The energy sector is the lifeline in the development of any nation. This belief informed the decision to undertake the construction of the first hydroelectric (Akosombo) dam in 1965, which continues to be an important investment in Ghana’s economic history. Over the years with the increased demand by power users for greater security and reliability other sources of power – thermal, solar and lately windmills, as well as imports – have been added to the generation mix. The thrust of Government policy in the energy sector and Ghana’s oil find in commercial quantities is to push for a significant increase in its energy resources to become a net exporter of both power and fuel. The production of Ghana’s oil started in the year 2010.
SUB-SECTORS
The energy sector in Ghana contributes significantly to the economy. The sector can be classified into two main sub-sectors; the Petroleum and Power Sub-sectors
Petroleum Sub-Sector
Ghana’s petroleum sector involves upstream and downstream activities. The upstream activities include the exploration, development, production, procurement and refining of crude oil and the downstream activities include production, distribution and marketing of petroleum products and premixing of petroleum products for industrial uses, including fishing.
Distribution of petroleum products in Ghana is dominated by multinational oil marketing companies. Following the deregulation policy of the government, the oil marketing companies have increased in numbers to include several local Ghanaian companies. The products are retailed through gas stations which are either owned by the Oil Marketing Companies (OMCs) or private individuals. There are one hundred and thirty-eight (138) accredited oil marketing companies in good standing for business in Ghana. The private sector, including the OMCs and others source and supply finished products through an open competitive tendering system.
Power Sub-Sector
The focus of the policy is on expanding energy production to meet the needs of consumers of electricity and ensuring the extension of electricity to all areas of the country; the development of the newly discovered oil and gas sector; and the identification and development of renewable energy sources to boost energy supply in Ghana. Also, there has been significant encouragement in the use of LPG as a substitute for wood fuel (charcoal), as part of the programme to preserve national forests and halt the advancement of desertification and climate change.
The power sub-sector involves the generation, transmission and distribution of electrical energy for industrial, commercial and domestic use in Ghana. The Power System of Ghana is run by seven public institutions. These are the Ministry of Energy (MOE), Energy Commission (EC), Public Utility Regulatory Commission (PURC), Volta River Authority (VRA), Ghana Grid Company (GridCo), Electricity Company of Ghana Limited (ECG) and the Northern Electricity Department Company (NEDCo), a subsidiary of the VRA.
SECTOR COMPOSITION
Energy Sector Structure and Deregulation
Prior to the energy market reforms of the 1990s, Ghana’s energy market was state owned, vertically integrated and highly regulated. The Volta River Authority (VRA) was responsible for generation and transmission. The state-owned Electricity Company of Ghana (ECG) and VRA subsidiary the Northern Electricity Department Company (NED) were responsible for distribution to customers in the southern and northern halves of the country respectively.
Deregulation and reforms of the policy framework radically restructured the power utility sector to facilitate greater efficiency and competition. The roles and responsibilities of existing utilities were changed and new entities and regulators introduced to ensure the smooth running of the new market structure. The changes resulted in:
- VRA focusing on power generation, retaining its Akosombo, Kpong, and Aboadze power generation assets.
- GRIDCo being spun out of the VRA to have the sole responsibility of independently and impartially operating the transmission network.
- NEDco and ECG continuing to focus exclusively on distribution.
- The creation of the Public Utilities Regulation Commission (PURC) Act, 1997 (Act 538) which sets energy prices (rates and tariffs), monitors utility performance, promotes competition and focuses on balancing the interests of consumers and utilities.
- The formation of the Energy Commission (EC) Act, 1997 (Act 541) which awards utility operating licences and sets performance standards.
Electricity is the dominant modern energy form used in the industrial and service sectors accounting for 69% of modern energy used in the two sectors of the national economy. The Ghana electricity supply industry is unbundled with separate jurisdictions and entities regarding activities of electricity generation, transmission and distribution.
Electricity generation is undertaken by the state-owned Volta River Authority (VRA), which operates the Akosombo Hydro Power Station, Kpong Hydro Power Station and the Takoradi Thermal Power Plant (TAPCO) at Aboadze. VRA is also a minority joint partner with TAQA, a private sector company which owns and operates the Takoradi International Power Company (TICO) thermal power plant also located at Aboadze. Bui Power Authority (BPA), another state- owned entity, is charged with the implementation of the Bui Hydroelectric Power Project. In addition, independent power producers have been licensed to build, own and operate power plants.
The structure of Ghana Energy’s market
The market and regulators, Public Utility Regulatory Commission (PURC) and the Energy Commission (EC) welcome Independent Power Producers (IPPs) to compete with existing utilities, and this is enabled by open access to the independent transmission network.
GRIDCO (Transmission)
GRIDCo was established in accordance with the Energy Commission Act, 1997 (Act 541) and the Volta River Development (Amendment) Act, 2005 Act 692, which provides for the establishment and exclusive operation of the National Interconnected Transmission System by an independent Utility and the separation of the transmission functions of the Volta River Authority (VRA) from its other activities within the framework of the Power Sector Reforms.
