Guide to

Electric Power
in Ghana
First Edition

RESOURCE CENTER FOR ENERGY ECONOMICS AND REGULATION

INSTITUTE OF STATISTICAL, SOCIAL AND ECONOMIC RESEARCH
UNIVERSITY OF GHANA, LEGON

July 2005
 Guide to Electric Power in Ghana
First Edition

RESOURCE CENTER FOR ENERGY ECONOMICS AND REGULATION

Institute of Statistical, Social and Economic Research
University of Ghana
P. O. Box LG 74
Legon, Accra
Ghana

Telephone: +233-21-512502/512503
Fax: +233-21-512504
 For additional copies of this report contact:

The Co-ordinator
Resource Center for Energy Economics and Regulation
Institute of Statistical, Social and Economic Research
University of Ghana
P. O. Box LG 74
Legon, Accra
Ghana
Telephone: +233-21-512502/512503
Fax: +233-21-512504
 Guide to Electric Power in Ghana

Outline

1. FACTS ON GHANA’S ELECTRIC POWER 1

1.1 Who uses electricity in Ghana 1
1.2 Electricity and population growth 2
1.3 Organisations 3
1.4 Electric power system 3
1.5 How much does it cost and how much do we pay 5
1.6 Electric power and Ghana’s neighbours 7
2. THE BASICS OF ELECTRIC POWER 9
2.1 Introduction 9
2.2 Defining and Measuring 9
2.3 Generating Electricity 11
2.4 Transmission and Distribution 11
2.5 Transmission Constraints 12
2.6 Distribution 13
2.7 The Electric Power Industry 15
3. HISTORY OF ELECTRIC POWER IN GHANA 16
3.1 Introduction 16
3.2 Before Akosombo (1914 to 1966) 16
3.3 The Hydro Years (1966 – Mid 1980s) 17
3.4 Thermal Complementation – The Takoradi Thermal Power Plant 20
3.5 Current Power System 23
3.6 Need for Additional Generation 23
4. REGULATION AND POLICIES 25
4.1 Introduction 25
4.2 History of electricity policy and regulation 26
4.3 Restructuring of electricity sector 28
4.4 Current regulation of electric power in Ghana 29
5. MAJOR ELECTRIC POWER ISSUES 30
5.1 Consumer issues 30
5.2 Electric Power and Economic Development 31
5.3 Environment and Energy Policy Issues 32
5.4 Financing and Operations 36
5.5 Performance of Ghana’s Electric Power Industry 38
6. FUTURE TRENDS 42
6.1 Introduction 42
6.2 Technology changes 42
6.3 Financing 44
6.4 Industry Re-organisation 46
6.5 Electric power and Ghana’s neighbours – West African Power Pool 50
Appendix 1: Ghanaian Electricity Infrastructure 54
Appendix 2: Energy Sources for Generating Electricity 56

iv
 Guide to Electric Power in Ghana

Preface

T
his ‘Guide to Electric Power in Ghana’ is published by the Resource Center for Energy
Economics and Regulation (RCEER) which is based at the Institute of Statistical, Social
and Economic Research (ISSER), University of Ghana. It is published for two key
reasons: first, the guide will provide comprehensive facts on Ghana’s electric power sector.
In doing so it provides the basics, history, regulations and policies affecting electric power
generation in Ghana. The document evaluates the future prospects of the industry, discuss-
ing at length major issues and challenges facing electric power generation in Ghana,
particularly financing. It also assesses the role of consumers and their critical contribution
towards the maintenance of the sector.

Secondly, it was envisaged that the process of putting together this guide will promote
greater collaboration between RCEER and all stakeholders. As a newly established center,
RCEER seeks to collect, store, process and disseminate data and knowledge on the energy
sector; conduct research to support energy sector development and governance; develop
teaching material for both academic and professional audience; and educate the public on
energy related issues.

This ‘Guide to Electric Power in Ghana’ has six chapters. Chapter one discusses consump-
tion, expenditure and revenue patterns of electricity and the entire electric power system in
Ghana. Chapter two emphasises the basics of electricity, while Chapter three generally
details the phases of power generation in Ghana and states the case for developing addi-
tional power generation facilities. Chapters four and five trace the policies and regulatory
developments that influence electric power generation in Ghana as well as discuss reforms
currently being undertaken within the industry to address major challenges. The final
chapter summarises the major issues and looks at new technologies for the future develop-
ment of electric power generation in Ghana and neighbouring countries.

Following a lot of consultation, considerable information and data have been assembled for
the guide. The guide has been prepared to meet the needs of policy makers, practitioners,
academics, media practitioners and the general public. Additionally, the guide serves as
easy reference material for many who ordinarily would find it difficult to gain access to such
information.

A number of individuals and organizations have contributed immensely to make this

publication possible. We express our appreciation to USAID which funded the project. We
also thank Dr. Michelle Foss and Dr. Gurcan Gulen, both of the Center for Energy Econom-
ics, University of Texas, Austin, USA for their comments and assistance. We also thank Mrs
Korantema Adi-Dako for her editing work and Mrs Helen Sunnu for her typesetting work.

Prof. Ernest Aryeetey

Director, ISSER and Chairman, RCEER Steering Committee

v
 Guide to Electric Power in Ghana

1. Facts on Ghana’s Electric Power

1.1 Who uses electricity in Ghana

W
ith a customer base of heaters, electric cookers in addition to
approximately 1.4 million, it a substantial amount of lighting
has been estimated that 45- equipment and bulbs for the houses.
47 percent of Ghanaians, including 15- The majority of the rest of the residen-
17 percent of the rural population, tial consumers use electric power for
have access to grid electricity with a lighting.
per capita electricity consumption of
358 kWh. All the regional capitals have
been connected to the grid. Electricity Table 1.1: ECG and NED Customer
usage in the rural areas is estimated to population and energy consumption,
be higher in the coastal (27 percent) 2004
and forest (19 percent) ecological Customer Number Energy
zones, than in the savannah (4.3 of Consumption
percent) areas of the country. In 2004, Customers (GWh)
ECG 1,200,000* 4,818
Ghanaians consumed 5,158 gigawat-
NED 188,344 340
thours (GWh) of electricity. It is TOTAL 1,388,344 5,158
estimated that about half of this *Includes active customers, non-active
amount is consumed by domestic (or customers and bulk customers.

residential) consumers for household

uses such as lighting, ironing, refrig-
eration, air conditioning, television,
radio and the like. Commercial and The major characteristic residential
industrial users account for the rest. arrangement is the “compound house”
The majority of the customers are in multi-house phenomenon – essentially
service territories of the Electricity a number of households living in a
Company of Ghana (ECG) and the compound and sharing basic amenities
Northern Electrification Department including one electricity metering
(NED) and they are regulated (Table system.
1.1). However, there are also deregu- Apart from residential consumers
lated consumers such as mines, and who are considered to be “small”
aluminum companies, which account users, other consumers whose con-
for one third of total consumption. sumption is not considered large by
One industrial entity, VALCO, can virtue of their activities are the non-
account for most of this amount when residential consumers as well as small
it is operating normally. industrial concerns which are known
Residential consumers comprise as special load tariff customers (SLT’s).
middle and high-income urban con- Non-residential consumers comprise
sumers. This consumer-class typically offices, banks and other small busi-
uses a number of high energy consum- nesses. Since the 1980’s, the
ing household appliances and items government has pursued a policy of
such as air conditioners, fridges, water extending electricity to the rural

1
 Guide to Electric Power in Ghana

communities. The objective of this is to are more diversified than in rural

encourage the use of electricity for areas, since access to a variety of
productive use for cottage industries commercial fuels and appliances are
and eventually the growth of these higher in the urban areas than in the
industries into bigger consumers rural areas. Often the cost of alterna-
which will become a source of em- tives is higher in the rural areas than it
ployment and economic growth for the is in the urban where incomes are
communities they are situated in. lower.
Clearly, with the Ghanaian econ-
1.2 Electricity and population
omy growing, increasing urban
growth populations will consume more elec-
In Ghana, electricity consumption has tricity. The Energy Commission (EC)
been growing at 10 to 15 percent per estimates that residential demand may
annum for the last two decades. It is reach anywhere between 7,000 and
projected that the average demand 13,000 GWh by 2020 depending on the
growth over the next decade will be rate of economic growth and urbaniza-
about six percent per year. As a result, tion. The residential sector is not the
consumption of electricity will reach only segment expected to grow;
9,300 GWh by 2010. The projected commercial and industrial consump-
electricity growth assumption has tion will grow as well to 3,000 to
profound economic, financial, social 10,000 GWh by 2020 according to the
and environmental implications for the EC. If VALCO is fully operational, an
country. The aspirations of developing additional 2,000 GWh should be
countries for higher living standards expected. In order to meet this increas-
can only be satisfied through sustained ing demand, new power generation as
development of their electric power well as transmission and distribution
markets as part of their basic infra- facilities will have to be built.
structure. Electricity demand will
Ghanaian governments have been
grow much faster than overall eco-
pursuing a national electrification
nomic growth (4-5 percent per year) or
policy. Still, more than half of the
than population growth (which is less
population remains without access to
than two percent a year) because
grid-based electricity. It is very expen-
continuing urbanization will allow
sive to build long-distance trans-
newly urbanized segments of the
mission lines to serve small communi-
population to expand their electricity
ties, especially when these
consumption manifold.
communities are relatively poor and
Urbanization in Ghana is expected cannot afford to pay rates high enough
to increase from around 40 percent in to cover the cost of these services.
2000 to about 55 percent in 2012 and Moreover, there is weak or no evi-
eventually to 60 percent by 2020. A dence of increased economic activity in
little more than a third of the urban communities that benefited from the
population lives in Greater Accra and national electrification scheme. Smaller
is expected to reach around 40 percent scale and locally installed generation
by 2020. A considerable percentage of systems using solar panels, batteries
household expenditure goes into and the like can be more affordable.
energy. Energy sources in urban areas

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 Guide to Electric Power in Ghana

Nevertheless, rural electrification will The Energy Commission: Independ-

continue to be a challenge for Ghana. ent agency that licenses private and
public entities that will operate in the
1.3 Organisations electricity sector. EC also collects and
There are several key entities in the analyses energy data and contributes
Ghanaian electric power industry. to the development of energy policy
They will be discussed and referred to for Ghana.
in later chapters in more detail. In this The Private Generators: Domestic or
section, we provide a short introduc- international entities that build power
tion to each of these entities. generation facilities in Ghana. They
The Ministry of Energy: Ultimate sell their electricity to VRA or ECG.
body responsible for development of The Energy Foundation: a Ministry of
electricity policy for Ghana. Energy – Private Enterprises Founda-
The Volta River Authority (VRA): tion (PEF) initiative, which was set up
State-owned entity that is responsible in 1997 to promote energy efficiency
for generation and transmission of and conservation programmes. Initial
electricity in Ghana. VRA operates the activities focused primarily on provi-
largest generation facility in Ghana, sion of technical support to industries,
the Akosombo hydroelectric plant. introduction of compact fluorescent
lamps (CFLs) countrywide and public
The Electricity Company of Ghana
education.
(ECG): State-owned entity that is
responsible for distribution of electric-
1.4 Electric power system
ity to consumers in southern Ghana,
namely Ashanti, Central, Greater The physical equipment of an electric
Accra, Eastern and Volta Regions of power system includes generation
Ghana. ECG is the entity that consum- which makes electricity, a transmission
ers interact with when they receive system that moves electricity from the
and pay their bills or when they have power plant closer to the consumer
service questions (billing, metering, and local distribution systems which
line connection etc.). move electric power from the trans-
mission system to most consumers.
The Northern Electrification See Appendix 1 for a map of the
Department (NED): A subsidiary of Ghanaian electric power system.
VRA and responsible for power distri-
bution in northern Ghana namely, Generation
Brong-Ahafo, Northern, Upper East Electric power plants use coal, lignite,
and Upper West Regions. natural gas, fuel oil, and uranium to
The Public Utilities Regulatory make electricity. In addition, renew-
Commission (PURC): Independent able fuels include moving water, solar,
agency that calculates and sets electric- wind, geothermal sources and bio-
ity tariffs, educates customers about mass.
electricity services as well as energy The type of fuel, its cost, and gener-
efficiency and conservation and en- ating plant efficiency can determine
sures the effectiveness of investments. the way a generator is used. For
example, a natural gas generator has a

3
 Guide to Electric Power in Ghana

high marginal cost but can be brought periods (see following). Energy is
on-line quickly. Coal, lignite, and stored in the fuel itself before it is
nuclear units have lower marginal converted to electricity. Once con-
costs but cannot be brought on-line verted, it has to go out on the power
quickly. They are used primarily to lines.
provide the base load of electricity.
Electricity Storage Technologies -
Costs for fuel, construction and Compressed air, pumped hydroelec-
operations and maintenance vary tric, advanced batteries and super-
greatly among types of power plant. conducting magnetic energy storage
For example, renewable generation are the four main technologies being
plants such as solar or wind, have studied for possible electricity storage.
virtually no fuel costs but are expen- Compressed air and pumped hydro
sive to manufacture and install. are used in some locations around the
Nuclear and coal fueled plants have world.
low fuel costs but can be more expen-
sive to construct and maintain. Coal Transmission System
and lignite units also incur additional Power plants are located at one point
costs for meeting air quality standards. and electricity must be moved from
Natural gas plants have higher fuel that point to the consumer. The trans-
costs than coal or nuclear, but have mission system accomplishes much of
lower initial construction costs. this task with an interconnected
system of lines, distribution centers,
Ghanaian generators have an
and control systems.
installed capacity of more than 1,650
megawatts. About 1,100 MW is hy- As of December 2003, the existing
droelectric and 550 MW is thermal transmission network system com-
capacity burning light crude oil. prised 36 substations and approxi-
mately 4000 circuit km of 161 kV and
Capacity vs. Actual Generation – In
69 kV lines. This includes 129 km of
2003, total demand was 8,500 gigawat-
double circuit 161kV interconnection
thours (GWh). Electricity from
to Togo and Benin. There is also a
hydroelectricity facilities provided
single circuit, 220 km of 225 kV inter-
6,500 GWh. The rest of our electricity
tie with La Côte d’Ivoire's network.
is generated from thermal power
plants burning light crude oil, which is
Local Distribution Systems
imported. Electricity is usually dis-
patched first from hydroelectricity Most homes and businesses use 120-
stations because it is cheaper per kWh and 240-volt electric power while
to generate power at these facilities as industries often use much higher
long as water is available. voltages. Large commercial and indus-
trial customers may bypass the local
Storing Electricity – Unlike water
distribution system, receiving electric-
and natural gas, electricity cannot be
ity at high voltage directly from the
easily stored. This is a fundamental
transmission system.
challenge of the electric power system.
There is no container or large "battery"
that can store electricity for indefinite

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 Guide to Electric Power in Ghana

Table 1.2: Ghana electricity system capacity supply and demand balance

Generation Source Effective Percent of Total Installed percent of

Capacity Available Capacity Installed
(MW) Effective Capacity (MW) Capacity
Hydro:
Akosombo 850 1020
Kpong 120 160
Total Hydro 970 56 1180 55
Thermal:
TAPCO 320 330
TICO 220 220
TDS 15 35
OECF Barge 0 125
Total Thermal 555 32 710 33
Imports 200 12 250 12

Total Installed Capacity Including 2140 100

Imports
Total Available Effective Capacity 1725 100 81

System Coincident Peak Demand* 1200 70 56

Reserve Margin 525 30 25
*VRA System Peak Without VALCO @ 3 Pot-Lines
TAPCO - Takoradi Power Company
TICO - Takoradi International Company
TDS - Tema Diesel Station

Substations on the transmission occupant needs, appliance use and

system receive power at higher volt- weather events.
ages and lower them to 24,900 volts or As of December 2003, the entire
less to feed the distribution systems. distribution system comprised 8,000
The distribution system consists of the km of sub-transmission lines, 30,000
poles and wires commonly seen in km of distribution networks with 22
neighborhoods. At key locations, bulk supply points and 1,800 MVA of
voltage is again lowered by transform- installed transformer capacity.
ers to meet customer needs.
Customers on the distribution 1.5 How much does it cost and
system are categorized as industrial, how much do we pay?
commercial and residential. Industrial Since most of the electricity is gener-
use is fairly constant, both over the ated from hydro facilities that were
day and over seasons. Commercial use built several decades ago, the cost of
is less constant and varies over sea- generation has been pretty low (about
sons. Residential and commercial use 2-2.5 US cents per kWh). But, as de-
are more variable, sometimes changing mand grew and VRA had difficulty
rapidly over the day in response to supplying electricity during years of
low rainfall, new thermal plants were

