Authored By:
Riverson Oppong, PhD (r.oppong@geinsight.com)
Ishmael Ackah, PhD (ackish85@yahoo.com)
Background: Ghana’s Energy Mix
The Energy Outlook for Ghana outlines projections for energy demand and supply for the year 2021 and beyond. The report provides an overview of the actual performance of the energy sector, specifically the electricity and petroleum industry subsector of the preceding years (2000-2020), comparing actuals to projected values.
Ghanaians had traditionally relied on biomass and waste, particularly firewood and charcoal; until oil and natural gas production steadily increased due to a growing domestic energy demand and an increase in fossil fuel consumption. Over the past decade, thermal production of electricity has witnessed a significant upsurge due to the use of natural gas for energy generation. Ghana exports its crude oil production to international markets, and the country’s natural gas production is mostly used to fuel its domestic power plants.
Ghana’s energy sector has evolved over the last two decades. This can be attributed to the regular regulatory reforms as well as increased investment into the energy industry. Furthermore, the discovery of oil and gas in commercial quantities in 2007 and subsequent production in 2010, has enhanced the country’s growth in the energy space. The country started oil production in 2010 with one field but can now boast of three oil producing fields namely; Jubilee, Tweneboa Enyenra Ntomme (TEN) and OCTP Sankofa Gye Nyame. Previously (from 2010 to 2016), all of Ghana’s natural gas was imported from Nigeria via the West African Gas Pipeline (WAGP), which runs east to west from Nigeria to Ghana.
Ghana’s electricity sector was tormented with several challenges related to erratic power supply which resulted in an extensive effect on the socioeconomic condition of the nation.
A number of regulatory reforms, private sector investments and policy initiatives by successive governments have led to relatively stable power supply, and increased access to electricity (about 86% of the population). However, challenges such as suppressed renewable energy investments and liquidity problems of some state owned energy entities remain and need to be addressed.
Electricity Generation in Ghana
The total electricity generation increased more than twofold, from 7,224 GWh in 2000 to 18,189 GWh in 2019. The share of hydro in the total electricity generation decreased from 91.5% in 2000 to 39.9% in 2019, whilst that of thermal increased from 8.5% in 2000 to 59.8% in 2019. This represents an annual thermal capacity growth rate of 16.3%.
Utility scale electricity generation from the non-hydro renewable sources commenced with the construction of a 2.5 MW solar plant in Navrongo in the Upper East region; the first grid connected solar plants in the country by the Volta River Authority in 2013. The electricity generated by the VRA solar plant in that year was 3 GWh.
Subsequently, generation of electricity from renewable sources increased to 52 GWh by the end of 2019 with the additional 40 MW solar plant and a 100kW biogas plant. At the end of 2019, electricity generated from renewable sources constituted 0.3% of the total electricity generated in the country, (Fig. 1&2 ).
In line with the Renewable Energy Development Programme, there have been additional solar projects. For instance, as at the end of 2020, 9 MW of VRAs solar was in operation whilst 13 MW was under construction. The development in the utility scale solar projects have been championed by the private sector, Bui Power Authority and the Volta River Authority. There are other future plans. Bui Power Authority has plans of constructing 700 MWp of solar by 2024. Indeed, by December 2021, the installed capacity non-hydro renewable energy was 151 MW, representing 2.8% of total installed generation capacity. The non-hydro renewable energy sources include large solar, small scale solar, waste to energy (biogas), among others.
Fig. 1&2: Historical Trend of Energy Generation Capacity Share
The country has set a target of achieving 10% of the electricity mix from non-hydro renewable sources by 2030 and a universal access rate by 2025. This is in line with the SDGs and the Integrated Power Masterplan (IPSMP) which calls for investments in solar, as the most optimal source of electricity. Other recommended fuels in IPSMP include wind and gas-fired thermal plants. To achieve this target and increase investments in renewable energy, the country requires US$5.6 billion from 2018 to 2030 to install 1363.63 MW green energy capacity according to the Renewable Energy Masterplan. Out of this, 80% is expected from the private sector . According to the Plan, this investment will lead to carbon savings of about 11 million tonnes of CO2 by 2030 as indicated in Ghana’s Intended Nationally Determined Contribution (NDCs).
