Guide to Electric Power in Ghana

First Edition

RESOURCE CENTER FOR ENERGY ECONOMICS AND REGULATION INSTITUTE OF STATISTICAL, SOCIAL AND ECONOMIC RESEARCH UNIVERSITY OF GHANA, LEGON

July 2005

Guide to Electric Power in Ghana

First Edition

RESOURCE CENTER FOR ENERGY ECONOMICS AND REGULATION Institute of Statistical, Social and Economic Research University of Ghana P. O. Box LG 74 Legon, Accra Ghana

Telephone: +233-21-512502/512503 Fax: +233-21-512504

For additional copies of this report contact:

The Co-ordinator Resource Center for Energy Economics and Regulation Institute of Statistical, Social and Economic Research University of Ghana P. O. Box LG 74 Legon, Accra Ghana Telephone: +233-21-512502/512503 Fax: +233-21-512504

Guide to Electric Power in Ghana

Outline

1. FACTS ON GHANA’S ELECTRIC POWER 1 1.1 Who uses electricity in Ghana 1 1.2 Electricity and population growth 2 1.3 Organisations 3 1.4 Electric power system 3 1.5 How much does it cost and how much do we pay 5 1.6 Electric power and Ghana’s neighbours 7 2. THE BASICS OF ELECTRIC POWER 9 2.1 Introduction 9 2.2 Defining and Measuring 9 2.3 Generating Electricity 11 2.4 Transmission and Distribution 11 2.5 Transmission Constraints 12 2.6 Distribution 13 2.7 The Electric Power Industry 15 3. HISTORY OF ELECTRIC POWER IN GHANA 16 3.1 Introduction 16 3.2 Before Akosombo (1914 to 1966) 16 3.3 The Hydro Years (1966 – Mid 1980s) 17 3.4 Thermal Complementation – The Takoradi Thermal Power Plant 20 3.5 Current Power System 23 3.6 Need for Additional Generation 23 4. REGULATION AND POLICIES 25 4.1 Introduction 25 4.2 History of electricity policy and regulation 26 4.3 Restructuring of electricity sector 28 4.4 Current regulation of electric power in Ghana 29 5. MAJOR ELECTRIC POWER ISSUES 30 5.1 Consumer issues 30 5.2 Electric Power and Economic Development 31 5.3 Environment and Energy Policy Issues 32 5.4 Financing and Operations 36 5.5 Performance of Ghana’s Electric Power Industry 38 6. FUTURE TRENDS 42 6.1 Introduction 42 6.2 Technology changes 42 6.3 Financing 44 6.4 Industry Re-organisation 46 6.5 Electric power and Ghana’s neighbours – West African Power Pool 50 Appendix 1: Ghanaian Electricity Infrastructure 54 Appendix 2: Energy Sources for Generating Electricity 56

iv Guide to Electric Power in Ghana

Preface

his ‘Guide to Electric Power in Ghana’ is published by the Resource Center for Energy Economics and Regulation (RCEER) which is based at the Institute of Statistical, Social Tand Economic Research (ISSER), University of Ghana. It is published for two key reasons: first, the guide will provide comprehensive facts on Ghana’s electric power sector. In doing so it provides the basics, history, regulations and policies affecting electric power generation in Ghana. The document evaluates the future prospects of the industry, discuss- ing at length major issues and challenges facing electric power generation in Ghana, particularly financing. It also assesses the role of consumers and their critical contribution towards the maintenance of the sector.

Secondly, it was envisaged that the process of putting together this guide will promote greater collaboration between RCEER and all stakeholders. As a newly established center, RCEER seeks to collect, store, process and disseminate data and knowledge on the energy sector; conduct research to support energy sector development and governance; develop teaching material for both academic and professional audience; and educate the public on energy related issues.

This ‘Guide to Electric Power in Ghana’ has six chapters. Chapter one discusses consumption, expenditure and revenue patterns of electricity and the entire electric power system in Ghana. Chapter two emphasises the basics of electricity, while Chapter three generally details the phases of power generation in Ghana and states the case for developing additional power generation facilities. Chapters four and five trace the policies and regulatory developments that influence electric power generation in Ghana as well as discuss reforms currently being undertaken within the industry to address major challenges. The final chapter summarises the major issues and looks at new technologies for the future development of electric power generation in Ghana and neighbouring countries.

