partners and Intergovernmental Agencies including the World
Bank Group, the African Development Bank (AfDB), USAID and CIDA have been the
bedrock of financial support for the development of various power projects in Ghana
including the financing of the Akosombo and Kpong hydropower plants as well as
investments towards the achievement of universal access to electricity by the year 2020
(Edjekumhene, Amadu, & and Brew-Hammond, 2001). The United States Power Africa
Initiative launched in 2013 aims at increasing electricity access in sub-Saharan Africa by
adding more than 30,000 megawatts of cleaner, more efficient electricity generation capacity
and 60 million new homes and business connections. The technical assistance provided by
Power Africa to the Ghana government helped to bring the CenPower (348 MW) IPP
transaction to a financial closure. The initiative also facilitated the development of Ghana’s
first offshore natural gas field, the Jubilee fields (USAID, 2017). Other projects currently
benefiting from the Power Africa support include Bridge power (400 MW), Ghana 1000
(375 + 375 MW), Amandi (192 MW), Globaleq (450 MW) and Jacobsen (400 MW), as well
as a number of renewable energy projects (USAID, 2017). The Millenium Challenge
Corporation (MCC) and the GoG signed a US $498.2 million “Compact II” whose keystone
project aims to improve the creditworthiness of the Electricity Company of Ghana (ECG)
and the management of the Northern Electricity Distribution Company, the nation’s off-
takers and distributors of electric power, by supporting the transformation of their
management and operation to private sector principals (USAID, 2017).
The international community has not only provided financial support to Ghana’s power
sector but also support the sector with technical know-how. The construction of the various
power sector infrasture have been carried out by international companies. Impregillo-Recchi
constructed the Akosombo and Kpong hydropower plants. Sinohydro Corporation Limited
constructed the Bui hydropower plant with financial support from the Exim Bank of China
and GoG. Other projects include Sunon Asogli Power (Ghana) Limited and the BXC Ghana
solar project which were all carried out by the Chinese.
The nationwide implementation of prepaid electricity metering systems for both the private
sector and government agencies holds the potential of helping the utility companies properly
account for the electricity consumed. Whiles prepaid meters are been implemented among
some in the private sector, those in the government sector are still on credit meters, hence
the huge debt levels. The state owned utility companies are not autonomous since the
government appoints the board members and some top management officials. This
interference makes it difficult for the utilities to fully hold government institution
accountable for the electricity they consume. One challenge to the implementation of the
prepaid metering system in the private sector is the lack of education on the part of the
utility companies to the consumers. A successful implementation of the prepaid metering
system in both the private and public sector will ensure funds are available for the effective
operation of the sector including the replacement of obsolete transmission and distribution
equipment to help improve on the technical losses.
18
Tariff Structure
The Public Utilities Regulatory Commission (PURC) incorporated the Automatic
Adjustment Formula (AAF) with the aim of sustaining the real value of the tariffs by
adjusting it, based on variations in factors such as fuel price (light crude oil, natural gas, etc),
foreign exchange, inflation and generation Mix. PURC has also instituted the lifeline tariff
for low income consumers with significantly low consumption levels at tariffs below the cost
of electricity provision, in consonance with the Government of Ghana’s Poverty Reduction
Strategy (GPRS). Figure 7 presents the trend in the average end user tariff for Ghana over
the past decade. The figure also shows the impact the exchange rate has on the tariff paid by
the consumers and the amount available to the utility companies. The weak state of the local
currency against the United States dollar significantly affects the revenue available to the
utilites because of foreign exchange losses.
Figure 7: Trend in average end user electricity tariff for Ghana from 2006 to 2015
0.25 4.5
Average Electricity Tariff (US$/kWh)
The African Development Bank group reports the average end user electricity tariff across
Africa in 2010 to be US $0.14 per kWh and was produced at an average cost of US $0.18 per
kWh (AfDB, 2013). The case of Ghana, as shown in Figure 7, is no different from the rest
of the continent. This makes it difficult for the electricity utility companies to recover their
cost of operation. This phenomenon coupled with debts owed the utilities in subsidies and
unpaid bills by the government and other agencies goes to affect their ability to provide
reliable electricity to consumers.
Electricity tariffs are grouped into six (6) categories; residential, non-residential, special load
tariff (SLT) – low voltage, special load tariff (SLT) – medium voltage, special load tariff
(SLT) – high voltage and special load tariff (SLT) – high voltage – mines (Energy
19
Commission of Ghana, 2016b). The residential and non-residential categories are classified
into consumer below 50 kWh, 51–300 kWh, 301–600 kWh and those above 600 kWh
(Energy Commission of Ghana, 2017). All residential consumers enjoy some form of
government subsidy for the first 50 kWh of electricity a priviledge which should have been
given to only consumers whose total monthly consumption is less than 50 kWh. This means
the residential sector tariffs are unrealistic, making it difficult for the utility companies to
fully recover the cost of providing elerctricity. This situation also encourages the inefficient
use of electricity in the residential sector; putting more pressure on the power utilities.