The grid transmission network connecting the main production to consumption centres has been modeled and categorized into five zones under the Ghana Grid Company (GridCo).
There are four voltage levels, in the power grid: 330kV, 225kV, 161kV & 69kV
The total length of the transmission line is 4315km, in which 330kV line (219km), 225kV line (73km), 161kV line (3,888km) and 69kV line (132km). There are 53 substations and about 100 transformers in the transmission grid of Ghana. It is expected in the power grid planning of Ghana that the 330kV backbone grid will form all over the country’s grid by 2020. The 161kV voltage level will serve as the regional transmission voltage.
GRIDCo’s main functions are to:
- Undertake economic dispatch and transmission of electricity from wholesale suppliers (generating companies) to bulk customers, which include the Electricity Company of Ghana (ECG), Northern Electricity Distribution Company (NEDCo) and the Mines;
- Provide fair and non-discriminatory transmission services to all power market participants;
- Acquire and manage assets, facilities and systems required to transmit electrical energy;
- Provide metering and billing services to bulk customers;
- Carry out transmission system planning and implement necessary investments to provide the capacity to reliably transmit electric energy; and manage the Wholesale Power Market.
AGENCIES IN THE ENERGY SECTOR
The National Interconnected Transmission System (NITS) for electricity is owned and operated by the Ghana Grid Company (GRIDCO). GRIDCO is a state-owned company. The distribution of electricity is done by the Electricity Company of Ghana (ECG), a state-owned company, and the Northern Electricity Development Company (NEDco), a subsidiary of the Volta River Authority (VRA).
The Energy Commission (EC) and the Public Utilities and Regulatory Commission (PURC) regulate the electricity supply industry. The Energy Commission, in addition to being responsible for technical regulations in the power sector, also advises the Minister for Energy on matters relating to energy planning and policy. The PURC on the other hand is an independent regulatory agency responsible for the economic regulation of the power sector with the mandate to approve rates for electricity sold by electricity distribution utilities.
The Ministry of Energy is responsible for formulating, monitoring and evaluating policies, programmes and projects in the energy sector. It is also the institution charged with the implementation of the National Electrification Scheme (NES) which seeks to extend the reach of electricity to all communities in the long term.
The current President Nana Addo Dankwa Akuffo-Addo announced a merger of the Ministries of Energy and Petroleum and Power to Ministry of Energy to bring about a sharper focus on the generation, supply and efficiency of power to match the growth the economy was experiencing.
CURRENT TRENDS
Power Distribution
There are 3 distribution companies currently operating in Ghana, with some 69 Substations scattered around the country
- lectricity Company of Ghana (ECG) – serves customers in the southern Ghana
- Northern Electricity Distribution Company – serves the northern part of the country
- En Clave Power – serves companies at the Tema free zone enclave
GENERATION
Figure 1: Generation Capacity
| INSTALLED POWER | CAPACITY |
| Total installed power capacity | 4,674MW |
| Hydro Generation | 1,580MW |
| Thermal Generation | 3,071.5MW |
| Renewable Energy(Navrongo Solar PV plant and BXC Solar) | 22.5MW |
Target of 5000MW in the medium term by 2020
The government’s energy policy is embodied in the Strategic National Energy Plan 2006-2020. The policy aims to develop a sound energy market that would provide sufficient, viable and efficient energy services for Ghana’s economic development through the formulation of a comprehensive plan that will identify the optimal path for the development, utilization and efficient management of energy resources available to the country.
The energy sector has been a vital component of Ghana’s industrial and socio-economic development. In this regard, the sector has been undergoing a number of developmental initiatives to improve overall operational efficiency and supply security.
Ghana has relied mainly on hydro-power plants for electricity generation. A few thermal plants are used to regulate the peak load. However, recently the net demand for electrical power has been considerably greater than the supply.