Following a lot of consultation, considerable information and data have been assembled for the guide. The guide has been prepared to meet the needs of policy makers, practitioners, academics, media practitioners and the general public. Additionally, the guide serves as easy reference material for many who ordinarily would find it difficult to gain access to such information.

A number of individuals and organizations have contributed immensely to make this publication possible. We express our appreciation to USAID which funded the project. We also thank Dr. Michelle Foss and Dr. Gurcan Gulen, both of the Center for Energy Econom- ics, University of Texas, Austin, USA for their comments and assistance. We also thank Mrs Korantema Adi-Dako for her editing work and Mrs Helen Sunnu for her typesetting work.

Prof. Ernest Aryeetey Director, ISSER and Chairman, RCEER Steering Committee

Guide to Electric Power in Ghana

1. Facts on Ghana’s Electric Power

1.1 Who uses electricity in Ghana ith a customer base of heaters, electric cookers in addition to approximately 1.4 million, it a substantial amount of lighting Whas been estimated that 45- equipment and bulbs for the houses. 47 percent of Ghanaians, including 15- The majority of the rest of the residen- 17 percent of the rural population, tial consumers use electric power for have access to grid electricity with a lighting. per capita electricity consumption of 358 kWh. All the regional capitals have been connected to the grid. Electricity Table 1.1: ECG and NED Customer usage in the rural areas is estimated to population and energy consumption, be higher in the coastal (27 percent) 2004 and forest (19 percent) ecological Customer Number Energy zones, than in the savannah (4.3 of Consumption percent) areas of the country. In 2004, Customers (GWh) Ghanaians consumed 5,158 gigawat- ECG 1,200,000* 4,818 NED 188,344 340 thours (GWh) of electricity. It is TOTAL 1,388,344 5,158 estimated that about half of this *Includes active customers, non-active amount is consumed by domestic (or customers and bulk customers. residential) consumers for household uses such as lighting, ironing, refrigeration, air conditioning, television, radio and the like. Commercial and The major characteristic residential industrial users account for the rest. arrangement is the “compound house” The majority of the customers are in multi-house phenomenon – essentially service territories of the Electricity a number of households living in a Company of Ghana (ECG) and the compound and sharing basic amenities Northern Electrification Department including one electricity metering (NED) and they are regulated (Table system. 1.1). However, there are also deregu- Apart from residential consumers lated consumers such as mines, and who are considered to be “small” aluminum companies, which account users, other consumers whose con- for one third of total consumption. sumption is not considered large by One industrial entity, VALCO, can virtue of their activities are the non- account for most of this amount when residential consumers as well as small it is operating normally. industrial concerns which are known Residential consumers comprise as special load tariff customers (SLT’s). middle and high-income urban con- Non-residential consumers comprise sumers. This consumer-class typically offices, banks and other small busi- uses a number of high energy consum- nesses. Since the 1980’s, the ing household appliances and items government has pursued a policy of such as air conditioners, fridges, water extending electricity to the rural

