Africa Destiny: Power and Energy Challenges in Ghana

Ghana’s energy sector has significant debt. The country’s electricity access rate is 86.63%, with 50% of rural residents and 91% of urban residents connected to the electricity grid.
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In 2021, 86.63% of Ghana’s population had access to electricity. This is a 0.86% increase from 2020. 50% of rural residents and 91% of urban residents are connected to the electricity grid.

Ghana’s electricity access rate is one of the highest in sub-Saharan Africa. The Bank’s April 2023 Africa’s Pulse Report scored Ghana 81.2%. This was followed by:

Cote D’Ivoire (77%)
Kenya (76%)
Senegal (73.5%)
Nigeria (69.1%)
Rwanda (65%)
The Gambia (61%)

Ghana’s installed capacity is around 4,300 MW. In 2018, Ghana’s peak demand exceeded its installed capacity by more than 2,000 MW.

Ghana’s electricity demand is expected to rise from 21.3 thousand gigawatt hours in 2021 to over 36.5 thousand gigawatt hours in 2030. However, Ghana’s actual availability of electricity rarely exceeds 2,400 MW due to:

Changing hydrological conditions
Inadequate fuel supplies
Dilapidated infrastructure

Ghana’s energy sector is expected to see generation/supply shortfalls of at least:

467MW in 2025
916MW in 2026

Ghana’s power supply sources include:

Hydroelectricity
Thermal fueled by crude oil, natural gas, and diesel
Solar
Imports from La Cote D’Ivoire

Ghana’s energy supply is dominated by thermal generation (68%), followed by hydropower (31%). Gas is the largest source of electricity production, followed by hydropower.

Ghana uses both renewable (10%) and non-renewable (90%) forms of energy.

The most commonly used energy resources are:

Biomass (46.667%)
Oil (40.52%)
Natural gas (10%)

Ghana’s energy strategy is to diversify its energy portfolio and increase the role of renewables.

The government’s Renewable Energy Master Plan (REMP) aims to increase the country’s renewable energy capacity from 42.5 MW in 2019 to about 1390 MW by 2030.

The REMP is a US$ 5.6 billion investment plan, with more than 80% coming from the private sector. The plan is implemented over a 12-year time-space, from 2019 to 2030.

Ghana’s National Energy Policy focuses on the country’s vast mini hydro potential. Twenty-one micro- and medium-hydro power sites, with generation capacities ranging from 4kW to 325 kW, have already been identified as suitable for power generation.

Ghana’s energy mix is expected to provide affordable electricity at a generation cost below 4.5 cents/kwh.

Some ways to solve Ghana’s energy crisis include:

– Diversifying the electricity generation mix
– Expanding the prepaid metering system
– Having other independent power distributors
– Consulting energy experts and engaging civil society organizations
– Producing biofuels from plants like corn and soybeans
– Promoting the establishment of dedicated woodlots for wood fuel production
– Promoting the production and use of improved cookstoves
– Replacing high energy-consuming appliances with energy-efficient refrigerators, air conditioners, fans, and lighting systems

Other possible solutions to the global energy crisis include:

– Moving towards renewable resources
– Buying energy-efficient products
– Lighting controls
– Easier grid access
– Energy simulation
– Performing energy audits
– A common stand on climate change

Ghana Actual Energy Supply Chain Management:

According to the International Trade Administration, Ghana’s energy sector currently relies on hydro and thermal generation fueled by crude oil, natural gas, and diesel. Thermal generation accounts for nearly 66% of Ghana’s power generation mix, with hydro accounting for 33%. In total, Ghana’s electric access rate stands at just over 86%, with 91% of urban residents and 50% of rural residents being actively connected to the electricity grid.

Ghana imports energy to secure its supply and promote inter-regional energy trade. Ghana imports natural gas from Nigeria through the West African Gas Pipeline. Ghana also imports petroleum fuel because it has limited oil reserves.

Ghana’s overreliance on fossil fuels makes its energy insecure and threatens its economic growth and development. The country’s power sector cannot meet demand for electricity. The Ghanaian government is turning to liquefied natural gas (LNG) as an alternative fuel source.

These are the prevaling conditions of the Energy sector in Ghana and the Government is seeking an exit from such dilemna and challenging energetic deficiencies.

The Energy Commission of Ghana was established in 1997. The commission’s main objectives are to:

Regulate and manage Ghana’s energy resources
Coordinate all energy-related policies
Provide the legal, regulatory, and supervisory framework for all energy providers in the country
Grant licenses for transmission, wholesale, and supply
Advise the government on energy matters

The commission consists of seven commissioners responsible for: Licensing, Renewables, Infrastructure, Efficiency.

The Ministry of Energy is responsible for:

Formulating, monitoring, and evaluating energy policies, programs, and projects
Supervising and coordinating the activities of Energy Sector Agencies
Implementing the National Electrification Scheme (NES)
Formulating and implementing laws and policies, such as the Renewable Energy Act of 2011

Ghana Current Response to the Energy Crisis

Ghana unveiled its $550 billion Energy Transition and Investment Plan (ETIA) at the UN General Assembly on September 21, 2023. The plan aims to achieve net-zero emissions and universal energy access by 2060. It also aims to create 400,000 jobs.

The plan is expected to be the government’s main roadmap for achieving these goals. It will help Ghana achieve net-zero energy-related carbon emissions by deploying low-carbon.

The plan includes:

Achieving net-zero emissions
Creating 400,000 jobs
Universal energy access
150 GW of solar PV
Hydropower, biomass, solar energy, and wind energy

Foreign investments in Ghana

Kasoa, C/R, Ghana – With the inauguration of the Kasoa Bulk Supply Point (BSP) today, the United States has completed its nearly six-year $316 million investment in Ghana’s energy infrastructure, supporting more reliable power for hundreds of thousands of schools, hospitals, offices, and homes in Ghana. Jun 1, 2022

USD 200,000 for joint ventures with a Ghanaian partner

USD 500,000 for enterprises wholly owned by a non-Ghanaian

USD 1 million for trading companies

Foreign Investments in Ghana’s Energy Sector:

Ghana’s energy sector is becoming an increasingly attractive destination for foreign investment. The country has a high potential for solar energy generation and a favorable investment climate for solar energy companies.

Here are some foreign investments in Ghana’s energy sector:

United States – The United States invested $316 million in Ghana’s energy infrastructure. This investment supported more reliable power for hundreds of thousands of schools, hospitals, offices, and homes in Ghana.
IFCAs of March 2023, IFC’s investment portfolio in Ghana was $446 million in financing and $12.5 million in advisory services.

Ghana’s top investing economies are: South Africa, The Netherlands, France, Mauritius, China.

China is the world’s largest investor in Africa in terms of total capital. In 2020, China’s total stock of foreign direct investments (FDI) in Ghana was around $1.6 billion.

In the first half of 2021, Ghana’s largest investment partners were: