Ghana’s electricity industry is unbundled into three main sub-sectors, namely electricity generation, transmission and distribution. The policies of government for the electricity sector are mainly in relation to these sub-sectors.
The National Energy Policy 2010 (the Policy) is the underlying policy guiding governmental actions and strategies in the power sector. Generally, the goal of the government was to become a major exporter of power in the West African sub-region by 2015. This was intended to be achieved through capacity addition, modernisation of transmission and distribution infrastructure. The policy also focuses on institutional and regulatory reforms intended to create competitive electricity markets.
The objective of the government under the National Energy Policy was to increase installed generation capacity from about 2GW to 5GW by 2015 and to achieve universal access by 2020.
As at 2014, Ghana had achieved only 2,830MW of installed generation capacity. According to the National Energy Statistics 2016 from the Energy Commission, Ghana increased its installed generation capacity from 2,830MW in 2014 to 3,656MW at the end of 2015. According to the 2017 and 2018 National Budgets, a total of 880MW of power capacity was added to the country’s installed generation capacity in 2016 to bring the installed capacity to 4,132MW. In 2017, a total of 445MW of power capacity was further added to increase the country’s installed generation capacity from 4,132MW to 4,577MW. According to the Volta River Authority (VRA) Power Generation Report, the current installed capacity is 4,420MW.
Under the Power Sector Development and Management Programme, the government completed installation works on the 340MW CenPower Project. The Ministry of Energy is also facilitating the relocation of the 450MW Karpowership from Tema to Sekondi to utilise gas produced from the Sankofa Fields. The 147MW (Phase 1) Early Power (which is 40 per cent complete) and the 192MW Amandi Power Projects are scheduled to be completed in 2019.
The policy objective for the transmission market is to provide an adequate, safe and reliable electricity transmission network. This may be achieved by supporting the mobilisation of commercial and domestic capital resources to supplement external funding for transmission infrastructure development. Also, the policy is to enforce technical regulations and operational standards, and to provide support for the maintenance of existing transmission infrastructure.
The policy objective for the distribution market is to seek adequate investment to improve the electricity distribution network and thereby reduce high system losses and improve the poor quality of electricity supply. This is intended to be achieved by assisting distribution utilities financially to improve their operations. In line with this objective, the government of Ghana, with funding from the Millennium Challenge Corporation, entered into a Concessionaire arrangement with the Power Distribution Services Limited (PDS), which saw PDS taking over the assets and operations of the Electricity Company of Ghana.
To secure future fuel supplies, the policy objective is to increase and diversify the fuel mix in power generation. The policy requires government to, among other things, support infrastructure for new fuel supply sources, develop coal power, and support regional integration of energy resources. The government also intends to achieve universal access to electricity by extending the reach of electricity infrastructure to all communities by 2020.
In line with the government’s Rural Electrification Programme, 122 out of a targeted 1,796 communities were connected to the national grid. The national electricity access rate is currently at 84.3 per cent. In 2019, a total of 1,250 communities are expected to be connected to the national grid.
With regard to electricity pricing, the government’s objective is to ensure that electricity pricing is efficient and competitive while providing rates that are affordable.
Power sector reforms were initiated in 1995 to ensure an efficient and effective power sector and also to allow increased private-sector investment and participation. The policy objectives include to promote competition in the generation of electricity through the development of a wholesale electricity market, create the environment for retail competition in the electricity market, facilitate the entry of independent power producers (IPPs), and ensure improved performance of electricity utility companies. In 2017, the Cabinet of Ghana approved the full operationalisation of the Wholesale Electricity Market (WEM) and its associated mechanisms as well as the establishment of the Electricity Market Oversight Panel (EMOP). The WEM controls the supply and trading of wholesale electricity between retailers and generators. The EMOP is an 11-member panel tasked with monitoring the general performance of the Electricity Company of Ghana (ECG) and ensuring the smooth operation of the WEM.
The government has shown significant interest in developing the renewable energy industry, the government of Ghana has identified renewable energy as one of the options that could contribute to the overall energy supply mix and minimise the adverse effects of energy production on the environment.
To address the attendant effects of such short-term planning of the overall development of the renewable energy sector, the Renewable Energy Master Plan (REMP) has been developed with the goal of providing investment-focussed framework for the promotion and development of the country’s rich renewable energy resources for sustainable economic growth, contribute to improved social life and reduce adverse climate change effects. The successful implementation of the REMP would lead to an installed electricity capacity of 1,363.63MW (with grid connected systems totalling 1,094.63MW)
The strategic policy focus for the sector is to attract investment to improve and expand the capacity of the existing infrastructure to deliver reliable power supply services in the short to long term and to be net exporter of electricity in the West African sub-region.