1 Guide to Electric Power in Ghana communities. The objective of this is to are more diversified than in rural encourage the use of electricity for areas, since access to a variety of productive use for cottage industries commercial fuels and appliances are and eventually the growth of these higher in the urban areas than in the industries into bigger consumers rural areas. Often the cost of alterna- which will become a source of em- tives is higher in the rural areas than it ployment and economic growth for the is in the urban where incomes are communities they are situated in. lower. Clearly, with the Ghanaian econ- 1.2 Electricity and population omy growing, increasing urban growth populations will consume more elec- In Ghana, electricity consumption has tricity. The Energy Commission (EC) been growing at 10 to 15 percent per estimates that residential demand may annum for the last two decades. It is reach anywhere between 7,000 and projected that the average demand 13,000 GWh by 2020 depending on the growth over the next decade will be rate of economic growth and urbaniza- about six percent per year. As a result, tion. The residential sector is not the consumption of electricity will reach only segment expected to grow; 9,300 GWh by 2010. The projected commercial and industrial consump- electricity growth assumption has tion will grow as well to 3,000 to profound economic, financial, social 10,000 GWh by 2020 according to the and environmental implications for the EC. If VALCO is fully operational, an country. The aspirations of developing additional 2,000 GWh should be countries for higher living standards expected. In order to meet this increas- can only be satisfied through sustained ing demand, new power generation as development of their electric power well as transmission and distribution markets as part of their basic infra- facilities will have to be built. structure. Electricity demand will Ghanaian governments have been grow much faster than overall eco- pursuing a national electrification nomic growth (4-5 percent per year) or policy. Still, more than half of the than population growth (which is less population remains without access to than two percent a year) because grid-based electricity. It is very expen- continuing urbanization will allow sive to build long-distance trans- newly urbanized segments of the mission lines to serve small communi- population to expand their electricity ties, especially when these consumption manifold. communities are relatively poor and Urbanization in Ghana is expected cannot afford to pay rates high enough to increase from around 40 percent in to cover the cost of these services. 2000 to about 55 percent in 2012 and Moreover, there is weak or no evi- eventually to 60 percent by 2020. A dence of increased economic activity in little more than a third of the urban communities that benefited from the population lives in Greater Accra and national electrification scheme. Smaller is expected to reach around 40 percent scale and locally installed generation by 2020. A considerable percentage of systems using solar panels, batteries household expenditure goes into and the like can be more affordable. energy. Energy sources in urban areas

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Nevertheless, rural electrification will The Energy Commission: Independ- continue to be a challenge for Ghana. ent agency that licenses private and public entities that will operate in the 1.3 Organisations electricity sector. EC also collects and There are several key entities in the analyses energy data and contributes Ghanaian electric power industry. to the development of energy policy They will be discussed and referred to for Ghana. in later chapters in more detail. In this The Private Generators: Domestic or section, we provide a short introduc- international entities that build power tion to each of these entities. generation facilities in Ghana. They The Ministry of Energy: Ultimate sell their electricity to VRA or ECG. body responsible for development of The Energy Foundation: a Ministry of electricity policy for Ghana. Energy – Private Enterprises Founda- The Volta River Authority (VRA): tion (PEF) initiative, which was set up State-owned entity that is responsible in 1997 to promote energy efficiency for generation and transmission of and conservation programmes. Initial electricity in Ghana. VRA operates the activities focused primarily on provi- largest generation facility in Ghana, sion of technical support to industries, the Akosombo hydroelectric plant. introduction of compact fluorescent lamps (CFLs) countrywide and public The Electricity Company of Ghana education. (ECG): State-owned entity that is responsible for distribution of electric- 1.4 Electric power system ity to consumers in southern Ghana, namely Ashanti, Central, Greater The physical equipment of an electric Accra, Eastern and Volta Regions of power system includes generation Ghana. ECG is the entity that consum- which makes electricity, a transmission ers interact with when they receive system that moves electricity from the and pay their bills or when they have power plant closer to the consumer service questions (billing, metering, and local distribution systems which line connection etc.). move electric power from the transmission system to most consumers. The Northern Electrification See Appendix 1 for a map of the Department (NED): A subsidiary of Ghanaian electric power system. VRA and responsible for power distribution in northern Ghana namely, Generation Brong-Ahafo, Northern, Upper East Electric power plants use coal, lignite, and Upper West Regions. natural gas, fuel oil, and uranium to The Public Utilities Regulatory make electricity. In addition, renew- Commission (PURC): Independent able fuels include moving water, solar, agency that calculates and sets electric- wind, geothermal sources and bio- ity tariffs, educates customers about mass. electricity services as well as energy The type of fuel, its cost, and gener- efficiency and conservation and en- ating plant efficiency can determine sures the effectiveness of investments. the way a generator is used. For example, a natural gas generator has a