Both policies and international commitments require that additional electricity capacity should satisfy the goals of sustainability, affordability, reliability and environmental-friendliness.
Table 1: Review of key energy plans, strategies and commitments
Source: Authors’ compilation based on documents from the Energy Commission
Ghana's power supply became erratic in early 1982/83, 1997, 2005/2006 and repeated in 2011. These were driven by several factors including reduced generation capacity due to a significant drop in water levels at the Akosombo Dam (Ghana's main hydro-electric dam) and some technical and financial challenges. The water level rose, in addition to increased natural gas supply, and investments in electricity generation. These factors contributed to the recent stable supply.
Electricity Demand
The share of thermal and renewable gas remained the same in the generation mix from 2019 to 2020. However, the use of Hydro energy reduced by 3.72% and thermal (LCO/HFO) increased by 3.73%, (Fig. 3 and 4 ).
Fig.3: Electricity Generation Capacity (2019)
Fig.4: Electricity Generation Capacity (2020)
In 2019, thermal gas was the highest share of the generation mix (57.82%) and LCO/HFO with a percentage of 1.18%. Hydro and non-hydro renewable also generated 40.71% and 0.29% respectively.
In 2020, thermal gas was the highest share of the generation mix (57.81%) followed by LCO/HFO with a percentage of 4.91%. Hydro and non-hydrorenewable also generated 36.99% and 0.29% respectively. This highlights the country’s large dependence on Gas for electricity generation.
Ghana’s Energy Mix Projections
Energy Forecast based on Historical Data
The total electricity generation is projected to increase more than twofold, from 19,664 GWh in 2020 to 41,712 GWh in 2030. The share of hydro in the total electricity generation is expected to decrease from 37.0% in 2020 to 18.5% in 2030. This can be attributed to an expected slowdown in hydropower energy generation as additional thermal plants for energy generation come online. The share of thermal is also expected to increase from 62.6% in 2020 to 70.4% in 2030, growing at an annual thermal capacity rate of 9%. The generation of electricity from non-hydro renewable sources is expected to increase from 78 GWh in 2020 to 4601 GWh by the end of 2030 owing to the current agenda to use cleaner energy for sustainability whilst protecting the environment. By 2030, electricity generated from non-hydro renewable sources is expected to constitute 11% of the total electricity generated in the country.
Figure 5. Total Electricity Generation by 2030
Figure 6. Share of different sources in electricity generation
Figure 7: Total generation capacity from different energy sources
By the end of 2030, thermal gas is still expected to have the highest share of the generation mix with a 70.4%.
The start of COVID-19 and measures to stop the spread of the disease, affected the demand and supply of energy in 2020. Nevertheless, the arrival of the COVID-19 vaccine throughout 2021, is expected to support the gradual return to normalcy in Ghana. As such, modest growth in Ghana’s energy demand and supply is expected at least to their pre-pandemic levels in 2021 and beyond Energy Forecast based on Policy Alignment
Ghana has signed on to a number of international protocols that have energy consequences. Historically, some of these protocols have either shaped the country’s policies, influenced energy supply targets or guided the energy generation mix.
On 6th August 2016, Parliament ratified the Paris Agreement. This was a significant step in developing strategic interventions that are necessary to prevent and adapt to climate change. This, in addition to the localisation of the Sustainable Development Goals contributed to a sense of urgency to the development of non-hydro renewable energy sources. Indeed, between 2015 and 2021, the country invested more than four times in utility scale non-hydro renewable energy sources than the previous 50 years. Other contributory factors include lower prices of solar and reform of the licencing process that encouraged investments. A very significant protocol that has shaped development planning and Outcomes across the world is the UN’s Sustainable Development Goal. Indeed, Goal 7, on universal access to affordable, reliable and clean and modern energy, and Goal 13, requires urgent action on climate change and its impacts. Based on these and other technological changes, hydro and non-renewable will generate 18.5% and 11.0% respectively by 2030. This indicates that though the country will heavily rely on gas as a major generator for electricity, the share of non-hydro renewable energy solar will quadruple by 2030.