5
 Guide to Electric Power in Ghana

built in the late 1990s. These plants (including a ‘postage stamp’ transmis-
have costs ranging from 4.5 to 8 US sion charge of about 0.9 US cents) and
cents per kWh, and sometimes higher, a DSC of about 3.4 US cents.
depending on the cost of imported
There are different tariffs for indus-
fuels such as light crude oil. As a
trial, commercial (non-residential) and
result, the average cost of generation
residential customers. The tariff for
increased from about 2 US cents per
residential customers has a lifeline
kWh in the mid-1990s to about 6 US
tariff for low consumption, which was
cents in 2002. However, tariffs to end-
set at 100 kWh per month maximum in
users have not always reflected these
1989/90 but was downgraded to 50
costs due to government’s subsidized
kWh per month maximum by the year
tariff policy.
2000, which is still high compared to
Electricity supply is divided into some neighbouring countries (for
bulk electricity (transmission level) example, 20 kWh for Benin and 40
and final electricity (distribution level). kWh in Togo). The lifeline tariff is
Average bulk electricity price was about US $1.5 (about 13,000 cedis) per
below 4 US cents per kWh in the early month. The Government of Ghana
1990s until 1998 when it went up to subsidizes the lifeline consumers to the
between 4.0 to 4.5 US cents per kWh, tune of about US $1 per month but it
below the cost of generation. has been unable to make regular and
After its establishment in 1997, the timely remittances to the utilities. The
Public Utilities Regulatory Commis- total subsidies owed by the Govern-
sion (PURC) started setting electricity ment to the distribution utilities by
tariffs, in consultation with key stake- end of 2003 ranged from US $400,000–
holders comprising the generators, 1,400,000.
distributors and representatives of The average tariff for final electric-
major consumers. PURC developed a ity in general, was below 5 US cents
transition plan to trigger a gradual per kWh until 1998 when it shot up to
adjustment to economic cost recovery between 5.2 - 8.2 US cents per kWh.
by 2003. The automatic price adjust- Above 8 US cents per unit, though
ment formula of the Transition Plan relatively low compared to some
has been effected once in 2003 and neighbouring countries, it is not
twice in 2004 with the latest adjust- attractive to induce high level com-
ment in 2004 affecting only the Bulk mercial and industrial usage. At the
Supply Tariff (BST) and the Distribu- same time, industrial customers
tion Service Charge (DSC). The subsidize residential consumers. These
country runs a block end user tariff policies are hampering the develop-
system for electricity reaching all ment of an industrial base in Ghana
classes of consumers. The sum of the that can compete in regional and
BST and the DSC is the End User Tariff global markets and fuel economic
(EUT) charged by the distribution growth.
companies. The addition of thermal
There are a number of other chal-
generation has pushed up the End
lenges in fixing the distortions in
User Tariff to about 8.2 US cents per
electricity tariffs. First, utilities need to
kWh: a BST of about 4.8 US cents
improve their operational efficiencies

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 Guide to Electric Power in Ghana

so that they can be financially sound largest generators. In 2001, total re-
while lowering tariffs for consumers of gional electricity consumption was
electricity. A second and related 31.8 TWh, led by Nigeria's 14.6
challenge concerns the average tariff (45.8%). Ghana (8.8, 27.8%), and La
collection efficiency, which has ranged Côte d'Ivoire (3.0, 9.4%) were the next
from 75 to 85 percent. PURC has a largest electricity consumers.
benchmark of 95 percent. Although There are roughly 234 million po-
utilities are called upon to improve tential electricity consumers in the
their customer relations and service region. Only about 33 percent of them
quality; consumers have the duty to have access to electricity. Demand for
procure legal connections and to pay electric power in the region is expected
their bills regularly. Otherwise, the to grow by five percent annually over
electricity system cannot be expanded the next 20 years, and much faster in
reliably to meet the growing demand. some countries (see Figure 1.1). Based
on the existing capacity of 10,000
megawatts, the region needs to in-
1.6 Electric power and Ghana’s crease its generating capacity by about
neighbours 17,000 megawatts by 2023 to keep up
West Africa's total installed electric with demand. Most of the countries in
generating capacity was 9.4 gigawatts the region have small power utilities;
(GW) at the beginning of 2001, the the largest three are in Nigeria (2,800
majority of which was thermal (about MW), Ghana (1,600 MW) and La Côte
59 percent). Ghana is the second d’Ivoire (1,200 MW). All others have
largest electricity market after Nigeria less than 450 MW of capacity.
both in terms of generation capacity The electric power transmission
and consumption in the region, fol- system of Ghana is connected to its
lowed by La Côte d’Ivoire. neighbours, La Côte d’Ivoire on the
west by a 226-kV transmission line and
Togo and Benin on the east by a 161-
Figure 1.1: Average annual growth in elec-
tricity demand, 2003-2012
kV transmission line. Ghana also
supplies electric power to Burkina
Faso in the north through a low volt-
age distribution network. A high
voltage transmission system between
Ghana and Burkina Faso is being
developed. In 2002, La Côte d’Ivoire
exported 1,563 GWh of electricity
(worth about $77 million), of which
111 GWh went to Burkina Faso and
another 233 GWh was transmitted
across Ghana to Togo and Benin. Also
in 2002, Ghana exported an additional
Total electricity generation for the
170 GWh of electricity to Togo and
region in 2001 was 33.8 terawatthours
Benin.
(TWh), with Nigeria (15.7), Ghana (8.8)
and La Côte d'Ivoire (4.6) being the

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 Guide to Electric Power in Ghana

Under the leadership of the Eco- If this regional approach to electric-

nomic Community of West African ity sector development is successful,
States (ECOWAS), there is an effort to countries in the region are expected to
create a regional power pool, starting save about $3-5 billion over 20 years.
with Nigeria, Benin, Togo, Ghana, La The WAPP is now an ECOWAS prior-
Côte d’Ivoire, Burkina Faso and Niger ity project for the New Partnership for
which are already interconnected. The African Development (NEPAD). A
project, known as the West African more detailed discussion on WAPP is
Power Pool (WAPP), also aims to provided in Section 6.5.
increase energy trade in the region and
to promote foreign investment in the
electricity sector.

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 Guide to Electric Power in Ghana

2. The Basics of Electric Power

2.1 Introduction

E
lectricity travels fast, cannot be connected wires, electricity may travel
stored easily or cheaply, and miles out of any direct path to get
cannot be switched from one where it is needed. As a result of these
route to another. These three princi- three principles, designing and operat-
ples are basic to the operation of an ing an electrical system is complex and
electric power system. Electricity is requires constant management.
almost instantaneous. When a light is
Energy is used in diverse ways and
turned on, electricity must be readily
the most commonly utilized form of
available. Since it is not stored any-
energy is heat. Energy may be ob-
where on the power grid, electricity
tained either directly or indirectly
must somehow be dispatched imme-
from energy sources; electrical energy
diately. A generator is not simply
or electricity, for instance, is always
started up to provide this power.
invariably produced indirectly from a
Electric power must be managed so
myriad of primary energy sources.
that electricity is always available for
Electricity is one of the key types of
all the lights, appliances and other
energy; it is made up basically of the
uses that are required at any particular
flow of tiny particles of matter called
moment.
electrons. Practically everything on
Electricity travelling from one point this earth, including humans, contains
to another follows the path of least electrons and therefore can be de-
resistance rather than the shortest scribed as partly electrical.
distance. With long distances of inter-

2.2 Defining and Measuring

Electricity is simply the flow or ex-
change of electrons between atoms.
The atoms of some metals, such as
copper and aluminum, have electrons
that move easily. That makes these
metals good electrical conductors.
Electricity is created when a coil of
metal wire is turned near a magnet
(Diagram 1). Thus, an electric genera-
tor is simply a coil of wire spinning
around a magnet. This phenomenon
enables us to build generators that
produce electricity in power plants.

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 Guide to Electric Power in Ghana

The push, or pressure, forcing 1. Watt-hour (Wh): equal to one-

electricity from a generator is ex- thousandth of 1 kWh or (1kWh/1,000)
pressed as volts. The flow of electricity
2. Megawatt-hour (MWh): equal to
is called current. Current is measured
1,000,000 Wh or 1,000 kWh
in amperes (amps).
3. Gigawatt-hour (GWh): equal to
Watts are a measure of the amount
1,000,000,000 Wh; 1,000,000 kWh or
of work done by electricity. Watts are
1,000 MWh
calculated by multiplying amps by
volts. Electrical appliances, light bulbs 4. Terawatt-hour (TWh): equal to
and motors have certain watt require- 1,000,000,000,000 Wh; 1,000,000,000
ments that depend on the task they are kWh; 1,000,000 MWh or 1,000 GWh.
expected to perform. One kilowatt The kilowatt-hour (kWh) is also
(1,000 watts) equals 1.34 horsepower. known as one unit of electricity. If a
The watt (W) represents the unit of 100-W bulb burns continuously for 10
measure of electric power or rate of hours, then 1 unit or 1 kilowatt-hour of
doing work. Large amounts of electric electricity has been used. This is
power are denoted as follows: described in mathematical form as:
1. Kilowatt (kW): equal to 1,000 W 100-W x 10 hours = 1000 Wh = 1 kWh
= 1 unit of electricity.
2. Megawatt (MW): equal to 1,000,000
W or 1,000 kW Most electric plants generate kilowatts
(kW) or megawatts (MW) of electric
3. Gigawatt (GW): equal to
power while the energy production
1,000,000,000 W; 1,000,000 kW or 1,000
could be in billions of units or kilo-
MW
watt-hours (kWh).
4. Terawatt (TW): equal to
The average electricity customer in
1,000,000,000,000 W; 1,000,000,000 kW;
Ghana uses about 350 kWh annually,
1,000,000 MW or 1,000 GW.
with large differences between indus-
A 60-W incandescent bulb will, for trial users and residential users as well
example, require 60 watts of electric as between urban users and rural
power to operate or light up. On the users. The world average for electricity
other hand, a 3-kW electric kettle will consumption is about 2,900 kWh per
need 3,000 watts of electric power to person. In high income countries,
boil water. The kilowatt-hour (kWh) is average consumption is more than
the basic unit of measure of the 8,000 kWh per person.
amount or quantity of electricity
Electricity is generated and usually
(electric energy) used. A kilowatt-hour
transmitted as alternating current
is equal to one kilowatt of electric
(AC). The direction of current flow is
power supplied to or taken from an
reversed 60 times per second, called 60
electrical power system for one hour. It
hertz (Hz). Because of the interconnec-
represents the amount of work done
tion within the power grids, the
by one kilowatt in one hour. Other
frequency is the same throughout the
representations of electric energy
grid. Operators strive to maintain this
utilized are the following:
frequency at 60 Hz.

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 Guide to Electric Power in Ghana

Higher voltages in many instances

can be transmitted more easily by
direct current (DC). High voltage
direct current (HVDC) lines are used
to move electricity long distances.

2.3 Generating Electricity

There are many fuels and technologies
that can generate electricity. Usually a
fuel like coal, natural gas, or fuel oil is
ignited in the furnace section of a
boiler. Water piped through the boiler
in large tubes is superheated to pro-
duce heat and steam. The steam turns
turbine blades which are connected by
a shaft to a generator. Nuclear power
plants use nuclear reactions to produce
heat while wind turbines use the wind
to turn the generator. A generator is a
huge electromagnet surrounded by
coils of wire which produces electricity
when rotated (Diagram 2).

2.4 Transmission and

Distribution
Once electricity is given enough push
(voltage) to travel long distances, it can
be moved onto the wires or cables of
the transmission system. The transmis-
sion system moves large quantities of
electricity from the power plant
through an interconnected network of
transmission lines to many distribu-
tion centers called substations. These
substations are generally located long
Electricity generation ranges from distances from the power plant. Elec-
13,000 to 24,000 volts. Transformers tricity is stepped up from lower
increase the voltage to hundreds of voltages to higher voltages for trans-
thousands of volts for transmission. mission.
High voltages provide an economical High voltage transmission lines are
way of moving large amounts of interconnected to form an extensive
electricity over the transmission and multi-path network. Redundant
system. means that electricity can travel over

11
 Guide to Electric Power in Ghana

various different lines to get where it losses that are associated with illegal
needs to go. If one line fails, another connections and unpaid consumption.1
will take over the load. Most transmis- Switching stations and substations are
sion systems use overhead lines that used to (1) change the voltage, (2)
carry alternating current (AC). There transfer from one line to another, and
are also overhead direct current (DC) (3) redirect power when a fault occurs
lines, underground lines, and even on a transmission line or other equip-
under water lines. ment. Circuit breakers are used to
All AC transmission lines carry three- disconnect power to prevent damage
phase current - three separate streams from overloads.
of electricity travelling along three Control centers coordinate the opera-
separate conductors. Lines are desig- tion of all power system components.
nated by the voltage that they can One or more utilities can make up a
carry. Voltage ratings are usually 345 control area. To do its job, the control
kilovolt (kV) for primary transmission center receives continuous information
lines and 138 kV and 69 kV for sub- on power plant output, transmission
transmission lines. Transmission lines, ties with other systems, and
voltages in Ghana are presently 69,000 system conditions. In Ghana, VRA and
volts, 161,000 volts and 220,000 volts. It ECG manage their control centers as
is envisaged to operate 330,000 volts
the main transmission and distribution
transmission lines along parts of the providers.
coastal corridor of the country by 2008.
Sub-transmission voltages are 33,000 2.5 Transmission Constraints
volts and 34,500 volts. Apart from the
There are some important constraints
reduced level of voltage, a sub-
that affect the transmission system.
transmission system is similar to a
These include thermal limits, voltage
transmission network.
limits, and system operation factors.
Even though higher voltages help
push along the current, electricity Thermal/Current Limits
dissipates in the form of heat to the Electrical lines resist the flow of elec-
atmosphere along transmission and tricity and this produces heat. If the
distribution lines. This loss of electric- current flow is too high for too long,
ity is called line loss. The loss will be the line can heat up and lose strength.
higher if the lines are not well main- Over time it can expand and sag
tained by the utilities. Around the between supporting towers. This can
world, best utility practices lower the lead to power disruption. Transmis-
technical line loss during transmission sion lines are rated according to
and distribution to 7-8 percent. In thermal limits as are transformers and
Ghana, this ratio was about 14 percent other equipment.
in 2001 (11 percent during distribution
and three percent during transmis- Voltage Limits
sion). It is also estimated that there is
Voltage tends to drop from the send-
about 14 percent of non-technical
ing to the receiving end of a
1Transitional Plan for Electricity Rate Adjust-
ment 2001-2002 prepared by the PURC.

12
 Guide to Electric Power in Ghana

transmission line. Equipment (capaci- sychronization of the generators and

tors and inductive reactors) is installed preventing voltage collapse. Genera-
to help control voltage drop. If voltage tors operate in unison at a constant
is too low, customer equipment and frequency of 60 Hz. When this is
motors can be damaged. disturbed by a fault in the transmis-
sion system, a generator may
System Operation Constraints accelerate or slow down. Unless
Power systems must be secure and returned to normal conditions, the
reliable. Operating constraints are system can become unstable and fail.
needed to assure that this is achieved. Voltage instability occurs when the
Power Flows: Electricity flows over transmission system is not adequate to
the path of least resistance. Conse- handle reactive power flows. Reactive
quently, power flows into other power is needed to sustain the electric
systems' networks when transmission and magnetic fields in equipment such
systems are interconnected. This as motors and transformers, and for
creates what are known as loop flows. voltage control on the transmission
Power also flows over parallel lines network.
rather than the lines directly connect-
ing two points-called parallel flows. 2.6 Distribution
Both of these flows can limit the ability The distribution system is made up of
to make other transmissions or cause poles and wire seen in neighborhoods
too much electricity to flow along and underground circuits. Distribution
transmission lines thus affecting substations monitor and adjust circuits
reliability. within the system. The distribution
substations lower the transmission line
Preventive Operations: The primary
voltages to 34,500 volts or less. In
way of preventing service failures
Ghana, the median voltage is 11,000
from affecting other areas is through
volts. The voltage is then further
preventive operations. Some standards
reduced by distribution transformers
and guidelines developed by the
(substations) to the utilization voltages
utility or regulator or another entity
of 415 volts three-phase or 230 volts
are usually desired. Operating re-
single-phase supply required by most
quirements include (1) having a
users.
sufficient amount of generating capac-
ity available to provide reserves for Substations are fenced yards with
unanticipated demand and (2) limiting switches, transformers and other
power transfers on the transmission electrical equipment. Once the voltage
system. The guidelines recommend has been lowered at the substation, the
that operations be able to handle any electricity flows to homes and busi-
single contingency and to provide for nesses through the distribution
multiple contingencies when practical. system. Conductors called feeders
Contingencies are identified in the reach out from the substation to carry
design and analysis of the power electricity to customers. At key loca-
system. tions along the distribution system,
voltage is lowered by distribution
System Stability: The two types of
stability problems are maintaining

13
 Guide to Electric Power in Ghana

transformers to the voltage needed by The effectiveness of a distribution

customers or end-users. system is measured in terms of service
Apart from voltage magnitude, continuity or reliability, service quality
distribution systems differ in other in terms of voltage stability and lowest
ways from transmission networks. The cost possible. Distribution systems also
distribution network has more feeders face similar cost constraints for trans-
or wires and more sources of power mission networks but to a much lesser
supply than the transmission network. extent.
Customers at the End of the Line
The ultimate customers who consume
electricity are generally divided into
three categories: industrial, commer-
cial, and residential. The cost of
serving customers depends upon a
number of factors including the type of
service (for example, if service is taken
at high or low voltage) and the cus-
tomer's location with respect to
generating and delivery facilities.