GENERATION INSTALLED CAPACITY
Figure 2: VRA Installed Generation Capacity
| PLANT | INSTALLED CAPACITY (MW) | DEPENDABLE CAPACITY (MW) | TYPE OF PLANT | FUEL TYPE |
| Akosombo | 1,020 | 900 | Hydro | Water |
| Kpong | 160 | 140 | Hydro | Water |
| TAPCO-T1 | 330 | 300 | Thermal | Gas/LCO |
| TICO-T2 | 330 | 320 | Thermal | Gas/LCO |
| Mines Reserve Plant – MRP | 80 | 0 | Thermal | Gas |
| Tema Thermal 1 Plant- TT1PP | 110 | 100 | Thermal | Gas/LCO |
| Tema Thermal 2 Plant- TT2PP | 49.5 | 45 | Thermal | Gas |
| Tema Thermal 2 Plant Expansion – TT2PP-X | 38 | 32 | Thermal | Gas |
| Kpone Thermal Power Plant- KTPP | 220 | 200 | Thermal | Gas/DFO |
| VRA Navrongo Solar Plant | 2.5 | Solar | Sunlight | |
| TOTAL CAPACITY | 2,340 | 2,037 |
*LCO – Light Crude oil / *DFO – Distillate Fuel oil / *HFO – Heavy Fuel Oil
INSTALLED CAPACITY OF INDEPENDENT POWER PRODUCERS (IPPs) AND OTHER PLANTS
Figure 3:
| PLANT | INSTALLED CAPACITY (MW) | DEPENDABLE CAPACITY (MW) | TYPE OF PLANT | FUEL TYPE |
| Bui Hydro | 400 | 340 | Hydro | Water |
| Kar Power Barge 1 | 235 | 225 | Thermal | HFO |
| Kar Power Barge 2 | 470 | 450 | Thermal | HFO |
| Sunon Asogli Phase 1 | 200 | 180 | Thermal | Gas |
| Sunon Asogli Phase 2 Stage 1 | 180 | 160 | Thermal | LCO/Gas |
| Sunon Asogli Phase 2 Stage 2 | 180 | 160 | Thermal | LCO/Gas |
| Cenit Power Plant | 110 | 100 | Thermal | LCO |
| Ameri Power Plant | 250 | 230 | Thermal | Gas |
| AKSA | 289 | 270 | Thermal | HFO |
| BXC Solar | 20 | Solar | Sunlight | |
| TOTAL CAPACITY | 2,334 | 2,115 |
ALLIED SERVICES/RELATED SECTORS
The discovery of significant oil and gas accumulations in 2007 and the commencement of production of the jubilee field in November 2010 were the most significant events in Ghana’s oil and Gas sector in the last 2000s. With the Jubilee, the floodgates appear to have opened to further investment/exploration activities. Ghana’s oil and gas sector is rapidly transforming on every front investment (both core and ancillary), scale of operations, discoveries and reserves, policy, legislation and new institutions.
Seismic Data coverage has increased: 2D seismic data totaled about 70,000-line kilometers in 2011, while 3D seismic coverage is over 24,000sq.km. Over 160 wells have so far been drilled in Ghana’s sedimentary basins.
Oil and gas companies that have explored onshore and offshore Ghana include Mobil, Shell, Volta Petroleum, Texaco, AgriPetco, Philips Petroleum, Amoco, PetroCanada, Arco, Agip, Nuevo Oil Company, Hunt Oil Company, Dana Petroleum, Santa Fe Energy Resources, Fusion, Devon Energy, Lukoil, Vanco Energy, Oranto Petroleum, Tap Oil, Ophir Energy, Afren Energy etc. IOCs that currently operate in Ghana include Kosmos Energy, Tullow, Anadarko, Sabre Oil and Gas Holdings, Hess Corporation, Vitol Upstream, Eni, AGM Petroleum Cola Natural Resources Limited, Medea Development Ltd holds, A-Z petroleum Products Ghana Limited, ECO Atlantic Oil and Gas Limited, etc.
GOVERNMENT’S POLICY DIRECTION
RENEWABLE ENERGY
The renewable energy sector is gradually growing to help increase power generation output. The government is committed to increasing the use of renewables to provide power in Ghana.
The Renewable Energy Act, 2011 (Act 832) was enacted to enable Ghana achieve a sustainable renewable energy mix and reduce our dependence on other sources of generation.
Government is committed to providing adequate, reliable and cost-effective electricity supply through timely power generation capacity additions and modernization of transmission and distribution infrastructure as well as ensuring universal access to electricity by 2020. The policy objective is to increase installed generation capacity from the current 4,674 MW to 5,000 MW by 2020.
Renewable Energy
The main policy issues in the renewable energy sub-sector are:
- Low level of application of new renewables (small hydro, modern biomass, wind, solar, and bio-fuels) in the national energy mix
- Over dependence and inefficient utilization of wood fuel resources.
Renewable Energy Policy Goals
The policy goals of the renewable energy subsector are:
- Achieve 10% contribution of modern renewables (excluding large hydro and wood fuels) in the electricity generation mix by 2020.
- Reduce the demand on wood fuels from 72% to 50% by 2020.
- Promote development and use of other biomass technologies including biogas, biofuels, gasification and waste-to-energy.
SOLAR
Research has found that, driven by the growing affordability of LED colour TVs and other appliances (reflecting consumer aspirations for modern energy services), rural households in off-grid areas are willing to pay for quality solar energy services (World bank, 2016). Potential for solar energy production lies in the northern region and the northern parts of Brong-Ahafo and Volta Regions, where there are very high radiation levels received, with monthly average of between 4.4 and 6.5kWh/m2/day. Despite this abundance, solar power still contributes very little to energy production in Ghana.
WIND
Ghana has about 2,000MW of raw potential for wind energy. It is currently reliably projected that over 300 MW installed capacity of wind farm could be established at the coastal part to generate over 500 GWh to supplement the nation’s energy supply