Energy & Mining

Power Through

The Power Sector

Ghana is facing headwinds. The rising star of Africa's upward momentum has been weighed down by dumsor—the local name given to power outages that have steadily plagued the economy for the last three years.

At the time of writing, the capital city, Accra faces an average of a day and a half without power per week. Ironically, Ghana is currently exporting power, as a source of foreign exchange, to its neighbors; Benin, Burkina Faso, and Togo.

Dumsor has been caused by a combination of factors. The first is low levels of rainfall, which has impeded hydroelectric-power at Lake Volta, which accounts for just over half of Ghana’s installed capacity, with three stations at the Volta River basin: Akosombo, Kpong, and Bui.
The second factor is the erratic, occasionally non-existent supply of Nigerian gas coming through the West African Gas Pipeline (WAGP).

Ghana’s total demand, including export, far exceeds available power generation capacity. Current peak demand, at the time of writing, is about 2,400MW, and there is an installed capacity of 2,800MW. However, only 1,6000MW is available at peak, and 1,4000MW at off peak, and demand is growing at roughly 10% per annum. So far there has been a flurry of activity, and many proposed solutions about how to make up this 800MW deficit. According to the Ministry of Power there will be an additional 5,000MW generating capacity coming into the grid from natural gas, clean coal, and renewable energy sources within the next five years.
Dr. Kwabena Donkor, Minister of Power for Ghana at the time of writing, also announced plans to push through an Emergency Power arrangement in July 2015. This is expected to beef up supply, adding about 1,000MW by the end of 2015.

The government is exploring the construction of a 700MW coal plant in a deal that is not yet finalized, but the plant could be realized by 2017, at the cost of $1.5 billion, by Sunon Asogli, a JV between China’s Shenzhen Energy Group and Ghana’s Asogli Power.

The main power generation utility, the Volta River Authority (VRA) is also facing reform. In order to respond quicker to the changing electricity landscape the Government has announced its intention to create two separate entities from the VRA. A new publicly owned entity would be formed to concentrate on thermal generation in partnership with private-sector actors while the remainder will concentrate on hydro generation.
Minister of Energy and Petroleum, Emmanuel Armah-Kofi Buah, has indicated that the government is approving a range of projects that would add over 300 to 400 million cubic feet of gas to the national stream of natural gas, in order to satisfy the increasing demand for industry powered by gas, which the World Bank has described the development of the associated gas fields as a “top priority” for the country, given its hugely overstretched electricity generation capacity.

In January 2015, the government, Eni, and Vitol announced the launch of activities to develop the Sankofa Gye-Nyame fields, which are expected to provide enough gas to power Ghana’s thermal power plants for at least 15 years. The development is known as the Offshore Cape Three Points (OCTP) Integrated Oil and Gas Project, and comprises of five fields. The project is expected to access around 1.5 tcf of gas-in-place and around 500m barrels of oil-in-place. Production is expected to commence in 2017, increasing through 2018, and reaching 80,000 barrels of oil equivalent per day in 2019. A questions mark still hangs over who will be responsible for gas. Ghana Gas was set up to be the sole aggregator of gas in the country and the only entity mandated by law to build, own, and operate infrastructure required for gathering, processing, transporting and marketing. However, the oil companies that discovered gas deposits offshore insist they want to process before passing on to Ghana National Gas Company.

All the same, solutions are being implemented.

Dr Akinwumi Adesina, President of the African Development Bank told local news in October; “All the investments made in the energy sector should allow Ghana to have about 4,000MW in the next few years. With that Ghana would have more than it needs, given its average consumption of about 2,000MW. That means there will be an average of 2,000MW that can be sold.” Developing bankable power projects that deploy private-sector capital in partnership with government resources are becoming the norm across the continent. The Africa Finance Corporation, the Nigeria-based multilateral development fund, for example, initiated two power projects on the continent — a 300MW wind power project in Kenya’s Lake Turkana region and a 350MW thermal power plant in Ghana.

Likewise, Greek power contractor Metka has signed an agreement with the Ghanaian government worth $350 million to provide fast-track engineering, procurement and construction services and operations and maintenance support for a 250MW gas power plant.

With such a buzz of activity and willingness to partner with private entities, the Ghanaian power sector looks to be recuperating and coming back stronger, with not just enough capacity to satisfy its own needs, but to maintain exporting power to the wider region.

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