Industrial
Industrial customers generally use
The structure or topology of its electricity in amounts that are rela-
network is also different: this may be tively constant throughout the day.
either radial overhead feeder as are They often consume many times more
often used in rural areas or loop/ring electricity than residential consumers.
format that are the norm in urban Most industrial demand is considered
areas. Ring circuits are usually inter- to be base load. As such it is the least
connected to form networks used for expensive load to serve. Industrial
enhancing reliability of supply to loads are expected to remain within
customers. Radial feeders are cheaper certain levels over time with relatively
than ring or loop circuits but are less little variation. Major industrial cus-
reliable as there is only one path tomers may receive electricity directly
between the substation and the cus- from the transmission system (rather
tomer. A failure of any component than from a local distribution system).
along the path results in complete loss
of power delivery. Ring systems Commercial
however provide two paths between Commercial loads are similar to
the sources of power (substations or industrial in that they remain within
service transformers) and every cus- certain levels over intermediate peri-
tomer. Here, each loop is designed ods of time. Examples of commercial
such that service can be maintained customers are office buildings, ware-
regardless of a break at any point on houses, and shopping centers.
the loop.

14
 Guide to Electric Power in Ghana

Residential Central, Eastern, Volta and Greater

Residential electrical use is the most Accra Regions while the Northern
difficult to provide because house- Electricity Department has responsibil-
holds use much of their electricity in ity for supplying power to customers
the morning and evening and less at in the northern half of the country
other times of the day. This is less consisting of the Brong Ahafo, North-
efficient to provide and therefore a ern, Upper East and Upper West
more expensive use of the utility's Regions.
generators. Over time as homeowners There are four electric utilities in the
buy new appliances and change life- country, namely VRA, ECG, NED and
styles, the expected loads also change. TICO. The Public Utilities Regulatory
Examples of residential loads are Commission (PURC) and the Energy
individual residences. Commission (EC) are two government
agencies that regulate the utilities for
2.7 The Electric Power Industry the public good rather than private
Organizations that generate, transmit interests. The PURC is an independent
or distribute electricity are called body with primary responsibility for
(public) utilities due to the fact that they setting the tariffs that utilities charge
have the capacity to satisfy essential their customers. The EC on the other
human wants which lead to enhance- hand is tasked with licensing and
ment of the quality of life. Utilities regulating the technical operations of
may be vertically integrated in which the utilities. Both regulatory agencies
case electric power generation, trans- also ensure fair competition in the
mission and distribution are power market, enforce standards of
performed by one organization. The performance for the provision of
Volta River Authority (VRA), a gov- services to customers and protect both
ernment owned utility, is largely customer and utility interests.
responsible for electricity generation Electric energy policy formulation is
and transmission in Ghana and it can the preserve of the Ministry of Energy
be described as being partially inte- while the Energy Foundation, a non-
grated. Limited generation is also governmental agency, has been very
undertaken by a private company, the active in promoting energy efficiency
Takoradi International Company measures.
(TICo), a joint venture ship between
VRA and CMS Energy Inc. of the USA.
Two nationally owned utilities are
responsible for electric power distribu-
tion in the country. These are the
Electricity Company of Ghana (ECG)
and the Northern Electricity Depart-
ment (NED), the latter being a
directorate of the VRA. The Electricity
Company of Ghana delivers power to
customers in the southern half of the
country comprising Ashanti, Western,

15
3. History of Electric Power in Ghana
3.1 Introduction 3.2 Before Akosombo

T
here are three main periods of (1914 to 1966)
electricity in Ghana. The first, Before the construction of the
“Before Akosombo”, refers to Akosombo hydroelectric plant, power
the period before the construction of generation and electricity supply in
the Akosombo Hydroelectric Power Ghana was carried out with a number
Plant in 1966. This is a period of of isolated diesel generators dispersed
isolated generation facilities with low across the country as well as stand-
rates of electrification. The second alone electricity supply systems. These
period, “the Hydro Years”, covers the were owned by industrial establish-
period from 1966 to the mid eighties, ments such as mines and factories,
the Volta Development era. The Volta municipalities and other institutions
Development includes the Akosombo (e.g. hospitals, schools etc.).
Hydroelectric Plant commissioned in
The first public electricity supply in
1966 and the Kpong Hydroelectric
the country was established in Sekondi
Plant, completed in 1982. By the mid-
in 1914. The Gold Coast Railway
eighties, demand for electricity had
Administration operated the system
exceeded the firm capability of the
which was used mainly to support the
Akosombo and the Kpong Hydro
operations of the railway system and
Power Plants. The third period,
the ancillary facilities which went with
“Thermal Complementation”, from
its operations such as offices, work-
the mid eighties to date is character-
shops etc. In 1928, the supply from the
ised by efforts to expand power
system was extended to Takoradi
generation through the implementa-
which was less than 10 km away. This
tion of the Takoradi Thermal Power
system served the needs of railway
Plant as well as the development of the
operations in the Sekondi and Ta-
West African Gas Pipeline to provide a
koradi cities.
secure and economic fuel source for
power generation. There have been In addition to the Railways Admini-
efforts to link the power facilities of stration, the Public Works Department
Ghana with neighbouring countries (PWD) also operated public electricity
including the implementation of the supply systems and commenced
Ghana-Togo-Benin transmission line limited direct current supply to Accra
as well as the Ghana - La Côte d’Ivoire in 1922. On November 1, 1924, the
interconnection carried out during the PWD commenced Alternating Current
second period. As the economies of supply to Accra. The first major elec-
Ghana and its neighbours continue to tricity supply in Koforidua
grow, there are many challenges commenced on April 1, 1926 and
remaining in meeting the increasing consisted of three horizontal single
demand for electricity in the region cylinder oil-powered engines. Other
while at the same time pursuing municipalities in the country which
policies of fuel diversification, grid were provided with electricity in-
integration and sector restructuring. cluded Kumasi where work on public
 Guide to Electric Power in Ghana

lighting was commenced. On May 27, erators and other units of smaller sizes.
1927, a restricted evening supply Subsequently, three of the original
arrangement was effected and subse- units were relocated to Tamale and the
quently, the power station became others used as a source of spare parts
fully operational on October 1, 1927. for the ten newer units. The plant
The next municipality to be sup- when completed was the single largest
plied with electricity in 1927 was diesel power station in Black Africa
Winneba where with an initial direct and served the Tema Municipality. In
current supply, the service was addition, through a double circuit 161-
changed to alternating current (AC) by kV transmission line from Tema to
extending the supply from Swedru. Accra, the Tema Diesel Plant supplied
During the 1929-30 time frame, elec- half of Accra’s power demand.
tricity supply of a limited nature was The total electricity demand before
commenced in the Tamale township. the construction of Akosombo cannot
Subsequently in 1938, a power station be accurately determined due to the
operating on alternating current was dispersed nature of the supply re-
commissioned. In 1932, a power sources and the constrained nature of
station was established in Cape Coast electricity supply. Most of the towns
and subsequently another station was served had supply for only part of the
opened at Swedru in 1948. Within the day. In addition to being inadequate,
same year, there was a significant the supply was also very unreliable.
expansion of the electricity system and There was therefore very little growth
Bolgatanga, Dunkwa and Oda had in electricity consumption during the
electricity power stations established. period. Total recorded power demand
The first major transmission extension of about 70 MW with the first switch
of the electricity network in Ghana is on of the Akosombo station can be
believed to be the 11 kV overhead used as a proxy for the level of electric-
extension from Tema to Nsawam ity demand in the country just prior to
which was put into service on May 27, the construction of Akosombo.
1949. Subsequently a power station
was commissioned at Keta in 1955. 3.3 The Hydro Years (1966 –
On April 1, 1947, an Electricity Mid 1980’s)
Department within the Ministry of Akosombo Hydroelectric Project
Works and Housing was created to The history of the Akosombo Hydroe-
take over the operation of public lectric Project is linked with efforts to
electricity supplies from the PWD and develop the huge bauxite reserves of
the Railways Administration. One of Ghana as part of an integrated bauxite
the major power generation projects to aluminium industry. The project
undertaken by the Electricity Depart- was first promoted by Sir Albert
ment was the construction of the Tema Kitson, who was appointed in 1913 by
Diesel Power Plant. The plant was the British Colonial Office to establish
built in 1956 with an initial capacity of what is known as the Geological
1.95 MW (3x 650 kW units). This was Survey Department. In 1915, while Sir
expanded in 1961-64 to 35 MW with Kitson was on a rapid voyage down
the addition of ten 3 MW diesel gen- the Volta River he identified the hydro

17
 Guide to Electric Power in Ghana

potential of the Volta River and later of the Volta river and by other means,
outlined a scheme for harnessing the and of supplying electricity through a
water-power and mineral resources of transmission system. The VRA was
the then Gold Coast in an official also charged with the responsibility for
bulletin. the construction of the Akosombo dam
The idea was later taken up by and a power station near Akosombo
Duncan Rose, who came across Kin- and the resettlement of people living
ston’s proposals in the bulletin and in the lands to be inundated as well as
became interested in the idea of a the administration of lands to be
hydroelectric aluminium scheme. inundated and lands adjacent thereto.
Efforts to develop the scheme further Construction of the Akosombo dam
intensified in the 1950’s with the formally commenced in 1962 and the
implementation of engineering studies first phase of the Volta River
by Sir William Halcrow and Partners Development project with the
on the possibility of producing power installation of four generating units
from the Volta River by constructing a with total capacity of 588 MW each was
dam at Ajena in the Eastern Region of completed in 1965 and formally
Ghana. The Halcrow report, which commissioned on January 22, 1966. In
was published in 1955 covered the 1972, two additional generating units
climate and hydrology of the Volta were installed at Akosombo bringing
Basin, evaporative studies, flood the total installed capacity to 912 MW.
control, geology, power plant design
By 1969, the Volta Lake, created
and project cost estimates in detail.
following the completion of the
An independent assessment of the Akosombo dam, had covered an area
Halcrow report by Kaiser Engineers in of about 8,500 km2 and had become the
1959 recommended the construction of world’s largest man made lake in
the dam at Akosombo instead of Ajena surface area. It can hold over 150,000
as proposed in the Halcrow report. million m3 of water at its Full Supply
This meant a complete redesign of the Level (FSL) of 278 feet NLD and has a
dam and the power plant. The major shoreline length of about 7,250 km.
advantage in relocating the dam was The Lake is about 400 km long and
that the width of the gorge at the covers an approximate area of 3,275
proposed crest elevation of 290 feet square miles, i.e., 3 percent of Ghana.
was only 2,100 feet compared with The drainage area of the Lake
3,740 feet at the Ajena site. However, comprises a land area of approximately
at the Akosombo site, the maximum 398,000 km2, of which about 40 percent
depth to bedrock was minus 80 feet as is within Ghana's borders. The other
compared to minus 40 feet at the Ajena portions of the Volta Basin are in Togo,
site. Benin, Mali and la Côte d’Ivoire. The
average annual inflow to Lake Volta
The Volta River Authority (VRA)
from this catchment area is about 30.5
was established in 1961 with the
MAF (37,600 million m3).
enactment of the Volta River
Development Act, 1961 (Act 46) and Kpong Hydroelectric Project
charged with the duties of generating In 1971, VRA commissioned Kaiser
electricity by means of the waterpower Engineers of USA to prepare a plan-

18
 Guide to Electric Power in Ghana

ning study, "the Ghana Power Study: hydroelectric capacity.

Engineering and Economic Evaluation of
Demand for Electricity during the
Alternative Means of Meeting VRA
Volta Development Period
Electricity Demands to 1985", which
recommended the construction of the By 1967, a year after the Akosombo
Kpong Hydroelectric Project, with the Hydroelectric Plant was commis-
dam located upstream of the Kpong sioned, most of the major electricity
Rapids and the Power Station at Penu, consumers were switched off diesel-
about 18 kilometers upstream of powered electricity supply and served
Kpong. from Akosombo. The major customers
of power were an aluminum smelter
Other options studied included the
and a national electricity distribution
Bui Hydroelectric Plant on the Black
company established in 1967.
Volta, expansion of the Akosombo
Plant with the installation of addi- The smelter was owned by the
tional units and development of the Volta Aluminum Company (VALCO),
Pra, Tano and lower White Volta a company incorporated in Ghana. In
rivers. Thermal options, including 1962, VALCO signed a Master Agree-
steam turbine plants and gas turbine ment with the Government of Ghana,
plants were also considered, in addi- which included a Power Supply
tion to the possibility of supply from Agreement for the supply of power
Nigeria through the Ghana-Togo- from Akosombo to the 200,000-tonne
Benin (then Dahomey) transmission aluminum smelter. VALCO thus
line. These options, however, were served as the anchor customer for
found to be less economic than the VRA and the first phase of the Volta
Kpong hydroelectric development. Development. Construction of the
The study also recommended that VALCO smelter commenced in 1964
thermal plants, which could be de- and was completed in 1967 and con-
ployed faster than the Kpong plant, nected to the VRA transmission
should be considered for implementa- system.
tion in the event of a significant In 1967, the Electricity Corporation
increase in demand. of Ghana (ECG), established by the
In 1974, VRA commissioned Acres Electricity Corporation of Ghana
International of Canada to carry out a decree of 1967 (NLCD 125) and Execu-
review of the Kaiser Study. Following tive Instrument No. 59 dated June 29,
the review, the plant site was changed 1967 vested all assets and liabilities of
to Akuse. A major benefit of the the former Electricity Department in
change was the drowning of the ECG.
Kpong rapids as a result of the dam Total domestic load (excluding
construction. This eliminated the VALCO) supplied from the grid in
terrible insect, simulium damnosum, 1967 was approximately 540 GWh
the agent of river blindness. with an associated peak demand of
The Kpong Hydroelectric Plant was about 100 MW. Domestic consumption
successfully commissioned in 1982 and in 1967 was therefore less than 20
gave an additional 160 MW of in- percent of the installed capacity at the
stalled capacity to the existing Akosombo Station.

19
 Guide to Electric Power in Ghana

Between 1967 and 1976, domestic curtailed and export supplies to Togo
consumption more than doubled, and Benin were reduced.
growing from about 540 GWh to about
1,300 GWh. The average annual 3.4 Thermal Complementation
growth rate was about 10 percent. This – The Takoradi Thermal
was followed by a period of relatively Power Plant
stagnant domestic consumption, 1977 In 1983, following the drought, VRA as
to 1980, when domestic consumption part of its Generation and
remained around 1,350 GWh. From Transmission planning process under-
1981, domestic consumption declined took a comprehensive expansion
to a level of about 1,000 GWh in 1984. study, the Ghana Generation Planning
During this period, supply to VALCO Study (GGPS).. The engineering
was governed by the VRA – VALCO planning study which was completed
Power Supply Agreement. Figure 3.1 in 1985 confirmed the need for a
shows consumption of electrical thermal plant to provide a reliable
energy from 1967 to 1985. complementation to the hydro
In 1972, VRA commenced supply of generating resources at the Kpong and
electricity to neighbouring Togo and Akosombo power plants. A major
Benin following the construction of a consideration for complementing the
205-kilometre 161-kV transmission line hydro sources was the natural and
from Akosombo (Ghana) to Lome inherent characteristic of the Volta
(Togo). The supply of electricity was River to have highly variable flows
governed by a Power Supply Agree- from year to year. The Volta River had
ment executed in 1969 between VRA shown over 10:1 variation in flow
and the Commutate Electricité de between its highest inflow in 1963 and
Benin (CEB), a power utility formed by the lowest in 1983. Indeed this
the two countries, Togo and Benin. In characteristic was not for the Volta
1983, the interconnected Ghana-Togo- River only. Nearly all the tropical
Benin power system was expanded rivers of the world have this cyclical
through the construction of a 220- variation in inflow over a certain
kilometre transmission line from the periodicity.
Prestea Substation in Ghana to the The study concluded that by adding
Abobo Substation in La Côte d’Ivoire.
thermal complementation to the all-
The decline in power consumption hydro system, the vulnerability of the
in the early eighties was compounded power system in Ghana would be
by the most severe drought in the significantly reduced. This was because
recorded history of the Volta Basin, in times of insufficient rainfall resulting
which occurred from 1982 to 1984. in low inflows into the Volta Lake, the
Total inflow into the reservoir over thermal plants could be used to meet
this three-year period was less than 15 the shortfall in demand resulting from
percent of the long-term expected reduced hydro generation. In effect, the
total. Electricity supply during this thermal generators were to serve as an
period was consequently rationed. insurance policy against poor
Supply to VALCO was completely hydrological years to meet the demand
for electricity in Ghana.

