From Generation to Distribution: Investigating Ghana’s Power Sector’s Value Chain and its Implications for Reliable, Affordable, and Clean Energy Supply
Summary of Issues
- The power sector’s role in economic growth is underscored by its function in providing stable electricity. The government manages a significant portion of the sector’s interconnected transmission networks and oversees policy direction and regulation. Thus, its actions or inactions government can change the trajectory of the power sector due to its multifaceted oversight responsibilities.
- The government has taken steps to address Ghana’s power sector challenges. While these initiatives are promising, their execution has been problematic, highlighting the need for further effort and innovation to ensure a sustainable power sector in Ghana.
- Natural gas is an important fuel source for Ghana’s thermal plants. However, the limited capacity of the existing gas processing facility hinders the country’s ability to fully commercialise gas supply from the producing fields. Consequently, Ghana has flared large volumes of gas which could have been used for the power sector.
- The notion of excess generation capacity in Ghana’s power sector has become a subject of political discourse. To accurately assess excess capacity, it is crucial to consider available generation capacity, peak demand, and reserve margin. Relying solely on the nominal difference may oversimplify the analysis. While there might be a nominal difference between total installed capacity and peak demand, the limitations of certain plants indicate that Ghana’s power sector is not burdened by a disproportionate surplus of generation capacity.
- Efficient power transmission relies on a strong transmission network to bolster the reliability of the power supply. Unfortunately, revenue shortfalls exacerbate GRIDCo’s challenges in making essential investments in crucial transmission infrastructure.
- The distribution sector generates revenue to meet the financial needs of entities within the power sector value chain. However, inefficiencies in the sector’s governance have resulted in substantial under-recoveries, contributing to excessive debts and undermining the sustainability of the power sector.
- Despite substantial investments in power distribution infrastructure, technical and commercial losses in Ghana’s power sector have risen from 24% to about 30% between 2014 and 2021. This occurrence underscores the urgent need for comprehensive reforms and improved management practices in power distribution.
- The government continues to make efforts to expand the national energy mix to include renewable energy technologies. The successful introduction and utilisation of renewable energy technologies would require creating an enabling environment for renewable energy companies to thrive.