Restructuring the tariff regime to ensure that subsidies are directed to only the poor in the
society would go a long way to help save the utility companies from financial crises.
The PURC, in taking steps to review the tariff structure, undertook a major tariff review in
2013 where the state owned utitlity companies, VRA, GRIDCo, ECG and NEDCo
presented proposals seeking upward adjustment of tariffs. This exercise resulted in an
upward review of tariffs although not up to the levels requested by the utility companies.
The government also introduced the energy sector levies to help repay the debts owed by the
utitlity companies.
20
Figure 8: Average water levels vs. electricity generation
275 14,000
270
12,000
265
255
8,000
250
6,000
245
240 4,000
235
2,000
230
225 0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
The total installed generation capacity at the end of 2016 was 3,795 MW with proportions as
follows; 57.8 percent thermal, 41.6 percent hydro and 0.6 percent renewable. All the thermal
facilities presented in Table 2 run on natural gas (a cheaper fuel source compared to liquid
fuels) as the primary fuel source, with the exception of the CENIT Power Plant and the
Karpowership power plant, which depend solely on liquid fuels (LCO/DFO and HFO
respectively). This makes natural gas supply very crucial for the effective operation of
Ghana’s electricity sector.
The West African Gas Pipeline, transporting natural gas from Nigeri desktop-j06n6jv@ad a,
has been the major supplier of natural gas for electricity generation until the commissioning
of the Atuabo gas processing facility owned by the Ghana Gas Company in 2015 (Boadu &
Aklorbortu, 2015). Gas supply from Nigeria has, however, not been reliable with the
Nigerians citing non-payment of debt as one of the major reasons. Figure 9 shows the total
natural gas imports through the West African Gas Pipeline between 2009 and 2015. The
Atuabo gas processing facility is capable of supplying up to 150 Mscf per day to the western
power generation enclave at the Aboadze thermal facility with supplies from the Jubilee oil
fields. Plans are underway to process natural gas from the Tweneboa, Enyenra, Ntomme
(TEN) oil fields to augment supplies from the Jubilee fields and make Ghana self sufficient.
However, the Tema thermal power enclave still depends on natural gas supply through the
WAGP. The key challenges that have been experienced in the reliability of gas supply
include: Inadequate supply; planned and unplanned supply interruptions; and domestic and
international payment deficits. The Ghana National Petroleum Corporation (GNPC), in a
21
bid to diversify natural gas supply, signed an agreement in 2015 for the development of an
LNG facility which has the capacity to receive, store regasify and deliver at steady state an
equivalent of 500 Mscf of natural gas per day at Tema (GNPC, 2015).
30,000,000
Natural Gas Import (Mscf)
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
0
2009 2010 2011 2012 2013 2014 2015 2016
Crude oil prices have had significant impact on crude oil imports for electricity generation.
Figure 10 shows the relationship between average crude oil prices and the crude oil imports
for electricity generation in Ghana. It is worth noting that crude oil imports were lowest
when prices were highest in 2011, a situation that resulted in the highest natural gas import
levels as shown in Figure 9.
100
Average Crude Oil Prices
800
80 700
(US$/barrel)
600
60 500
400
40 300
20 200
100
0 0
2004 2006 2008 2010 2012 2014 2016 2018
Average crude oil prices Crude oil for electricity generation
22
Ghana has potential for alternative sources of electricity including medium-sized
hydropower, mini hydropower and other renewable energy sources mainly solar and wind
energy. Developing these potential sources will reduce the burden on the traditional
electricity generation facilities, help reduce the losses in transmitting electricity over long
distances from generation centres (mostly located in the south) to the consumption centres
in the middle and northern part of the country. These sources will, in the long run, help
reduce the import of crude oil and natural gas and could go a long way to impact positively
on the cost of electricity to both generators and consumers alike.Renewable Energy Options
Renewable energy provides viable alternatives to the power crises, seeing that the country is
endowed with abundant renewable energy resources particularly solar. The Renewable
Energy Act was therefore passed into law in 2011 to provide the legal framework for the
adoption of renewable energy sources into the generation mix. Following the passage of the
Renewable Energy Act, the Energy Commission has developed regulations for the sub-
sector including the renewable energy grid code and together with the PURC developed
feed-in tariffs for investment in the sector. The Act provides for the establishment of a
Renewable Energy fund to provide financial resources for the promotion, development,
sustainable management and utilization of renewable energy sources. The fund also provides
financial incentives for the development of mini grid and off grid renewable power systems
for remote areas and island communities. Under the feed-in tariff scheme the PURC is
mandated to set the feed-in tariff rates for the sector based on which developer could sign
power purchase agreements with the distribution companies following a written approval
from the PURC.