20
 Figure 3.1: Consumption of electrical energy from 1967 to 1985

Historic Electricity Consumption

3,500
Domestic
3,000 VALCO
Export
2,500
Energy (GWh)

2,000

1,500

1,000

500

0
1966 1970 1974 1978 1982
Years

In addition to thermal easily established, it was extremely

complementation, the study also difficult to establish the economic and
recommended the rehabilitation of the especially financial feasibility of the
30-MW Tema Diesel Station as an undertaking given the relatively low
immediate and short term measure to tariffs then being paid by VALCO and
support the operation of the hydro consumers in Ghana.
plants and consequently reduce the risk In addition, the late 1980s saw the
of another exposure to poor rainfall and beginning of significant increases in
reduced power generation. The Tema the demand for power in Ghana. This
Diesel plant faced delays in its
could largely be attributed to the
rehabilitation but work was completed
impact of the Economic Recovery
in 1993. Given its state and importantly,
Programme embarked on by the
the cost of generation, the Tema Diesel
Government in 1984/85. A study was
plant has been used intermittently and
also carried to determine the optimal
is currently not in commercial
technology for the thermal plants to be
operation.
developed especially in the light of the
Between 1985 and 1992, a number of profile of the rapidly growing power
studies were carried out to confirm the demand in Ghana. The study, named
technical, economic and financial the Combustion Turbine Feasibility
feasibility of introducing thermal Study, was completed in 1990. The
plants within the generation mix. Study recommended the addition of
Although, the technical feasibility was combustion turbine power plants in
Ghana.
 Guide to Electric Power in Ghana

With the continued increase in aged the introduction of private sector

demand for power, another study, participation in infrastructural devel-
Takoradi Thermal Plant Feasibility opment for the sector to meet growing
Study was finally completed in 1992 demand.
with a recommendation for the con-
In 1999, in line with Government’s
struction of a 600-MW plant, with an
policy, the VRA entered into a joint
initial 300-MW combined cycle plant
venture arrangement with CMS En-
and a 100-MW Combustion Turbine
ergy of USA to expand the Takoradi
unit to be commissioned by 1995.
Thermal Power Plant Station to 550
There were however, delays in financ-
MW with the addition of 2x110 MW
ing approvals by the International
Combustion Turbine plants. With the
Development Association, which
expansion of the Takoradi Thermal
eventually resulted in the first 330-
Power Plant, thermal generation
MW tranche of the Takoradi Plant
increasingly started playing a major
being commissioned in 1999. It is
role within the power generation mix
noted however that the first 110-MW
of Ghana. The two combustion turbine
combustion turbine unit went into
units were put into commercial opera-
commercial operation in December
tion in March and September 2000
1997 and the second in January 1998.
respectively. Figure 3.2 shows the
In 1998, the power system in Ghana significant impact of low rainfall on
experienced another crisis resulting in the Ghanaian power system. Clearly,
the rationing of power to consumers. the addition of thermal generation
The crisis was brought on largely by capacity in recent years has been
poor rainfall and consequently low helpful but remains limited.
inflows into the Volta Lake affecting
power generation, and also the inabil-
ity to obtain sufficient back up power Figure 3.2: Electricity generation in
from La Côte d’Ivoire. Ghana, 1966-2003
In order to deal with the power
shortage, the Government contracted HistoricElectricityGeneration
two emergency power producers,
9,000
namely, AGGREKO LTD and Imports
8,000
CUMMINS Ltd both of the UK to Thermal
Total Hydro
produce and sell into the distribution 7,000
Energy (GWh)

grid in Tema up to 30 MW each. This 6,000

arrangement was ended in 2000 when 5,000
the crisis was over and normal power 4,000
generation had been restored. The 3,000
power crises set the basis for the 2,000
addition of power plants to the genera-
1,000
tion system in Ghana through the
0
private sector for the expansion of the
1966 1970 1974 1978 1982 1986 1990 1994 1998 2002
Takoradi Thermal Power Plant. In
1994, the Government launched a new Years
policy framework for the development
of the power sector. The policy envis-

22
 Guide to Electric Power in Ghana

3.5 Current Power System result of which local consumption of

Facilities electricity will reach 9,300 GWh by
2010. There is also the potential for
The total installed generation capacity is
significant electricity exports and
1,778 MW. This comprises:
supply to VALCO when the smelter
ƒ The Akosombo Hydroelectric resumes operations.
Power Plant with an installed
The firm capability of our hydro
capacity of 1,038 MW. The
system of about 4,800 GWh represents
Akosombo plant has been
about half of the projected domestic
retrofitted with the replacement
consumption for 2010. This implies
of the old turbine runners with
that at least 50 percent of Ghana’s
new ones as well as electro-
electricity requirement will be pro-
mechanical works aimed at
vided from thermal sources by the
restoring the plant to its original
year 2010.
condition. The retrofit was
completed in March. On the basis of the studies carried
out, the next generation addition is the
ƒ 160-MW Kpong Hydroelectric
completion of the expansion of the
Power Plant
Takoradi power station. This involves
ƒ 550-MW installed thermal ca- the addition of 110-MW steam unit in
pacity at the Takoradi Thermal order to complete the combined cycle
Power Station and; arrangements for the TICO power
ƒ 30-MW Diesel Power Plant at plant.
Tema. In the medium to long term, up to
A 125-MW Power Barge “the Osagyefo 600 MW of additional generating
Power Barge” is also available and is capacity will be required by 2012. It is
currently berthed at Effasu Mangyea in planned that this additional capacity
the Western Region with arrangements will be met through the establishment
ongoing to establish viable fuel sources of thermal as well as hydro plants such
for it. The Osagyefo barge was as the Bui Hydroelectric Plant. An
developed by the Ghana National attractive candidate for generation
Petroleum Corporation in order to expansion is the 300-MW combined
utilize the natural gas available in the cycle thermal power plant to be lo-
Tano oil and gas fields for power cated at Tema. The operation of this
generation. The barge has been plant is intended to be synchronized
completed and is yet to go into with the delivery of natural gas
commercial operation. through the West African Gas pipeline
project.
3.6 Need for Additional Currently, the Takoradi Thermal
Generation Power Station is fuelled with light
Domestic electric energy consumption crude oil, the price for which has
in 2004 was 6,004 GWh. An additional appreciated significantly on the world
660 GWh was supplied to CEB. It is market. In order to secure a sustain-
projected that the average local able and cost-competitive fuel source,
(Ghana) load growth over the next Ghana is involved in the West African
decade will be about six percent as a

23
 Guide to Electric Power in Ghana

Gas Pipeline (WAGP) Project for It is expected that the first gas will be
power generation. delivered to the Takoradi power
The West African Gas Pipeline station by the beginning of 2007.
(WAGP) Project involves the construc- In addition, Ghana is involved in
tion of a natural gas pipeline of about the development of the West African
600-kilometres to supply natural gas Power Pool (WAPP), aimed at estab-
from Nigeria to meet the energy lishing a regional market for electricity
requirements of Ghana and other West trades. The WAPP is expected to allow
African countries. The countries the sharing of available energy re-
presently involved in the project with sources and increase the reliability of
Ghana are Nigeria, Benin and Togo. electricity supply in the West African
The WAGP project will provide a region
source of clean fuel for VRA’s thermal
generating facilities and other future
thermal plants, and is expected to
deliver natural gas at relatively lower
costs than light crude oil currently
does.

24
4. Regulation and Policies
the development of a sustainable
4.1 Introduction
electricity industry.

P
rior to 1997, the Government
and the state-owned electricity It is contended that the reform
utility organizations combined process and the resulting policy de-
operational responsibilities with policy terminations, including the regulatory
and regulatory issues. Almost a cen- mechanisms, were a natural response
tury after the commencement of a to both the external demands and
public electricity service in what was internal factors. Following the relative
to become the modern Ghana, the successes of restructuring elsewhere
country’s electricity sector began a and the evolution of regulatory institu-
restructuring process in the mid tions, notably in Chile and Britain in
1990’s, among other things, to over- the early 1980’s and learning from the
come the limitations of the traditional long established traditional American
set up. As far as utility regulation is regulatory experience, the tone was set
concerned, perhaps the most dramatic for Ghana and indeed most of the
change was the policy shift towards African continent to embrace reforms
autonomous regulation of the sector generally and also the concept of
by bodies that operate at arms length independent regulation.
from government. Quite significantly, by the end of
The current regulatory policy 1997, the sectoral structures had been
evolved as result of the restructuring well defined and established and the
of the electricity sector, itself a compo- electricity industry positioned to
nent of a broader national advance. Two key regulatory institu-
infrastructure and public institutional tions were duly created by acts of
reform program. The structure of the Parliament. These were the Public
electricity industry in Ghana is similar Utilities Regulatory Commission
to the situation in most developing (PURC) established under the Pubic
countries where service providers are Utilities Regulatory Commission Act,
state-owned monopoly organizations. 1997 (Act 538) and the Energy Com-
Although the reform in the electricity mission (EC) established under the
sector is attributable to several factors Energy Commission Act, 1997 (Act
it was prompted largely by multilat- 541). As their names imply, the func-
eral donor agencies, fatigued from a tions of these institutions are broader,
decade and a half of concessionary but this synopsis is limited to their
financial support and considering regulatory mandates regarding the
reallocation of funds to other sectors. electricity industry. The following
Some of the objectives of the reforms, structure was adopted under the
which envisaged introduction of revamped system: the Ministry of
competition in supply as well as Energy is responsible for the broad
encouragement of private sector policy direction of the electricity
investment, necessitated transparency industry; the Energy Commission is
in regulation of the sector leading to responsible for indicative national
planning, licensing of electricity
 Guide to Electric Power in Ghana

utilities and technical standards; and ing urbanization, a long term program
the Public Utilities Regulatory Com- was initiated to accelerate the supply
mission has responsibility for of electricity to the other big towns
economic regulation, ensuring fair and commercial centers.
competition among utilities and
To streamline the development and
monitoring quality of service.
operations of the power stations and
ensure speedy growth of the electricity
4.2 History of electricity policy
industry, a prerequisite of an ambi-
and regulation tious industrialization and national
There is a close linkage between the development drive, certain measures
evolution of electricity policy and where initiated by the government.
regulation and the development and These included the enactment of the
growth of the industry from colonial Volta River Development Act, 1961
times to the post independence era. In (Act 46) which established the Volta
addition, the various institutional River Authority (VRA) mandated to
arrangements and the legal develop- build and operate hydro power sta-
ments in the sector are useful in tions within the Volta Basin and to
considering historical perspectives. As construct and operate the national
such the antecedents of the current electricity transmission system as well
electricity structure are summarized as the Electricity Act, 1961 (Act 48),
below. which vested licensing and other
Ghana’s electricity supply dates regulatory powers in respect of elec-
back to 1914 when the Gold Coast tricity in the Minister responsible for
Railways Administration started the Public Works.
first thermal power generation and The enactment of the Electricity
public electricity supply in the mu- Corporation Decree, 1967 (NLCD 125)
nicipalities of Sekondi and Takoradi. and the repeal of the Electricity Act,
The development and growth of the established the Electricity Corporation
industry was slow. From 1924, the of Ghana (ECG). For the next two
Public Works Department which was decades, ECG was to remain the entity
to dominate the industry for a long solely responsible for electricity supply
time started operating diesel plants and the distribution networks nation-
which had been installed in certain wide. In 1987, the corporation’s sphere
municipalities, notably in Accra, of operation was limited to the south-
Kumasi, Koforidua, Winneba, Swedru ern parts of Ghana which also had the
and Cape Coast. greater concentration of customers.
In 1947, the Electricity Department Service provision in respect of the
which later became the Electricity sparsely populated northern parts of
Division within the Ministry of Public the country devolved on the Northern
Works was created as a separate entity Electricity Department (NED) which
to assume responsibility for the gen- was formed as the distribution arm of
eration and supply of electricity from the VRA. This position had been in
both the Railways Administration and place until the radical changes intro-
the Public Works Department. After duced with the creation of the EC and
the take-over, and in the face of grow-

26
 Guide to Electric Power in Ghana

PURC with regulatory responsibility or holders of the most senior civil

over the sector. service positions in the Ministry with
Before independence in 1957, the responsibility for Energy, the Ministry
Electricity Supply (Control) Ordinance with responsibility for Finance as well
(Cap 66) provided the legal basis for as the Chief Executive of VRA consti-
regulating the electricity supply and tuted an overbearing government
distribution activities in Ghana. The presence on the utility’s board.
regulatory authority was exercised by VRA on its part was also required to
the Chief Electrical Engineer of the operate on a commercial basis and at a
Public Works Department. The licens- profit and was mandated to build and
ing, regulatory and operational generate hydro electricity and supply
framework for the industry was, it in bulk to various entities as well as
however, redefined with the enact- to control and regulate the Volta Basin
ment in 1961 of two pieces of as the construction and operation of
important sector legislation; the Elec- the national transmission system got
tricity Act and the Volta River underway. Indicative planning for the
Development Act. Under the Electric- national electricity system was also
ity Act, the Minister responsible for undertaken by VRA.
Public Works was vested with licens-
Both utilities had the power to issue
ing and other regulatory power for the
regulations in the form of subsidiary
electricity sector. In practice the regu-
legislation. But the inherent arbitrari-
latory function was performed by the
ness in the system was compounded
Chief Electrical Engineer of the Minis-
by the fact that these government
try. The repeal of the Electricity Act
monopolies had the ultimate power to
and its replacement with the Electricity
fix their own tariffs. The shortcomings
Corporation of Ghana Decree estab-
of that arrangement were self evident
lished the industry structure as it was
in the ensuing market failure that
known until the commencement of the
occurred. The absence of an independ-
electricity reform in the mid-1990’s.
ent regulator meant that decisions
Both Acts effectively made the two relating to regulation of services were
state-owned electricity organizations, made by the ministries, which were
ECG and VRA, self regulatory mo- not insulated from political considera-
nopolies with oversight by the tions.
Minister responsible for energy. ECG
Meanwhile, both VRA and ECG
which was required to operate on a
have been converted from their statu-
commercial basis was mandated to
tory corporation status to companies
purchase electricity from VRA in bulk
registered under the Companies Code,
for distribution. Governmental control
1963 (Act 179) under the provisions of
of the electricity industry is evident in
the related Statutory Corporations
the functions of the ECG and the
(Conversion to Companies) Act, 1993
composition of the governing board of
(Act 461). This Act signified Govern-
ECG. Among the eight-member board,
ment’s strategy to encourage private
three were civil servants and the chief
participation and investments in
executive of a state-owned enterprise
various sectors of the economy, includ-
(SOE). Thus, the Principal Secretaries
ing the electricity sector.