In 2014, the government set up the Ministry of Power as part of a restructuring of the power sector to ensure more stability and security of power. Prior to this, the Ministry of Energy had the oversight responsibility for the power sector. The Minister responsible for power is mandated to drive the sector and achieve the national objective of achieving sustainable generation, supply and efficiency of power to match the growth the economy is experiencing. The Ministry of Power has oversight responsibility for all the regulatory activities and generally provides policy and investment direction in the power sector. In 2016, with the change of government, the new government replaced the Ministry of Power with the Ministry of Energy to develop and ensure reliable, high-quality energy services at minimum cost to all sectors of the economy through the formulation, implementation, monitoring and evaluation of energy sector policies.
Ghana has two main regulatory agencies for the power sector, namely the Energy Commission and Public Utilities and Regulatory Commission.
The Energy Commission Act 1997 (Act 541) (the Energy Commission Act) established the Energy Commission. The commission’s main object is to regulate and manage the utilisation of energy resources in Ghana and to coordinate all policies in relation to them. The commission is responsible for granting licences to public utilities for the transmission, wholesale supply, distribution and sale of electricity and natural gas in Ghana.
There are a number of subsidiary legislations and guidelines enacted under the authority of the Energy Commission Act for the proper management and regulation of the power sector of Ghana.
The Public Utilities and Regulatory Commission Act 1997 (Act 538) (the PURC Act) (as amended), established the Public Utilities Regulatory Commission (the PURC). The PURC’s responsibility is to approve rates charged by public utilities, ensure competition among public utilities, monitor standards of performance of public utility service provision and ensure the protection of consumer rights.
There are several other acts of parliament, legislative instruments and sector codes enacted for specific purposes within the electricity industry. The Volta River Development Act 1961 (Act 46) (the VRA Act) established the oldest power entity in Ghana - the Volta River Authority (VRA). The VRA is wholly owned by the government of Ghana. The VRA, through its subsidiary, the Northern Electricity Development Company (NEDCo), is responsible for electricity distribution in the northern regions of Ghana. The Electricity Company of Ghana (ECG), a previously wholly state-owned utility company, is responsible for the distribution of power in the southern regions. The VRA Act tasked the VRA with the responsibility to generate electricity by means of the hydropower of the Volta River and by any other means. The VRA also supplies electrical power to distribution companies, bulk customers and the townships of Akosombo and Kpong.
As part of power sector reforms in 2005, the VRA’s mandate was restricted to electricity generation and the electricity transmission functions of the VRA were transferred to the Ghana Grid Company (GridCo). GridCo is responsible for operation of the National Interconnected Transmission System (NITS), bulk power purchase of electricity from generators of electricity and sale to NEDCo and ECG. Independent Power Producers who intend to transmit electrical power over the NITS are required to enter into a connection agreement with GridCo.
In 2007, Parliament enacted the Bui Power Authority Act 2007 (Act 740) (the Bui Power Act) which established the Bui Power Authority to oversee the development of the Bui hydroelectric power project on the Black Volta River and any other potential hydroelectric power sites on the Black Volta River.
The Renewable Energy Act 2011 (Act 832) (the Renewable Energy Act) is the most recent energy related legislation geared towards the encouragement of Ghana’s drive to boost the renewable energy sector.
The object of the Renewable Energy Act is to provide for the development, management and utilisation of renewable energy sources for the production of heat and power in an efficient and environmentally sustainable manner.
In line with the policy objectives under the Renewable Energy Act, the Energy Commission (Local Content and Local Participation) (Electricity Supply Industry) Regulations, 2017 (L.I. 2354) was made to ensure, among others, that an enabling environment was created to ensure maximum use of financial capability, expertise, goods and services and to create employment for Ghanaians, promote businesses in the electricity supply industry and to retain the benefits in Ghana.
The Energy Commission developed the National Electricity Grid Code (the Grid Code) in 2009, which is intended to set out the requirements, procedures, practices and standards that govern the development, operation, maintenance and use of the NITS in Ghana.
The over-arching objective of the code is to ensure that NITS provides fair, transparent, non-discriminatory, safe, reliable, secure and cost-efficient delivery of electrical energy.
The Grid Code describes the responsibilities and obligations associated with all the functions involved in the supply, transmission and delivery of bulk electric power and energy over the NITS including the functions of the electricity transmission utility (ETU), a NITS asset owner, a wholesale supplier, a distribution company and a bulk customer.
To ensure that electric power is produced, transmitted and distributed in an environmentally sustainable manner, the Environmental Protection Agency Act 1994 (Act 490) (the EPA Act) was enacted in 1994. The EPA Act established the Environmental Protection Agency (EPA) as the principal environmental watchdog in Ghana.
All electricity utilities must receive an environmental permit from the EPA before they undertake any project. The EPA ensures compliance with the laid down environmental impact assessment procedures in the execution of electricity projects.
The existing legal regime envisages a spot as well as a bilateral market for power trading. The present position is largely bilateral as there are not yet enough players for a fully functioning liquid spot power trading market. The Ghana Grid Company (GridCo), as market operator, is currently working at establishing systems and procedures to support enhanced market operations.
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