23
Figure 11: Solar radiation map for Ghana
Ghana’s total hydro power potential is estimated at 2,480 MW but only 1,580 MW has been
exploited in the form of the Akosombo, Kpong and Bui power stations leaving about 900
MW untapped (IHA, 2015). The Energy Commission has identified potential sites for
medium-sized and mini-hydro sites in Figure 12. Five of these medium-sized potential sites
including Juale (87 MW), Pwalugu (48 MW), Daboya (43 MW), Hemang (93 MW), and
Kulpawn (36 MW) are undergoing feasibility studies (IHA, 2015). Nine other potential mini-
hydro sites have been estimated to provide a total of 2.64 MW in various locations accros
the country (Ahiataku-Togobo & Amankwa, 2006). Exploration and development of the
other potential sites could impact greatly on the electricity situation in the country in the near
future.
24
Wind speeds measures at various locations across the country range from 6 m/s to 9 m/s
(EADTF, 2014). Whiles there are no existing wind power facilities presently operating in the
country, Figure 12 presents potential wind power sites indentified by the Energy
Commission. The Volta River Authority, as part of its diversification programme, plans to
implement upto 150 MW of wind energy projects of 74 MW capacity each along the cost of
Keta in the Volta Region and Ada in the Greater Accra Region (VRA, 2016).
Conclusions
Ghana has been committed to providing universal access to electricity by the year 2020. This
has seen the establishment of the National Electrification Scheme, in which programmes
such as the SHEP has extended electricity to about 82.5 percent of the population of Ghana
as of the end of 2016. This pace of electrification, however, cannot guarantee the country
universal access to electricity by the year 2020 unless the annual average electrification rate is
increased from 2.6 percent to 4.4 percent.
The electricity sector in Ghana has been plagued with severe power supply challenges,
characterised by persistent load shedding over the last decade. These challenges are not as a
result of lack of installed generation capacity since the total installed generation capacity is
far above the peak power demand for the country. The challenges can however be attributed
to the unavailability of adequate generation capacity due to fuel supply challenges, inefficient
distribution systems leading to high distribution losses and loss of revenue resulting from
non payment of bills as well as a poor tariff structure; making it difficult for electricity utility
companies to recover their investments in the sector.
25
Efforts aimed at addressing some of these challenges include the MCC Compact II which
seeks to provide financing for the enhancement of the grid infrastructure to mitigate some
of the distribution losses and also provide technical as well as managerial capacity to the
country’s distribution companies. The government is also developing the other gas resources
from the country’s oil fields to provide stability in supply of natural gas to the nation’s
thermal generation facilities. There has also been proposals to establish an LNG
regasification unit to augment local gas supply.
The country has potential in smaller hydro power and renewable energy sources which when
fully exploited, would bring diversity into the country’s generation mix thereby curbing the
heavy dependence on the Akosombo dam and the major thermal generation facilities. The
role of renewable energy in helping achieve electricity self sufficiency cannot be over
emphasized. The introduction of the Renewable Energy Act has provided the impetus for
development of the sector. However, the government needs to strengthen the enforcement
of the of the Act and the various sub regulations as well as introducing more incentives to
attract investments into the renewable energy space.
26
References
AfDB. (2013). The High Cost of Electricity Generation in Africa. Retrieved from African
Development Bank Group: https://www.afdb.org/en/blogs/afdb-championing-
inclusive-growth-across-africa/post/the-high-cost-of-electricity-generation-in-africa-
11496/
Ahiataku-Togobo, W., & Amankwa, K. (2006). Hydro Power Development in Ghana. Retrieved
August 2017, from http://www.unido.org/fileadmin/import/52380_Mr._Kennedy_
Amankwa.pdf
Boadu, K. A., & Aklorbortu, D. K. (2015). Prez Mahama unveils Atuabo Gas Plant; Says it's a
game changer. Retrieved from Graphic Online: http://www.graphic.com.gh/news/
general-news/prez-mahama-unveils-atuabo-gas-plant-says-it-s-a-game-changer.html
Bokpe, S. J. (2016). Government owes ECG GH¢728 million; Repayment to be spread over 5 years —
Terkper. Retrieved from GRAPHIC ONLINE: http://www.graphic.com.gh/news/
general-news/government-owes-ecg-gh-728-million-repayment-to-be-spread-over-5-
years-terkper.html
EADTF. (2014). The Ghana Energy Access (GhEA) Database. Retrieved Feb 2017, from Energy
Access Data Task Force: http://151.80.133.24:90/gheatweb/Home/Project
Edjekumhene, I., Amadu, B. A., & and Brew-Hammond, A. (2001). Power Sector Reform in
Ghana: The Untold Story.
Energy Commission of Ghana. (2016a). National Energy Statistics (2006-2016). Retrieved from
Energy Commission of Ghana: http://energycom.gov.gh/files/National%20
Energy%20Statistics_2016.pdf
Energy Commission of Ghana. (2016b). 2016 Energy (Supply and Demand) Outlook for Ghana.
Retrieved from The Energy Commission of Ghana: http://energycom.gov.gh/files/
Energy%20Commission%20-%202016Energy%20Outlook%20for%20Ghana_final.pdf
Energy Commission of Ghana. (2016c). Energy Commission of Ghana. Retrieved from National
Rooftop Solar PV Programme: http://www.rooftopsolar.energycom.gov.gh/about-nrp
Energy Commission of Ghana. (2017). National Energy Statistics (2007 - 2016). Retrieved from
http://energycom.gov.gh/files/ENERGY_STATISTICS_2017.pdf
Eshun, M., & Amoako-Tuffour, J. (2016). A Review of the Trends in Ghana’s Power Sector.
Energy, Sustainability and Society.
GNPC. (2015). GNPC and Quantum Power Signs an Agreement to Construct Tema LNG Terminal.
Retrieved August 9, 2017, from Ghana National Petroleum Corporation:
http://www.gnpcghana.com/press3.html
Gyamfi, S., Amankwa Diawuo, F., Kumi, E. N., Sika, F., & Modjinou, M. (2017). The
Energy Efficiency Situation in Ghana. Renewable and Sustainable Energy Reviews.
IEA. (2016). World Energy Outlook 2016. International Energy Agency, Paris.
IHA. (2015). Ghana: assessing the sustainability of new hydropower sites. (A. Khalil, Producer)
Retrieved August 4, 2017, from International Hydropower Association:
https://www.hydropower.org/blog/ghana-assessing-the-sustainability-of-new-
hydropower-sites
ISSER. (2005). Guide to Elerctric Power in Ghana. Institute of Statistical, Social and Economic
Research, Accra.
27
ISSER. (2015). Electricity insecurity and its Impact on Micro and Small Businesses in Ghana.
Electricity Insecurity and Its Impact on the Economy of Ghana. Accra: Institute of Statistical,
Social and Economic Research.
Kapika, J., & Eberhard, A. (2013). Power-Sector Reform and Regulation in Africa: Lessons from
Kenya, Tanzania, Uganda, Zambia, Namibia and Ghana. Retrieved from
http://www.hsrcpress.ac.za/downloadpdf.php?pdffile=files%2FPDF%2F2305%2FPSe
Book.pdf&downloadfilename=Power-sector%20reform%20and%20regulation%20
in%20Africa%20-%20Entire%20eBook
Kemausuor, F., & Ackom, E. (2016). Toward universal electrification in Ghana. WIREs
Energy Environment, 6(10).
Mathrani, S., Santley, D., Hosier, R., Bertholet, F., Braud, A., Dawson-Amoah, G., . . .
Reinoso, G. (2013). Energizing Economic Growth in Ghana : Making the power and Petroleum
Sectors Rise to the Challenge. Retrieved from http://documents.worldbank.org/curated/en/
485911468029951116/Energizing-economic-growth-in-Ghana-making-the-power-and-
petroleum-sectors-rise-to-the-challenge
Mensah, G. S., Kemausuor, F., & Brew-Hammond, A. (2014). Energy access indicators and
trends in Ghana. Renewable and Sustainable Energy Reviews, 30, 317–323.
Ministry of Energy. (2010). Natinoal Energy Policy. Retrieved from http://www.petrocom
.gov.gh/assets/national_energy_policy.pdf
Ministry of Power. (2016). Power News. The Official News Magazine for the Ministry of Power,
Maiden Edition. Accra.
Power Systems Energy Consulting (PSEC) & Ghana Grid Company (GRIDCo). (2010).
Ghana Power Reliability Assessment. Power Systems Energy Consulting.
UNEP. (2015). Ghana Solar Export Potential Study. Geneva: UNEP.
UNEP. (2016). GE-TOP Ghana Strategy Proposal – Realizing solar PV projects in a cross-border
power supply context. Geneva: UNEP.
USAID. (2017). Ghana: Power Africa Fact Sheet. Retrieved from USAID: https://www.usaid
.gov/powerafrica/ghana
VALCO. (2017). History. Retrieved from Volta Aluminium Company (VALCO):
http://www.valcotema.com/about-us/history.html
VRA. (2015). Power Generation: Facts and Figures. Retrieved March 20, 2015, from Volta River
Authority: http://vraghana.com/resources/facts.php
VRA. (2016). Wind Energy. Retrieved August 2017, from Volta River Authority:
http://www.vra.com/our_mandate/wind_energy.php
28