27
 Guide to Electric Power in Ghana

The importance and necessity for an future electricity infrastructure. The

independent regulator in the energy World Bank provided suggestions for
sector was underscored by the Power dealing with existing statutory restric-
Sector Reform Committee which was tions to the entry into the sector by
established in 1994 to look into ways of private investors owing to the domi-
bringing about efficiency and to nant and powerful role of the VRA
encourage private participation in the and ECG; these were insufficient
power sector. However the process regulation in terms of the lack of
towards the establishment of regula- definition of the rules of practice and
tory institutions, in particular the regulations intended to govern opera-
PURC, was accelerated by the imposi- tions of the sector; unclear tariff setting
tion of tariffs by the utility companies criteria and unpredictable tariff setting
which precipitated disaffection in the regime; lack of transparency in market
consuming public, resulting in the access and a nebulous government
suspension of tariffs. The upshot was policy on measures for assisting
the establishment of PURC as the investors in mitigating the risks posed
economic regulator and EC as the by the unfavorable investment climate.
technical regulator and licensing
The objectives of the reform in-
authority.
cluded structural changes within the
sector to bring about competition in
supply, transparency in the regulation
4.3 Restructuring of electricity of the sector operators, effective com-
sector mercialization of operations of
Ghana’s electricity sector has been electricity utilities and encouragement
significantly reformed in recent years. of private investment in the develop-
Several factors have driven the re- ment of the electricity sector. The
forms. In June, 1994, the Government industry structure envisaged under the
issued a Statement of Power Sector reform was the unbundling of the
Policy which outlined electricity sector with multiple generators of
reform in Ghana. This statement of public private partnerships, a single
policy was driven by the indication transmission utility to be publicly
given by the World Bank in a policy owned, creation of distribution zones
paper that it would no longer be in a and the establishment of a transparent
position to provide funding for elec- regulatory regime.
tricity sector projects in developing In 1997 two regulatory bodies were
countries. Following the Government established to superintend electricity
policy statement, the Minister of service provision, among their many
Energy initiated the power sector functions. The PURC, established
reform process to establish the re- under Act 538, sets rates and monitors
quired conditions in Ghana to improve quality. The EC was established under
operational efficiency of the utility Act 541 as the licensing authority of
companies and streamline tariff setting electricity utilities with further statu-
that would be transparent and inde- tory responsibilities for technical
pendent of Government. These were standards and indicative planning.
prerequisites to securing private sector
participation in the development of

28
 Guide to Electric Power in Ghana

Both bodies have power to issue ¾ to monitor the standard of per-

regulations for the sector. formance of the utilities;
In accordance with the provisions of ¾ to promote fair competition.
the Statutory Corporations (Conver-
In furtherance of its regulatory respon-
sion to Companies) Act, 1993 VRA and
sibilities, PURC has issued guidelines
ECG have been converted into compa-
for setting tariffs in respect of genera-
nies under the Companies Code.
tion, transmission and distribution of
Additionally, the physical unbundling
electricity. These guidelines provide a
of VRA has occurred and there has
transparent and predictable mecha-
been separation of hydro generation,
nism for setting rates. In addition, an
thermal generation and transmission Automatic Adjustment Formula has
functions into separate organizations. been introduced to allow for quarterly
revision of tariffs to reflect fluctuations
4.4 Current regulation of elec-
in crude oil prices and foreign ex-
tric power in Ghana change rates, the hydro-thermal
The current regulatory framework for generation mix and changes in the
the electricity industry is provided by consumer price index. With the auto-
Acts 538 and 541 which established the matic adjustment formula in place,
PURC and EC respectively. major tariff reviews would take place
EC’s regulatory mandates are: every four years. The tariff review
process is quite transparent and the
¾ to receive and assess applica- public and consumers are involved
tions and grant licenses to through the public hearings system.
public utilities for the transmis- Licensing decisions rendered by the
sion, wholesale supply and EC are subject to appeals to the Minis-
distribution of electricity; ter of Energy or the courts but tariff
¾ to establish and enforce, in con- decisions are not subject to appeal.
sultation with PURC, standards
of performance for the relevant
public utilities;
¾ to promote and ensure uniform
rules of practice for the trans-
mission, wholesale supply and
distribution of electricity.
PURC’s regulatory mandates are:
¾ to provide guidelines on rates
chargeable for electricity ser-
vices;
¾ to examine and approve the
rates;
¾ to protect the interests of con-
sumers and providers of utility
services;

29
5. Major Electric Power Issues
bill they have to pay and the reliability
5.1 Consumer issues
of the service (ii) the level of tariff

T
he use of electric power has price in comparison to reliability,
become widespread in Africa; adequacy and safety of service being
and Ghana is no exception. Over provided.
the last two decades, demand for
electricity for various purposes includ- Residential Customers
ing domestic and industrial uses has
As a large proportion of residential
been increasing at a rate of 10-15
customers are low-income earners, the
percent per annum. This has signifi-
cost of electricity is critical for them.
cant implications for the rate of
Therefore a pricing arrangement that
economic development. While the use
will ensure that they can enjoy the use
of electricity for domestic purposes
of electricity for their basic needs at an
(e.g., lighting, radio, television, iron-
affordable price is important. The
ing) will normally lead to
current “lifeline tariff” targets the
improvement only in the lives of
rural and urban poor whose consump-
consuming individuals, productive use
tion is less than 50 kWh per month.
of electricity by industries (all things
The life-line tariff is typically 60-70
being equal) will lead to general
percent of the economic cost of sup-
macroeconomic improvement and a
ply.
rise in the standard of living of the
populace. The major consideration for Non-Residential Customers
Ghana is the ability of the country to
match the rate of electricity demand This comprises major offices, banks
with adequate supply as well as the and small businesses. For this group,
proportion of energy produced which the cost of energy is also important
is consumed for productive use. It is particularly for small businesses
estimated that about 50 percent of whose electricity cost is a significant
electricity produced in Ghana is component of their operating cost and
consumed by domestic users. If this who require lower energy costs to be
proportionate use can be changed in more competitive in the market place
favour of industrial use and/or pro- to survive.
ductive use then Ghana stands to gain. Industrial Customer Special Load Tariff
In Ghana electricity customer Customers (SLT)
groups comprise Residential, Non- The major industries whose operations
Residential and Industrial customers. depend to a large degree on a reliable
Each group has its requirements and supply of power are also concerned
needs. For most ordinary consumers about cost and reliability in order to
electricity has become an important ensure their competitiveness in the
factor in their lives, particularly for markets within which they operate.
lighting purposes. The main issues for
ordinary consumers are (i) the price at
which the electricity is bought, i.e., the
 Guide to Electric Power in Ghana

5.2 Electric Power and Electricity costs are important, but

Economic Development so are the costs for land, labor, materi-
als, transportation and other factors.
Electricity, like other forms of energy,
Usually, employment in electric utility
is a vital ingredient in the economic
services is only a small portion of total
development of countries the world
employment in an economy. However,
over. Not only is it a critical factor and
we also have jobs tied to companies
cornerstone of the accelerated devel-
that provide equipment, materials and
opment and growth of any nation, it is
services to the electric power industry,
also a measure of the standard and
and jobs in electric power services
quality of life of a people. Without a
outside of the utility companies them-
safe, sustained, reliable and reasonably
selves.
affordable supply of electricity to meet
demand, a country can hardly make Though the electricity supply
progress in its economic and social industry Ghana contributes only 10
development. percent of its energy-supply mix, the
industry is a key driver of economic
Population growth and economic
growth and development, powering
expansion are the major factors driv-
the country’s industrial, commercial
ing growth in the electric power
and urban development. The indus-
industry. As the number of house-
trial, agricultural, mining and services
holds grows and as more and more
sectors of the Ghanaian economy,
households add on electric appliances,
which together account for 75 percent
electric power generation capacity has
of the country’s GDP, rely critically on
to keep up.
the electricity industry for their sur-
At the same time, electricity is an vival. The electricity industry accounts
essential input for industrial and for 14.7 percent of total energy share in
economic performance, although there the industrial sector, and 32.6 percent
are other things that are equally or energy consumption in the formal
more important. In general, when both manufacturing sector.2 It also contrib-
household and economic growth are utes 2.8 percent of real GDP and 10.65
taken together, they account for most percent of industrial GDP. With a
if not all of the net growth of electric customer base of approximately 1.4
generation capacity. million, it is estimated that 45-47
Growth in the electric power indus- percent of Ghanaians including 15-17
try is also influenced both directly and percent of the rural population have
indirectly by population growth and access to grid electricity with a per
general economic performance. The capita electricity consumption of
direct effects come from demand for 358kWh while the average annual
electricity as households are added or growth rate stands at 9.7 percent.3
businesses and industries expand. The According to the Ministry of Mines
indirect effects come from the contri-
bution that electricity makes to our
life-styles and quality of life and 2
Armah, B. 2002, Economic Analysis of the
technological development. Energy Sector, Institute of Economic Analysis
(IEA) Ghana
3 ECG Management Support Services Contract

2004

31
 Guide to Electric Power in Ghana

and Energy (1996)4 rapid growth in advantages. Coal, one of the lowest
domestic demand for electricity, which priced fuels, requires considerable
averaged 10 percent per annum be- treatment of emissions to meet envi-
tween 1985 and 1993, increasing ronmental standards and its use
further to 15 percent by 1995 was a triggers concerns about global warm-
result of positive economic growth and ing. Natural gas, a more expensive
the National Electrification Pro- fuel, burns cleaner than coal but can
gramme embarked upon by the contribute to ozone formation in urban
government during this period led to areas. Wind and solar power which
electricity demand gradually catching- require relatively high capital costs
up and eventually surpassing genera- produce no direct emissions and have
tion capacity. virtually no fuel cost but they can be
unsightly or impact wildlife nega-
tively. Nuclear power plants emit no
5.3 Environment and Energy combustion gases but have raised the
issue of long-term disposal of spent
Policy Issues
fuel.
Environmental concerns are a promi-
nent part of every industry today and Ghana generates most of its power
the electric power industry is no from hydroelectric facilities, which do
exception. Coal and lignite are taken not cause emissions of harmful ele-
from underground and strip mines. ments into the atmosphere; but their
Natural gas wells are drilled to pro- large reservoirs have some impact on
vide fuel to generate electricity. Power the environment by flooding large
plants that use fossil fuels emit pollut- areas, causing people to move, chang-
ants that are subject to emissions ing the ecology and causing silt
regulations. Transmission lines are formation.
spread across the state, affecting
Air Pollution
human and natural environments.
These activities are monitored and Acid rain, urban ozone depletion,
regulated, but because of the size and particulate emissions and global
scope of the industry there will con- warming are the four primary air
tinue to be concern about electric pollution concerns for the electric
power and its environmental effects. power industry. Power plants contrib-
ute relatively little to emissions of
Fuel Choices
volatile organic compounds (VOCs -
Power plants use various fuels that are associated with ozone formation),
linked to problems like acid rain, carbon monoxide, nitrous oxide (a
urban ozone depletion, global warm- greenhouse gas and oxide of nitrogen),
ing and waste disposal. Each fuel has or methane (a greenhouse gas). Be-
environmental advantages and dis- cause of effective control devices,
power plants contribute little to the
4 Load forecast studies suggest that peak problem of particulates.
demand on the Ghana system would double in
10 years requiring over 2000 MW of peak
Acid Rain: Acid rain refers to precipi-
capacity compared to the present peak tation which has a high acidity level
demand of 980 MW (Opam and Turkson, that poses a risk to human and ecosys-
2000)

32
 Guide to Electric Power in Ghana

tem health. SO2 emissions from burn- Transmission Lines and Stations
ing coal (or any fuel containing sulfur) Development of new transmission
reacts with water vapor and becomes lines, expansion of existing lines, and
an acid. The acids may mix with water, construction of new distribution
fall to the earth, or combine with dust facilities are often met with public
particles. These may damage plants, resistance. Environmental concerns are
marine life, or human health, includ- part of the reasons given for this
ing increasing mortality rates in resistance.
humans. SO2 is subject to federal and
state air quality standards. Transmission lines may require
intrusion on natural areas, be visible
Urban Ozone: Power plants produce a from scenic areas or intrude on resi-
substantial portion of NOX as a prod- dential neighborhoods. They may
uct of combustion. These oxides react destroy or disrupt wildlife habitats.
with VOC’s in the presence of sunlight Solar and wind power facilities sup-
to produce ozone. Ozone has various ported by environmental groups have
nonfatal effects on human health and faced similar public reaction.
some types of vegetation. NOX and
VOCs are subject to federal and state There has been ongoing public
air quality standards. concern about the health effects of
high voltage power lines. The National
Global Warming: Greenhouse gases Research Council in the U.S. has found
keep the earth's temperature within a that there is "no conclusive and consis-
certain range by capturing part of the tent evidence" that electromagnetic
sun's heating effect within the earth's fields cause any human disease or
atmosphere. Some fear that global harmful health effects. However,
warming will result from increased despite these findings, this issue will
CO2 levels (and other greenhouse likely continue to be an environmental
gases) in the atmosphere, leading to and health concern for the general
increased temperatures, changes in public.
precipitation and other harmful ef-
fects. CO2 and NO2 are two Related Energy Policy Issues
greenhouse gases produced by fossil
Environmental concerns are also
fuel (coal, natural gas, and petroleum)
linked to energy issues such as the use
power plants. Natural gas has about 60
of alternative fuels to generate electric-
percent of the carbon content of coal
ity and energy efficiency. Alternative
and, as such, produces less CO2.
fuels are defined in different ways, but
Particulates: Although power plants are often simply alternatives to con-
contribute relatively little to this ventional fuels. There are usually
problem, particulates are the subject of environmental or energy-related
increasing concern for their impact on benefits associated with alternative
human health. Particulates are associ- fuels. For example, natural gas used as
ated with other pollutants, such as SO2 a transportation fuel is considered an
from power plants, and are likely to be alternative that can be cleaner than
subject to future air pollution control conventional gasoline, but natural gas
strategies. for power generation is not considered
to be an alternative fuel (it is consid-

33
 Guide to Electric Power in Ghana

ered by many to be a cleaner fuel, Geothermal power relies on the heat

however). energy in the earth's interior. Some
Alternatives for power generation resources cannot be used for electricity
include hydroelectric power, solar production. However, heat from these
electricity, wind energy, biomass resources could be used as a substitute
energy and geothermal power. The for heat from an electrical source. The
fuels for each of these are available at economics and environmental effects
little or no cost; they are often renew- of such applications limit their viabil-
able fuels; and they may produce little ity.
if any direct emissions. Proponents While the benefits of cleaner, alter-
argue that the environmental costs of native energy sources for electricity are
conventional electric power are not appealing, they do pose operational
reflected in the cost of electricity considerations for the management of
produced. If these costs (externalities) electricity services. For one thing, they
were included, alternative fuel electric- are "intermittent" power sources (the
ity would be very competitive. sun does not shine at night, the wind is
Solar electric power can be pro- variable), and peak availability of
duced through various technologies. alternative energy sources does not
Costs have declined substantially and always coincide with peak demand.
Options like solar and wind cannot
in some applications, solar electricity is
economically competitive. Solar panels provide consistent power production,
and large solar arrays face environ- in contrast to the coal and nuclear
mental and community opposition facilities that are usually used for "base
similar to placement of other large load" (the units operate continuously
electric power facilities. providing a consistent power base).
Many solar technologies tend to be
Wind energy technology is available implemented in conjunction with
today at competitive prices (advanced natural gas turbines. In addition, both
wind turbines). Wind resources are solar and wind require large amounts
fairly site specific. of acreage when deployed for large-
Biomass energy is produced from scale power generation.
conversion of plant and animal matter Technological advances are such
to heat or to a chemical fuel. It encom- that some success in integrating wind-
passes the widest range of generated electricity has been
technologies including converting achieved. Likewise, hydro facilities
garbage to methane, burning materials provide a readily available power
to produce heat to generate electricity reserve (interrupted only by periods of
and fermenting agricultural wastes to extreme drought). Solar poses more of
produce ethanol. Many biomass a problem, because some form of
energy approaches rely on renewable storage is required. Scientists are
fuels. Because of the differences in experimenting with a variety of stor-
these technologies, it is difficult to age solutions, like letting daytime heat
generalize on the environmental issues accumulate in fluids like molten salt so
associated with them. that turbines can continue to operate
after sunset. However, it will be some