Energy Fuel Supply Challenges
Hydro Fuel Risk
The impact of environmental damaging activities can be seen throughout the globe. Ghana’s weather have been subject to a high level of inconsistency leading to unpredictability rainfall patterns. There is the concern that water levels could be below minimum operating levels to guarantee sustainable operations in the coming years. In addition, other water bodies that were earmarked in the 1960s and 90s for additional hydro projected have been affected by unsustainable illegal mining and climate conditions.
Thermal Fuel Risk
Gas supply reliability from domestic and import sources remains a major risk to the country's electricity supply reliability. Although there is high installed generating capacity, gas supply sustainability remains one of the major risks to reliable electricity supply in Ghana.
Any disruptions in fuel supply, mostly gas, would render some thermal plants inoperable, which will negatively impact supply reliability. The most critical outage scheduled in 2021 was a planned shutdown of the Takoradi Distribution Station (TDS) and pipeline for maintenance works in mid-April 2021. Also, WAPCo plans to undertake one (1) pigging exercise of the WAGP to inspect and clean three (3) lateral lines at Cotonou (Benin), Lomé (Togo) and Tema (Ghana). The WAPCo maintenance is scheduled to coincide with the TDS maintenance. The planned shutdown maintenance at GNGC in October 2021 also affected gas supply and affected the energy mix as a result. Lastly, maintenance activities on gas importing facilities in Nigeria are expected to be undertaken in the third (3rd) quarter and involve a two (2) day shutdown at Itoki Station and a five (5) day pigging operation on the Itoki to Lagos Beach stretch of the pipeline. Though these disruptions are expected, it is likely that the risk will be mitigated with the potential of LNG as an alternative. Any disruption can be averted by securing alternative fuels supply for the power plants to make up for any shortfall in gas supply within the period.
Moratorium on renewable energy licenses: The current moratorium on renewable licenses has stalled investments especially in distributed solar generation. Any delay in lifting this moratorium will affect the expected share of non-hydro renewable energy in the energy generation mix.
Transmission Challenges
Insufficient reactive power compensation in some portion of the transmission network could lead to poor customer supply voltage in areas such as Kumasi, Accra and some parts of the Western region. Due to project financing issues, work on the 330kV Anwomaso – Kintampo transmission line and 161kV Volta – Achimota – Mallam corridor upgrade projects have delayed, but work is expected to resume in 2021. The 330kV Anwoamso – Kintampo line is the remaining section of the 330kV Central Transmission Backbone infrastructure. This project is to enable the NITS improve system stability whilst exporting at least 100MW power to Burkina. Due to the delays in delivering the project, the 161kV Anwwomaso –Kumasi line is experiencing high loading contributing to system losses. Any contingency on the line will create severe system disturbances which may collapse the power system. GRIDCo must get the necessary support from Government and African Development Bank (AfDB) to complete this section of the line. The 161kV Volta-Achimota-Mallam Corridor is the most heavily loaded corridor on the Ghana grid, supplying power to the Capital and surrounding towns. It is made up of light capacity conductors which are at least 50 years old. In 2018, GRIDCo secured funds to replace all the towers and transmission lines with high-capacity conductors. The project has stopped due to project management issues and non-disbursement from AfDB. Transmission infrastructure deficit has to be dealt with in the short term to ensure widespread access to and reliability of electricity.
Conclusion
Ghana’s electricity has evolved over the years from thermal generation to predominantly hydro and a mixture of gas fired thermal plants, hydro, and solar. Successive governments have developed policies and interventions to open up the sector for private participation, set up independent regulatory institutions and introduced long term planning. Despite these, the country has moved from under-generation to over-generation over the past 40 years with its associated costs and discomfort. The challenges of low investments in transmission infrastructure and financial problems of some state owned enterprises are further exacerbated by climate change which has affected the hydro dams over the years. In looking at the future therefore, the energy transition, funding and deliberate effort to invest both natural gas and solar energy which have been found to be the optimal options for the country.