34
 Guide to Electric Power in Ghana

time before the economics of utility- energy lighting, improved insulation

scale renewable technologies become and high efficiency refrigeration. Co-
favorable. The operating cost of new generation can provide an energy
natural gas turbines has dropped by efficient means to sequentially pro-
half or more during the past decade, so duce both power and useful thermal
that electricity from most renewable energy (steam/chilled water) from a
energy technologies is usually 150 to single fuel. Technological improve-
400 percent more expensive than ments have substantially increased
natural gas-fired turbines with the fuel efficiency and lowered capital
range dependent upon the age of gas costs during the last decade.
turbine and the price of natural gas.
Reduced energy use also includes
The cost of wind power, however, has
changes in operations and behavior
fallen significantly to a range of 4 to 6
that result in less electricity consump-
cents per kWh within the last decade
tion; for example, turning out the
and costs are expected to drop another
lights when leaving a room or build-
20 to 40 percent over the next 10 years.
ing.
What many renewable technologies
Utilities can implement energy
(and some small scale technologies like
efficiency and conservation efforts
natural gas microturbines and fuel
through programs called demand-side
cells) do offer are options for users in
management (DSM). Utilities help
remote locations. An isolated commu-
customers to reduce electricity use by
nity can distribute electricity to its
providing energy audits and informa-
residents "off-grid" (meaning that
tion on energy saving appliances and
there does not have to be a connection
habits ("bill stuffers"). Other initiatives
to a transmission line). Or, excess
include offering rebates to customers
power from location-specific genera-
who install energy saving appliances,
tion, including co-generation, can be
compensating utilities that reduce
distributed "on grid." Distributed and
electricity load through efficiency
off-grid generation bear significant
programs by allowing them to earn a
implications for the future.
higher rate of return or encouraging
Energy Efficiency and Conservation customers to reduce peak-period
demand (i.e., installing devices that
Energy efficiency and conservation are reduce a customer's load during daily
two sides of the same environmental peaks in demand).
and energy policy coin. The impacts of
the environmental issues discussed However, many economists argue
above are all reduced by simply using that if costs and benefits are correctly
less electricity. New electricity demand measured, electric utilities may be
is met through energy savings rather spending much more on efficiency
than the provision of more electrical programs than the value of benefits
power. obtained. Other strategies, like mar-
ginal pricing which would force
Energy efficiency usually applies to customers to pay more of what it
technological improvements that actually costs to provide electricity,
reduce electricity needs, for example, may be more effective for rationing
more efficient electric motors, low electricity use. Retail electricity pro-

35
 Guide to Electric Power in Ghana

viders in restructured markets where the years by inflation (which affects

retail choice is allowed have already the cost of labor and materials), inter-
started to provide energy services, est rates (which affect the costs for
which include inspection of the site, utilities to borrow money), dealing
installation of energy efficient equip- with environmental concerns (costs
ment and insulation, monitoring of associated with environmental studies
energy usage, and so on. With the and mitigation) and other factors. In
growing attention to efficiency and contrast, the costs associated with
conservation, new businesses have generation have generally declined
emerged and existing ones have due to technological improvements,
grown, creating numerous opportuni- including those for alternative electric
ties. These businesses include every- energy sources, and lower costs for
thing from companies that research, conventional fuels.
develop and manufacture energy
The impact of technological innova-
saving devices (like lighting and
tions has had a significant impact on
building materials, automatic/remote
generation costs. Improvements in
thermostat controls, advanced real-
natural gas turbine design have made
time meters, storage devices, etc.) to
gas much more competitive with coal.
those that provide independent audits
New turbines are essentially jet en-
and information services.
gines that use a pressurized mixture of
gas and air to spin the turbine. New
5.4 Financing and Operations
"combined-cycle" turbines take excess
Electricity infrastructure (power heat generated from the gas turbine
generation plants, transmission and and use it to power a conventional
distribution lines, metering) is expen- steam turbine. This combination has
sive to build, maintain and operate. pushed turbine efficiencies beyond 50
Financing of these projects can be percent, and continued improvements
challenging. State companies that fail are expected in coming years. The new
to recover their investments because of generation of turbines is relatively
inefficiencies, inability to collect bills cheap, modular and can be brought
or charge cost-reflective tariffs cannot on-line quickly. Gas derived from coal
be expected to finance future expan- or biomass can also be used to drive
sion or maintenance. Regulated mono- combined-cycle turbines. Turbines
polies can secure financing more easily using higher pressures and efficiency
but they can invest more than neces- gains in performance are improving
sary and inflate costs, and they will rapidly.
face similar challenges regarding
tariffs and collection. Policies to make Because of the development of
the electric power industry more turbine technologies and improve-
competitive have big financial and ments in alternative energy
operational impacts on these invest- technologies (mainly in solar panel
ments. and wind turbine design), the costs of
electricity generation from natural gas
Electricity Investments and Technology and alternative fuels are on a down-
ward trend, while flexibility and ease
Transmission and distribution costs
of installation are on an upward trend.
have been most heavily impacted over

36
 Guide to Electric Power in Ghana

Where investments of billions of power utilities. To that end, the Gov-

dollars were a matter of course for ernment, the VRA and ECG each
nuclear and coal facilities, it is likely adopted Financial Recovery Plans
that the financial requirements of the which led to significant debt relief to
electric power industry in the future the ECG amounting to US$ 95.6 mil-
will be much different. However, it is lion.5 In addition, total debt relief
clear that for the electric utilities, amounting to US$88 million was also
especially those that have invested written-off by the Government.
heavily in coal and nuclear facilities, As part of its macro-economic
the advent of cheaper, more flexible restructuring programme with the
turbine design and generation alterna- World Bank and IMF, the Government
tives means that financial pressure agreed to continue to provide the ECG
everywhere in the electric power with further debt relief annually up to
industry is likely to increase. 2008, while undertaking to secure
Historically, financing of the opera- further funding for the company to
tional activities of Ghana’s electric undertake critical short-term invest-
power industry has been from gov- ments in the company’s distribution
ernment, either through multilateral or system. These recipes, if observed and
bilateral loan agreements. The first if the company is able to manage its
major government financing of opera- operations prudently, should signifi-
tions of the country’s electricity cantly improve the current financial
industry dates back to the early 1960’s position of ECG in the coming years.
when the Government contributed £35 The government also granted the VRA
million as its equity investment in the total debt relief amounting to US$
Volta River Project. This was followed 144.9 million under the Heavily In-
by several other loans and grants debted Poor Countries (HIPC)
which were on-lent to both the Volta Initiative Debt Relief programme,
River Authority and the Electricity while discussions with International
Company of Ghana. Despite Govern- Development Association (IDA) are
ment efforts at financing the on-going on the preparation of a new
operations of the VRA and ECG, the Distribution Sector Upgrade Project;
two state-owned generation and this is intended to inject a further
distribution utilities have continued to US$105 million of support for North-
incur huge debts which in turn un- ern Electricity Department (NED). In
dermined their operational capability. addition, the Government continues to
To address the problems posed by the meet the US$ 10 million quarterly
high level of debt and also enhance the crude oil supply to Takoradi Thermal
operational performance of the two Power Plant. It is argued that these
companies, the Government in 1998 measures, especially the debt relief,
undertook restructuring and re- have drastically reduced VRA’s debt
capitalisation of the VRA and ECG. portfolio and raised its return on
Following the approval of tariffs by average net fixed assets (regulated
the Public Utilities Regulatory Com-
mission in September 1998, the 5 The Government of Ghana under pressure

Government initiated action to deal from the World Bank and the IMF opted for
the Heavily Indebted Poor Countries (HIPC)
with the mounting liabilities of the
Initiative in 2000.

37
 Guide to Electric Power in Ghana

assets) in operation from negative (4.5 5.2. For example, the total debt stock of
percent) in 2002 to 2.25 percent, in the VRA including medium to long
2003. Available records show that, term and short-term loans as at De-
between 1997 and 2002, both the Volta cember 31, 2002 amounted to 3,910.9
River Authority and the Electricity Billion cedis and 1,075.1 Billion cedis
Company of Ghana had recorded huge respectively.
losses from their operations, details of
which are shown in the Tables 5.1 and

Table 5.1: Financial performance of VRA, 1997-2002 (in ¢Billion)

Year 1997 1998 1999 2000 2001 2002

Operating Profit/(Loss) 61.2 18.7 79.2 (257.9) (220.0) (582.5)
Net Profit/(Loss) (58.6) (105.2) (283.2) (983.3) (329.7) (1,269.1)
Source: Volta River Authority (VRA), Annual Reports and Accounts for 1997-2002

Table 5.2: Financial performance of ECG, 1997-2002 (in ¢Billion)

Year 1997 1998 1999 2000 2001 2002

Operating (33.9) 6.0 17.3 (13.6) 152.9 (85.3)

Profit/(Loss)

Net Profit/(Loss) (80.9) (27.5) (79.2) (394.0) 110.1 (380.5)

Source: Electricity Company of Ghana (ECG), Financial Statements for 1997-2002

pany also owns a 90 percent share-

5.5 Performance of Ghana’s
holding in a 330-MW Combined Cycle
Electric Power Industry Gas Turbine (CCGT) (Takoradi Ther-
Ghana’s electricity supply industry mal Power Company, TAPCO) with
infrastructure comprises two hydroe- CMS Energy of Michigan USA holding
lectric dams, which until the late 10 percent and a further 10 percent
1990’s virtually supplied all of Ghana’s equity holding in a 220-MW Simple
electricity (99 percent), two thermal Cycle Gas Turbine (SCGT) (Takoradi
generating plants and a network of International Company), with the CMS
transmission and distribution infra- Energy of Michigan USA holding the
structure. The two hydroelectric remaining 90 percent.
plants, namely the Akosombo Gener-
The Volta River Authority also
ating Station and Kpong Generating
owns and operates a high voltage
Station both of which are owned and
transmission network infrastructure,
managed by the Volta River Authority
which consists of 3,670 circuit kilome-
(state-owned generating company)
ters of 161-kV lines, 133 circuit
have installed capacities of 1020 MW
kilometers of 69-kV lines and 35
and 160 MW respectively. The com-

38
 Guide to Electric Power in Ghana

associated substations. Other trans- circuits within the major urban centers
mission network assets owned by VRA and approximately 4,049 km of other
include a 129-kilometer double circuit lower voltage distribution circuits for
of 161-kV lines connecting Ghana to retailing electricity. The total length of
Togo and Benin and a single 220- the company’s distribution network is
kilometer line of 225kV line connecting about 63,474 km.7 Power supply
La Côte d’Ivoire to the west of the capability in the Ghanaian electricity
country. supply industry including imports
from neighbouring La Côte d’Ivoire
As part of the arrangements to
exists and is well above the system
expedite the Northern Grid Extension
maximum demand of 1,200 MW by
and System Reinforcement Project, the
about 57 percent. However, the total
government in 1987 extended VRA’s
amount of energy that can be deliv-
mandate to distribution of electricity in
ered is constrained by several factors
the northern part of Ghana. This led to
including the low level of water in the
the creation of the Northern Electricity
country’s hydro system (Akosombo
Department (NED) as a subsidiary of
reservoir), technical problems with the
the VRA to implement the northern
distribution zone component of the 330-MW state-owned combined cycle
National Electrification Project. As thermal plant and transmission bottle-
such, the VRA became a vertically necks on the Western Corridor.
integrated monopoly in generation, As with the country’s generation
transmission and distribution of system, Ghana’s electricity distribution
electricity. As a corporate body, the sector has been bedevilled with several
VRA has since its establishment in problems including: (i) inadequate and
1961 under the Volta River Develop- outdated infrastructure; (ii) under-
ment Authority Act, 1961 (Act 46) been funding and under-investment; (iii)
operated as a quasi-enclave within managerial problems; and (iv) low
Ghana enjoying a high degree of tariffs coupled with under recovery
autonomy.6 and inability to collect bills etc, all of
The Electricity Company of Ghana which have led to unreliable supply
(state-owned distribution utility) is the and long outages, high system losses,
premier national distributor and unsustainable debt levels and severe
retailer of electric power in the south- liquidity problems. These factors have
ern sector of Ghana. The company contributed not only to the lack of
owns and manages the distribution competitiveness of Ghana’s electricity
network infrastructure. It has an industry, but have also created signifi-
cant social issues.8 It has been argued
installed transformer capacity of about
that for Ghana to achieve its GDP
3,004 MVA and 6,149-km of sub-
growth target of eight percent, it is
transmission lines, which are made up
absolutely essential that the minimum
of 1,200 km of 33-kV sub-transmission
power supply growth rate be at a
lines, 450 km of 11-kV distribution

6 Edjekumhene, Amadu, and Brew Hammond 7 Energy Commission (2005), Strategic Na-

(2003) “Power Sector Reform in Ghana in the tional Energy Plan 2005-2025.
1990’s: The Untold Story of A Divided Coun- 8 State of the Ghanaian Economy 2002, ISSER,

try Versus A Divided Bank.” University of Ghana, Legon.

39
 Guide to Electric Power in Ghana

factor of 1.5 of the GDP growth.9 It is though the company has established a
observed that limitations on electricity sound record of system planning as
services delivery to consumers are well as in projects implementation,
both technical and infrastructural in ECG is an electric utility in crisis.13 The
nature10 and cut across all aspects of report reveals the inefficiency of ECG
the electricity generation and supply operations and the shortcomings of its
business. Ghana’s distribution net- commercial performance.
work is bedevilled with bottlenecks Under-performance on the part of
resulting from poor maintenance of management and staff has led to
equipment installed over 30 years ago several negative impacts; for instance,
and overloads in the low voltage the continued government interven-
systems. tionist role in the industry, which goes
According to Center for Policy beyond the policy and ownership role
Analysis (CEPA),11 the long-term of the state. The current level of liabili-
energy problem of Ghana was com- ties of the distribution utility for
pounded by the public sector instance, which is estimated at about
dominance of the power sector. These US$300 million, it is argued is too high
constraints have led to serious deterio- to be sustainable considering the
ration in the performance of the current annual revenue base and
industry over the last several years collection rates of the company. The
resulting in customer dissatisfaction absence of effective control systems of
and general discontent by Govern- critical expenditure, particularly fuels
ment. While inadequate investment in and capital expenditure in respect of
generation and distribution infrastruc- distribution system extensions for
ture,12 have played a significant role in which the company has no funding,
the unsatisfactory performance of the has also compounded the difficulties
industry, to a larger extent the difficul- of the company.
ties faced by the state-owned electric
The operations of ECG and NED are
utilities as the key players in the
also characterised by high system
electricity industry may be attributed
losses (unaccounted for electricity in
to poor management and staff dissatis-
the system) of about 26 percent and 30
faction. According to a 2001
percent per annum respectively. Of
Management Audit of the operations
these, 16 percent is non-technical loss
of the Electricity Company of Ghana,
resulting in an annual revenue loss of
9Address delivered by the Minister for Private about US$40.3 million, whilst low
Sector Development at an International collection rates of electricity bills
Investments Forum for Electricity Sector averaging 87 percent per annum has
Investors in Accra on January 26, 2005. resulted in a further loss of about
10 Study on Electricity Services Delivery to the
US$27.7 million per annum. It is
Private Sector, Private Enterprise Foundation,
2003. estimated that revenue losses resulting
11
Ghana Mid-Year Micro-economic Review. Jan- from the company’s operations will
June, Centre for Policy Analysis, Accra, 1998. grow significantly as the demand for
12 Sources within the ECG intimated that no
and supply of electricity grows if
significant investments have been made in the
company’s distribution network over the past
10 years resulting in unreliable supply and 13 ECG Management Support Services Con-
periodic extended outages. tract, 2004.

40
 Guide to Electric Power in Ghana

nothing is done about the huge system address the issues of technical and
losses and poor collection rates. In non-technical losses that impede the
general, the technical and financial increase in access to electricity and
performance of ECG continues to improvements in the quality of service
deteriorate as the company does not such that ECG is no longer servicing
generate enough financial resources to its current debt obligations.

41
6. Future Trends
Ghana are in commercially significant
6.1 Introduction
quantities.

I
f the recent past is the prologue,
then we can be assured that the The electric power industry has
electricity industry will continue to often been criticized as a "low technol-
become more competitive and that ogy" industry, but nothing could be
some changes will take place. Electric- farther from the truth. In this docu-
ity will remain an important ment we have discussed a number of
component of our daily lives, perhaps technologies that are vastly changing
increasingly so as we move forward the way electricity is produced, deliv-
into the Information Age. There is sure ered and priced. Future expectations
to be conflict about how to best pro- for electric power should be no differ-
vide electricity to all users, how best to ent, but the outcomes may take a
facilitate consumers' desire for choice different form. Around the world,
and how to manage all of this while utility spending on R&D may be
protecting the environmental and affected by increased competition, but
social values that are important to us. new R&D arrangements are likely to
emerge from smaller technology
We can strive to consider what the companies such as Ballard (manufac-
future will hold in today's decision turer of fuel cells), major corporations
making, but that is often not possible. such as General Electric, Siemens and
Looking back at the historic changes in Westinghouse as well as state-owned
telecommunications, airlines, trucking, entities in China, India and South
banking and natural gas around the Africa.
world, there are many things that
could have been done differently. New Generation Technologies
Perhaps the best we can do is to watch
In addition to the advances in natural
the key trends and try to anticipate the
gas turbine design, new ways to
actions of today with the needs of
achieve clean combustion of coal and
tomorrow. Here are four key trends to
fuel oil and improvements in alterna-
watch in the electric power industry.
tive energy technologies, there are
technologies on the horizon that may
6.2 Technological changes completely change the industry. Often
In the past, the main source of power discussed are fuel cells, which use
generation in Ghana has been hydro electrochemical reactions - like auto-
with some amount of generation from motive batteries - to produce
diesel plants. It is anticipated that electricity. Most promising are fuel
thermal power generation mainly from cells that can use natural gas as feed-
natural gas will become a significant stock for producing hydrogen. Fuel
source of electricity generation. Natu- cells are smaller and modular and
ral gas supply is expected to come could be used to power individual
mainly from Nigeria, possibly from La buildings or neighborhoods with none
Côte d’Ivoire and possibly from of the noise and unsightliness of
domestic sources if natural gas finds in traditional generating stations. Fuel
 Guide to Electric Power in Ghana

cells, improved solar technologies and in technology lowered costs and

other developments may lead to a offshore offers a less objectionable
"decentralizing" of electric power frontier for wind farms.
systems, allowing small scale applica-
tions and resolving many of the Transmission, Distribution and Storage
potential reliability problems that Technologies
customers fear. As electricity travels over the trans-
Further into the future, economic mission grid, much of it is lost
nuclear fusion technologies may (sometimes upwards of 10 percent).
finally be achieved. Unlike nuclear This is because the materials typically
fission, fusion is the combination of used in transmission wires can only
atoms to produce heat. Fusion is a long withstand a certain amount of heat.
sought technology that holds the New superconducting materials may
tremendous promise of clean, renew- change that. At research centers
able energy, if it can be achieved. around the world, scientists are devel-
oping new materials that can
Given the abundance of coal re- withstand levels of heat and stress
sources around the world and the beyond anything achievable with
recent concerns about natural gas traditional metals. These materials, if
resource base and prices, there is an they can be economically developed
increasing interest in technologies that for applications like electricity trans-
may help lower the emissions from mission, will dramatically reduce the
coal-fired generation. Older coal plants amount of electricity that must be
with higher emissions will need to be generated and allow electricity to be
replaced in many countries. Neither efficiently transported over long
renewable nor gas-fired generation distances. Experiments with short-
may be sufficient to substitute for all of distance high voltage lines that use
the coal-fired capacity. One of the most superconducting materials have
promising and definitely most talked produced encouraging results.
about technologies is the integrated
gasification combined cycle (IGCC) For electricity to be more easily
approach where coal is gasified. managed, new ways of handling
electricity are needed that take advan-
Microturbines, solar power (either tage of superconducting materials and
as large collector farms or photovoltaic devices. One such technology is the
cells on buildings), and ocean power use of superconducting devices for
(using either the tidal currents of instantaneous management of electric
waves) are other technologies that are power. Such devices would enable
being watched closely by the investor various power management services
community. On the other hand, wind such as stability enhancement, in-
energy, which has established itself as creased transmission capacity, voltage
the most rapidly growing renewable and frequency control and other
technology, started to face problems as quality enhancements for a transmis-
public opposition to wind farms sion company or utility.
became more vocal and government
subsidies were challenged in some Storage technologies are the biggest
countries. Nevertheless, improvements hope and at the same time challenge

43
 Guide to Electric Power in Ghana

for the electricity industry. Flywheel "nonjurisdictional" or unregulated

technology seems to be the most affiliates of gas pipelines or gas or
advanced. A Texas company, Active electric utilities - act as intermediaries
Power developed the first commer- in a complex marketplace. Using
cially viable flywheel energy storage electronic information, they are able to
system and has distribution deals with package services and build flexible
companies such as Caterpillar, GE and arrangements and contractual terms
Invensys. between suppliers of gas and electric-
ity and end users.
Information Technologies
The development of electronic
The sophistication of electronic infor- information systems has been one of
mation systems is one of the most the most important factors in the re-
important factors in the drive to conceptualization of what monopoly
restructure industries like natural gas in a gas or electricity service is. These
pipelines and utilities and electricity tools have enabled the separation of
transmission and utilities. These the commodities gas and power from
information systems have removed the physical systems used to deliver
many of the barriers to common them to customers. The result is that
carriage by allowing real-time man- the scope of regulation can be nar-
agement of energy flows and rowed to the physical systems, where
exchanges. before it applied to both the systems
Electronic bulletin boards and and the commodities (which were not
software systems required by regula- commodities since there were not
tors for pipeline transportation and separate markets for the exchange of
electricity transmission include infor- gas and electricity). This has been a
mation on capacities, prices, critical step in the evolution of both the
transactions and other variables. This natural gas and electricity industries.
information is necessary to facilitate a
properly functioning marketplace. It 6.3 Financing
also facilitates the development of According to the International Energy
"secondary" markets so that holders of Agency’s World Energy Investment
excess capacity on pipelines or trans- Outlook 2003, an investment of roughly
mission grids can release or resell that $10 trillion worldwide will be needed
capacity. This prevents many of the between 2001 and 2030: $4.4 trillion for
kinds of disruptions and shortages new generation capacity; $1.6 trillion
that have posed serious problems in for transmission lines; and $3.6 trillion
the past. for distribution grids. Although more
than half of this investment will be in
Finally, the advent of information
developing countries, there would be
systems for natural gas and electricity
about 1.4 billion people without access
has supported the growth and effec-
to electricity in 2030. Only about $2
tiveness of new businesses,
trillion will be invested in building
independent third party marketers of
new generation in the developing
gas and power in advanced markets.
world. The IEA estimates that an
These companies - they may be en-
additional $665 billion will be neces-
tirely unaffiliated or they may be
sary for 100 percent electrification.

44
 Guide to Electric Power in Ghana

Similarly, the World Bank estimates $45-50 billion in 1997 to less than $6
that developing countries will need billion in 2002. Over the same period,
$120 billion a year between 2004 and the number of transactions also de-
2010 in infrastructure investments in clined from about 125 to about 30. The
the electricity sector.14 financial crises in Asia, Argentina, and
Since the 1980’s, numerous states Turkey that led to currency devalua-
and nations have attempted significant tions and macroeconomic instability
electricity reform. In those nations rendered these investments riskier.
where electricity assets have been Exposure of some investors to these
publicly owned, privatization and/or riskier countries as well as problems
corporatization have been a major experienced by some companies in
element of reform. Many nations have their home markets (e.g., some U.S.
also opened their doors to foreign companies suffered significantly
investment in the electric power following the California crisis and the
industry for the first time. As a result, collapse of the energy trading busi-
about $200 billion dollars were in- ness) restricted the ability to raise
financing in international capital
vested by the private sector in
developing countries, mostly in East markets. Moreover, many companies
Asia and Latin America, between 1990 overpaid based on optimistic estimates
and 2001.15 In East Asia, almost 70 of potential return or changes in
percent of roughly $95 billion invested markets.
has been in greenfield projects while in In order to meet investment needs
Latin America, almost 75 percent of of the electric sectors in the emerging
approximately $80 billion has been markets governments need to create
invested in privatized state assets. frameworks attractive to private
Note that this amount of investment investors as public funds, money-
losing state companies, and develop-
is significantly less than the invest-
ment levels estimated by the IEA as ment assistance cannot provide the
needed in the next three decades. investment needed. These frameworks
Governments, state companies or need to be transparent, fair, stable, and
multilateral agencies cannot be ex- credible. The independence, stability
pected to supply the difference. More and competence of regulatory agencies
private investment needs to flow into from political interference are vital.
the electric sector in developing coun- Governments, multilateral agencies,
tries. and investors need to be honest with
the public and not raise expectations
Unfortunately, after 1997, private with unrealistic promises about lower
investment in developing country prices and increased access to electric-
power sectors fell significantly from ity. At the same time, safety nets and
subsidy structures must be put in
14 Global Development Finance 2004, the World
place to protect the most vulnerable.
Bank. April 2004.
15 See What International Investors Look for When These measures must be independent
Investing in Developing Countries: Results from a of electricity prices. The segments of
Survey of International Investors in the Power the society which truly cannot afford
Sector. Energy and Mining Sector Board to pay market prices for their electric-
Discussion Paper No. 6, The World Bank
ity need to be identified carefully and
Group, May 2003.

45
 Guide to Electric Power in Ghana

financial support provided to them regulated market structure, Ghana

from general government funds and should expect to see more private
not via the electricity system. generation to come online.
Finally, governments need to lay
6.4 Industry Re-organisation
the foundation for competition by
improving commercial practices at The re-organisation of the electric
vertically integrated state companies power industry in Ghana was initiated
before they face competition. This in 1995 under a Power Sector Reform
commercialization will require the Programme (PSRP). The reforms were
freeing of the government budget from intended to create the environment to
financing losses and reorganizing the attract private sector investments in
companies along functional lines with the power sector owing to the fact that
separate cost accounting. Most impor- Government of Ghana and its tradi-
tantly, governments must allow tional financiers (the World Bank and
electricity prices to adjust until they other bilateral donors) were not able to
are high enough to recover costs so provide the significant funding re-
that these companies can become quired for future expansion of the
profitable. Improved productivity and power system. Following from the
cost reductions can be achieved initiation of the programme in 1996,
through management contracts, the Energy Commission (EC) and the
capacity-building programs, and other Public Utilities Regulatory Commis-
human resource actions. These sion (PURC) were established as part
changes, supported by government of the reforms in 1997.
reforms, will help to improve corpo- Other aspects of the reforms, par-
rate governance and transparency in ticularly the re-structuring of the Volta
the sector. With these reforms, it will River Authority (VRA) and the divesti-
be much easier to attract private ture of the Electricity Company of
investment to the electricity sector or Ghana (ECG), were not effected. The
restructure the market. re-structuring of the sector involved:
The power sector of Ghana has, in i) Reconstitution of VRA into two
the past, been financed through bilat- companies – a Hydro Company
eral loans contracted with Government (including non-core activities) to
guarantees on behalf of the sector be responsible for hydro genera-
organisations and Government direct tion, and another company to
financial support. In recent times, own the Aboadze Thermal
Government’s policy has been to Power Complex;
attract the private sector to finance the
ii) Establishment of a separate
development of the sector. The first
Transmission Company, wholly-
mainly private sector owned power
owned by Government to pro-
generation plant, the Takoradi Interna-
vided non-discriminatory, open
tional Power Company (TICO), with a
access transmissions service in
220MW capacity was constructed in
order to offer a level playing
2000. With the arrival of natural gas
field for all participants in the
through the West Africa Gas Pipeline
power market;
(WAGP) and the existence of a well-

46
 Guide to Electric Power in Ghana

iii) Reconstitution of ECG and NED, electricity sector investment required

the existing distribution utilities, in those countries. State utilities also
into a single Distribution Com- suffer from high production costs
pany. which primarily result from opera-
iv) Establishment of a Wholesale tional and maintenance problems that
Power Supply Market (WPSM) lower efficiency and from a high level
to create an environment for the of system losses (both technical and
competitive procurement of non-technical). Poor fuel quality, high
power. It is envisaged that and cost of equipment due to non-
Independent System Operator competitive and/or non-transparent
will manage the operations of the procurement practices, and poorly
electric power market in Ghana. designed electrification policies neces-
sitating high levels of investment in
Key Drivers transmission and distribution net-
works also contribute to higher costs.
Like in many other countries, the
fundamental drivers for restructuring Governments cannot, and should
the Ghanaian electricity sector are not, be expected to continue to support
primarily three-fold: inefficient state utilities or finance new
projects while their budget deficits and
¾ Investment shortages
sovereign debt increase. Their reve-
¾ High electricity prices nues are usually low and
¾ Technological developments, parti- unpredictable due to inability to
cularly those related to the growing collect taxes and volatile economic
efficiency of natural gas turbines. performance. Governments have other
priorities such as health and education
Investment Shortages: In the develop- and are better placed to focus on
ing world, a lack of access to capital providing services in these areas.
has hindered investment in infrastruc- Traditional funding for infrastructure
ture projects, including power investments from development assis-
generation, transmission, and distribu- tance, and especially bilateral aid, has
tion facilities. State utilities in many declined significantly as donor coun-
countries are not profitable and hence tries have meticulously examined past
are unable to finance their own pro- results. Development agencies such as
jects. The utilities are not able to the World Bank started to require
generate sufficient revenues because of economic reforms, including energy
low electricity prices (usually subsi- sector restructuring, as a precondition
dized by governments), payment and to further assistance.
collection shortfalls, and system losses.
If they are also required to purchase As a result of these developments,
fuel, especially oil products, for their many countries have opened their
power plants at world prices their electricity sectors to foreign invest-
financial situation becomes even more ment, primarily in generation. This has
precarious. The IEA expects fuel been particularly true for countries
purchases by developing country that suffered most during the debt
generators to cost almost $5 trillion by crisis of the 1980s, especially in Latin
2030 – roughly equivalent to total America. Moreover, during the 1980’s,

47
 Guide to Electric Power in Ghana

financial institutions, in particular such, industries will continue to push

commercial banks, incurred severe for restructuring that can lower their
losses from loan defaults among electricity prices. Clearly, low-cost
developing nations which may have electricity is important for developing
had a limiting impact on the develop- countries as well because it helps to
ing world’s access to some world increase access to electricity and allows
capital markets and may have driven local industries to develop cost com-
developing countries to allow greater petitiveness.
direct investment from abroad.
Technological Developments: Electric-
High Electricity Costs: Electricity costs ity generation has always been
vary considerably across regions and thought to exhibit economies of scale
countries, mostly depending on fuel requiring construction of larger plants
diversity and reflecting poorly fi- and expansive transmission and
nanced (or regulated) large distribution networks. Technological
investments, technical and non- developments (in particular, in natural
technical system losses, and opera- gas turbine technology) however, have
tional inefficiencies. Sometimes prices changed this. It is now possible to
reflect these costs but at other times build smaller, more efficient units. For
they are shielded by government example, a state-of-the-art combined-
policies such as subsidies. Electricity cycle gas turbine (CCGT) generating
prices also vary considerably with the unit is more efficient than coal or
ownership structure of the industry nuclear units (roughly 50 percent
and the degree of regulation. The versus 35 percent on average – 6,800
resulting price differentials can have a versus 9,800 heat rate).16 Gas-fired
significant effect on a region’s degree plants also have shorter construction
of competitiveness. They can also times. The time needed to build a
affect real standards of living. There- natural-gas-fired generation unit
fore, it is not surprising that many averages two to three years, compared
high-cost electricity regions were with three to five years for coal plants,
among the earliest reformers. For and five to seven years for nuclear
instance, both California, where 1995 plants. Construction time is only one
electricity prices were 43 percent of the factors that increases the capital
higher than the U.S. average and cost of coal and nuclear facilities,
Germany, where industrial electricity which are on average 2-3 times more
prices were 15 percent higher than in costly on a kW basis than a modern
the Organization of Economic Coop- CCGT plant. Natural gas plants are
eration and Development (OECD), also more flexible. The maximum
were early reformers. The consumers efficiency of a gas-fired power plant is
(in particular, large industrial and achieved at a much smaller level of
commercial consumers) in these capacity than a coal-fired unit. As a
regions were avid proponents of result, the size of a new natural gas
competition. The price of electricity plant can be adapted readily to various
continues to be a key cost factor for
most industries, perhaps even more so
now than before due to increased
16GE’s new H-series turbines promise heat
rates as low as 5,700, raising efficiency to
automation of many processes. As
about 60 percent.

48
 Guide to Electric Power in Ghana

changes in demand and the plant can technologies at different stages of

be built closer to the load. development will play a dual role.
All of these advantages make the Their commercialization is stimulated
financing of gas-fired plants easier for by increased competition and market
smaller, independent players and price signals. At the same time their
hence lower the need for integrated continuous improvement impels and
utilities. Accordingly, in recent years, supports restructuring efforts because
almost all new generation capacity they provide options to market par-
added around the world has been ticipants and offer increased efficiency
natural gas-fired. In resource-rich in energy production and consump-
countries, gas-fired power plants tion.
provide an opportunity to monetize Key Characteristics
stranded gas resources by creating
local demand. In most places, low cost Electricity restructuring has usually
of construction, higher efficiency, and involved a separation of the industry
lower emissions of gas plants increase along the lines of its different functions
their popularity. The liquefied natural as well as a rewriting of rules to allow
gas (LNG) industry, which has been for competition in generation and
cutting costs across the LNG value marketing. New regulatory agencies
chain from liquefaction to regasifica- were created to supervise the activities
tion, now makes natural gas available of private players in this new market-
to an increasing number of consumers place, to protect consumers against
around the world. The IEA expects market manipulation, to develop
more than 40 percent of new capacity service quality standards, and to
to be gas-fired. Almost half of this ensure the successful implementation
increase will happen in OECD coun- of the competitive model. There are
tries; there are significant uncertainties differences among the approaches
in most other countries regarding the used by different countries, but they
ability to attract capital needed for all involved a combination of the
infrastructure investments such as following actions:
upstream development, pipelines, • Unbundling of generation, trans-
LNG terminals and ships, and power mission, distribution, and
facilities. marketing functions
Developments in other generation • Open access to the transmission and
technologies from renewable tech- distribution grid
nologies such as wind and solar to
clean coal will continue to provide • Creation of electricity trading
alternatives. As consumers’ exposure arrangements (e.g., pools)
to market prices expands, their interest • Creation of independent system
in energy efficiency and conservation operators (ISO’s)
technologies will also increase. Storage
• Creation of an independent regula-
technologies and small scale distrib-
tory agency (if one does not
uted generation technologies may also
already exist)
play an important role in the electricity
industry of the future. These and other

49
 Guide to Electric Power in Ghana

• Privatization of electricity assets egy it promoted in many countries:

through sale or public auction, or “the Bank’s project-level outcomes
the corporatization of the govern- were disappointing, mostly because
ance of the assets the Bank underestimated the complex-
ity and time required for reforms to
• Deregulation of electricity prices
achieve lasting and equitable out-
• Retail competition. comes. At the sector level, outcomes
In many places, these are politically have been poor or, at best, mixed,
challenging reforms. Caught between except in countries fully committed to
investment needs of the power sector reforms. Private sector development of
and the difficulty of implementing the electric power sector is a work in
restructuring of the sector, many progress because the power sector
governments sought ways of inviting reform process is complex, takes time,
private capital to build new generation is resource-intensive, and requires
capacity via models such as build- phasing and careful sequencing to
operate-transfer and build-operate. create the conditions for sector trans-
Investors responded but required formation.”17
power purchase agreements (PPA’s), It is now clear that there is no single
which, in many instances, reflected model that applies to all countries. As
significant risk premiums in their price such, instead of following a rote
structures. Not only have some of checklist of market characteristics,
these PPA’s become political issues, each country needs to develop its own
they also present serious obstacles to commercial framework that reflect its
opening the market to competition. own socioeconomic and electric sector
Some of these agreements ended up in circumstances and priorities while
arbitration while others were renegoti- following certain fundamental guide-
ated. lines.
On the other hand, some countries
pushed forward with significant 6.5 Electric power and Ghana’s
reforms although the market was not neighbours – West African
large or diverse enough for a competi- Power Pool
tive model. If the market is not large Ghana’s electric power transmission
and diverse enough, it probably is not system is connected to La Côte
appropriate to pursue a full-scale d’Ivoire’s on the west and to Togo and
restructuring with unbundling, open Benin’s on the east. Ghana also sup-
access and all its associated changes. plies electric power to Burkina Faso in
Even if the market is large, the state the north through a low voltage
entities will not attract investors distribution network. The high voltage
because of their inefficiencies and transmission system between Ghana
cumbersome bureaucratic practices. Of and Burkina Faso is being developed.
course, it is not a simple matter to There are other interconnections
decide what is too small and what is
large enough. 17 Power for Development: A Review of the World
Bank Group's Experience with Private Participa-
The World Bank itself recognizes tion in the Electricity Sector by Fernando
the shortcomings of the reform strat- Manibog, published by the World Bank,
January 2004.

50
 Guide to Electric Power in Ghana

between countries in the region, Table 6.1: WAPP international transmission lines
Load Voltage Length Capital
including links between Burkina Faso Line capacity (kV) (km) Cost ($
and La Côte d'Ivoire, Niger and Nige- (MW) million)
ria, and Benin and Togo (Table 6.1). Benin- 150 161 183 existing
Togo
The existing interconnections are Burkina 200 225 150 existing
being extended to link all the countries Faso-La
Côte
in West Africa with the view of creat- D’Ivoire
ing a power pool that would Ghana- 256 161 129 existing
consolidate the power generating Togo
Ghana- 327 225 220 existing
resources of all the countries in West La Côte
Africa. In October 2000, 14 ECOWAS D’Ivoire
(Economic Community of West Afri- Niger- 70 132 264 existing
Nigeria
can States) members signed the West Benin- 560 330 16 20.00
African Power Pool (WAPP) agree- Nigeria
ment which calls for developing Gambia- 20 225 110 27.83
Senegal
energy production facilities and Guinea- 150 19.27
interconnecting their respective elec- Senegal
tricity grids to boost power supply in Guinea- 150 225 450 65.22
La Côte
the region. According to the agree- D’Ivoire
ment, the WAPP will be accomplished Guinea- 80 110 93 13.48
in two phases. The first phase involves Sierra
Leone
countries that are already intercon- Guinea- 150 225 123 17.82
nected, including Nigeria, Benin, Togo, Guinea
Ghana, La Côte d'Ivoire, Niger and Bissau
Guinea- 90 225 368 53.33
Burkina Faso (known as Zone A). Mali
Liberia- 80 13.48
The second phase involves coun- Guinea
tries which are yet to have Liberia- 80 13.48
interconnection facilities, which in- Sierra
Leone
Mali- 150 225 821 111.34
Senegal
Mali-La 100 225 616 88.18
Côte
D’Ivoire
Burkina 30 225 116 7.5
Faso-
Ghana
Source: The West African Power Pool & Optimal Long-Term
Planning of International Transmission with a Free-Trade
Electricity Policy, Interim Report, 2001, F.T. Sparrow and
Brian H. Bowen, Purdue University.

In December 2003, member states

signed the ECOWAS Energy Protocol,
which calls for the elimination of
clude Guinea, Guinea-Bissau, Liberia,
cross-border barriers to trade in en-
Mali, Senegal, Gambia and Cape ergy, and encourages investment in
Verde (known as Zone B). the energy sector by providing for
international arbitration for dispute

51
 Guide to Electric Power in Ghana

resolution, repatriation of profits, the French Ministry of Foreign Affairs,

protection against expropriation of and the Japanese International Coop-
assets, and other terms considered eration Agency (JICA). USAID-funded
attractive by potential investors. The implementing partners working with
Protocol provides open and non- ECOWAS and national utility corpora-
discriminatory access to transmission tions include PA Consulting, Nexant,
facilities. A regional regulatory body Associates for International Resources
and common standards for maintain- and Development, Purdue University,
ing grid reliability are also being and the U.S. Energy Association.
developed.
Although slightly behind schedule,
The ECOWAS Energy Information some of the interconnection projects
Observatory (EIO), one of the first are under construction or near comple-
permanent bodies of WAPP, was tion. Nigeria and the AfDB signed a
established in February 2003. The $15.6 million loan agreement in De-
WAPP EIO is based at the headquar- cember 2002 for the interconnection of
ters of the Communauté Electrique du NEPA (Nigerian Electric Power Au-
Bénin (CEB) in Cotonou, Benin. The thority) and Compagnie Electrique du
EIO is set to benefit from substantial Benin (CEB) networks in Benin and
local contributions by CEB, Togo Togo.
Electricité, and the National Electric
Growing demands for power have
Power Authority (NEPA) of Nigeria.
prompted Burkina Faso to seek import
USAID and the French Cooperation
electricity from neighboring La Côte
currently support the Observatory; but
d'Ivoire. A 225-kV power line, connect-
the EIO is expected to become self-
ing the city of Ferkessedougou in
supporting by means of a small fee
northern La Côte d'Ivoire with the
assessed on all cross-border electricity
Burkina Faso’s capital, Ouagadougou,
trading within the region.
is expected to begin operations in 2005.
The WAPP EIO will collect monthly Burkina Faso employs diesel genera-
energy supply and demand balances, tors to produce electricity, but high
provide forecasts of potential energy production costs attributed to fluctuat-
surpluses available for trading, coor- ing oil prices prompted the
dinate maintenance schedules, and government to begin interconnecting
engage in long-term generation and Burkina Faso's grid with that of
transmission capacity expansion neighboring countries like Ghana and
planning. The EIO is designed to have la Côte d'Ivoire to import additional
access to the electricity companies’ electricity requirements.
data and information in each of the
Work began in early 2003 on a
member countries. Eventually, access
project to connect portions of Niger to
should be allowed in real time.
Nigeria's electricity grid. The project
Key multi-lateral partners in the involves the construction of three
development of the WAPP are separate networks at an estimated cost
ECOWAS, the World Bank, and the of $16 million. The imported power
African Development Bank. Other will be much cheaper than the domes-
important bilateral donors are Agence tically oil-generated electricity cur-
Française de Développement (AFD), rently consumed, and the project will

52
 Guide to Electric Power in Ghana

help eliminate several diesel-powered

generators.
Overall, WAPP is an ambitious
project initiated by ECOWAS Energy
Ministers and championed by the
ECOWAS Department of Infrastruc-
ture. Many international entities and
bilateral aid institutions have become
involved in this undertaking mainly
because they realized its potential
benefits for the region.
If the WAPP initiative succeeds in
building the interconnections, estab-
lishing a transparent and efficient
regional regulatory framework, and
attracting private investment in power
generation, regional economic devel-
opment will receive a significant boost
while saving the regional economies
several billion dollars over the next
couple of decades.

53
 Guide to Electric Power in Ghana

Bibliography

Akorli, Simons (2005). Electricity Industry Policy Options for Small Economies: The Case of Ghana. A
PhD dissertation Proposal.
ABB (1995). Introduction to Integrated Resource T & D Planning, 3rd Printing, ABB Power T & D Com-
pany Inc., Cary.
ABB (1950). Electrical Transmission and Distribution Reference Book, ABB Power Systems Inc., Pittsburgh.
Armah, B. (2002). Economic Analysis of the Energy Sector, Institute of Economic Analysis (IEA).
Ghana.
ECG (2004). ECG Management Support Services Contract 2004. Accra. Ghana.
Edjekumhene, Amadu, and Brew Hammond (2003). Power Sector Reform in Ghana in the 1990s: The
Untold Story of A Divided Country Versus A Divided Bank.
Energy Commission (2005), Strategic National Energy Plan 2005-2025
Energy Commission Act, 1997 (Act 541)
Gonen, Turan (1988). Modern Power System Analysis, John Wiley & Sons Ltd, New York.
Government of Ghana (1999). Statement of Power Sector Development Policy, April.
Gross, Charles A., Power System Analysis, John Wiley & Sons Ltd, New York.
IEE (2002). Renewable Energy in the UK, An Environment & Energy Fact File, 2nd Edition, Savoy Place.
IEE (1979). IEE Introductory Booklet on The Power Station Game, Savoy Place.
ISSER (2003). State of the Ghanaian Economy in 2003. Institute for Statistical, Social and Economic
Research, University of Ghana, Legon
James Moxon (1984). Volta Man’s Greatest Lake. Pitman Press, Bath.
Public Utilities Regulatory Act, 1997 (Act 538).
Volta River Authority (2001). VRA Generation and Transmission System Master Plan, Acres Interna-
tional, July.
Volta River Authority (1985). Ghana Generation Planning Study, Acres International Limited.
Volta River Authority (1971). Ghana Power Study, Engineering and Economic Evaluations of Alterna-
tive Means of Meeting VRA Electricity Demands to 1985, Kaiser Engineers, August.
Weedy, B.M. (1987). Electric Power Systems, 3rd Edition Revised, John Wiley & Sons Ltd, Chichester.
World Book (1994). The World Book Encyclopedia, Volume 6, World Book Inc., London.

54
 Guide to Electric Power in Ghana

Appendix 1: Ghanaian Electricity Infrastructure

Source: Energy Commission, March 2005.

55
Appendix 2: Energy Sources for Generating Electricity
Fossil Fuels non-hydrocarbons in a gaseous phase
or in solution with crude oil in under-
Fossil fuels are derived from decaying ground reservoirs.
vegetation over many thousands or
millions of years. Coal, lignite, oil Ghana has some gas production
(petroleum) and natural gas are all associated with oil in the Central and
fossil fuels. Fossil fuels are non- Western Regions of Ghana. More gas
renewable, meaning that we extract can be found if more exploration takes
and use them faster than they can place either offshore or onshore.
possibly be replaced. Fossil fuels are
Fuel Oil
combusted in boilers in order to
convert water to steam that is used to Fuel oils are the heavier oils in a barrel
power the turbines in an electric of crude oil, comprised of complex
generator. hydrocarbon molecules, which remain
after the lighter oils have been distilled
Coal off during the refining process. Fuel
A black or brownish black solid com- oils are classed according to specific
bustible fossil fuel typically obtained gravity and the amount of sulfur and
from surface or underground mines. other substances that might occur.
Coal is shipped by rail to power plants Virtually all petroleum used in steam
and may be imported from other electric plants is heavy oil. Currently,
countries. In Texas, as in other coal roughly 30 percent of electricity in
producing states, electric generating Ghana are generated using light crude
stations are often "mine-mouth," oil, which is somewhat unusual.
meaning that they are built at the mine Renewables
and extracted coal is taken directly to
Renewable fuels are those that are not
the generator.
depleted as they are consumed. The
Coal is classified according to wind, sun, moving waters (hydroelec-
carbon content, volatile matter and tric), water heated in the earth
heating value. Lignite coal generally (geothermal) and vegetable matter
contains 9 to 17 million Btus (British (biomass) are typical renewable energy
thermal units, a measure of heat sources for electricity.
content) per ton. Sub-bituminous coals Hydroelectricity
range from 16 to 24 million Btu per
ton; bituminous coals from 19 to 30 Electricity can be created as turbine
million Btu/ton; and anthracite, the generators are driven by moving
hardest type of coal, from 22 to 28 water. Ghana depends heavily on
million Btu per ton. hydroelectricity, most of which comes
from two facilities, Akosombo and
Natural Gas
Kpong stations.
Natural gas is a mixture of hydrocar-
bons (principally methane, a molecule Wind Electricity
of one carbon and four hydrogen Electricity can be created when the
atoms) and small quantities of various kinetic energy of wind is converted
 Guide to Electric Power in Ghana

into mechanical energy by wind Nuclear

turbines (blades rotating from a hub), Nuclear energy is a non-renewable,
that drive generators. Currently, there non-fossil fuel form of energy derived
are no wind facilities in Ghana. from atomic fission.
Solar Electricity Nuclear Electricity
Radiant energy from the sun can be The heat from splitting atoms in
converted to electricity by using fissionable material, such as uranium
thermal collecting equipment to or plutonium, is used to generate
concentrate heat, which is then used to steam to drive turbines connected to
convert water to steam to drive an an electric generator. Uranium is a
electric generator. Solar electricity is heavy, naturally radioactive metallic
about a decade behind wind electricity element which has two principle
in development for commercial appli- isotopes, uranium-235 or uranium-238.
cations. Solar electricity can represent Uranium-235 is the only isotope
an important future energy source, existing in nature in appreciable
especially for niche markets like off- quantities and is thus indispensable to
grid power. Solar energy depends on the nuclear industry (which includes
available sunlight and is reliant on applications other than electric power
storage or supplementary power for civilian use). Uranium-238 absorbs
sources. There are some rural applica- neutrons to produce a radioactive
tions of solar energy in Ghana in the isotope that decays to plutonium-239,
form of photovoltaic cells used to which is also fissionable. Nuclear
charge batteries and to generate direct plants have been by far the most
use electricity. expensive to construct, although
Biomass and Geothermal uranium is the least expensive fuel to
Electricity can be created when various use (apart from questions about dis-
materials (like wood products and posal costs). Disposal of waste fuel,
agricultural waste, or even crops which remains radioactive for a long
grown for use in electricity produc- time, has been a major concern. For
tion) are combusted. Heat from these reasons, no nuclear plant has
combustion is used to convert water to been ordered in the U.S. since 1978.
steam for power generation. Electricity The costs and hazards associated with
can also be created when steam pro- decommissioning nuclear facilities are
duced deep in the earth is used to run likely to be substantial and the dis-
turbines in a generator. Ghana has posal of radioactive wastes from these
some agricultural waste but there are facilities remains an unresolved issue
no biomass generation facilities, in the U.S. On the other hand, coun-
mainly because the technology is tries such as France, Japan, South
relatively expensive and waste quanti- Korea and Finland continue to depend
ties are limited. on nuclear power at significant rates
(for example, more than 70 percent in
France) and to build new facilities.

57