3 Guide to Electric Power in Ghana high marginal cost but can be brought periods (see following). Energy is on-line quickly. Coal, lignite, and stored in the fuel itself before it is nuclear units have lower marginal converted to electricity. Once con- costs but cannot be brought on-line verted, it has to go out on the power quickly. They are used primarily to lines. provide the base load of electricity. Electricity Storage Technologies - Costs for fuel, construction and Compressed air, pumped hydroelec- operations and maintenance vary tric, advanced batteries and super- greatly among types of power plant. conducting magnetic energy storage For example, renewable generation are the four main technologies being plants such as solar or wind, have studied for possible electricity storage. virtually no fuel costs but are expen- Compressed air and pumped hydro sive to manufacture and install. are used in some locations around the Nuclear and coal fueled plants have world. low fuel costs but can be more expensive to construct and maintain. Coal Transmission System and lignite units also incur additional Power plants are located at one point costs for meeting air quality standards. and electricity must be moved from Natural gas plants have higher fuel that point to the consumer. The trans- costs than coal or nuclear, but have mission system accomplishes much of lower initial construction costs. this task with an interconnected system of lines, distribution centers, Ghanaian generators have an and control systems. installed capacity of more than 1,650 megawatts. About 1,100 MW is hy- As of December 2003, the existing droelectric and 550 MW is thermal transmission network system com- capacity burning light crude oil. prised 36 substations and approximately 4000 circuit km of 161 kV and Capacity vs. Actual Generation – In 69 kV lines. This includes 129 km of 2003, total demand was 8,500 gigawat- double circuit 161kV interconnection thours (GWh). Electricity from to Togo and Benin. There is also a hydroelectricity facilities provided single circuit, 220 km of 225 kV inter- 6,500 GWh. The rest of our electricity tie with La Côte d’Ivoire's network. is generated from thermal power plants burning light crude oil, which is Local Distribution Systems imported. Electricity is usually dispatched first from hydroelectricity Most homes and businesses use 120- stations because it is cheaper per kWh and 240-volt electric power while to generate power at these facilities as industries often use much higher long as water is available. voltages. Large commercial and industrial customers may bypass the local Storing Electricity – Unlike water distribution system, receiving electric- and natural gas, electricity cannot be ity at high voltage directly from the easily stored. This is a fundamental transmission system. challenge of the electric power system. There is no container or large "battery" that can store electricity for indefinite

4 Guide to Electric Power in Ghana

Table 1.2: Ghana electricity system capacity supply and demand balance

Generation Source Effective Percent of Total Installed percent of Capacity Available Capacity Installed (MW) Effective Capacity (MW) Capacity Hydro: Akosombo 850 1020 Kpong 120 160 Total Hydro 970 56 1180 55 Thermal: TAPCO 320 330 TICO 220 220 TDS 15 35 OECF Barge 0 125 Total Thermal 555 32 710 33 Imports 200 12 250 12

Total Installed Capacity Including 2140 100 Imports Total Available Effective Capacity 1725 100 81

System Coincident Peak Demand* 1200 70 56 Reserve Margin 525 30 25 *VRA System Peak Without VALCO @ 3 Pot-Lines TAPCO - Takoradi Power Company TICO - Takoradi International Company TDS - Tema Diesel Station

Substations on the transmission occupant needs, appliance use and system receive power at higher volt- weather events. ages and lower them to 24,900 volts or As of December 2003, the entire less to feed the distribution systems. distribution system comprised 8,000 The distribution system consists of the km of sub-transmission lines, 30,000 poles and wires commonly seen in km of distribution networks with 22 neighborhoods. At key locations, bulk supply points and 1,800 MVA of voltage is again lowered by transform- installed transformer capacity. ers to meet customer needs. Customers on the distribution 1.5 How much does it cost and system are categorized as industrial, how much do we pay? commercial and residential. Industrial Since most of the electricity is gener- use is fairly constant, both over the ated from hydro facilities that were day and over seasons. Commercial use built several decades ago, the cost of is less constant and varies over sea- generation has been pretty low (about sons. Residential and commercial use 2-2.5 US cents per kWh). But, as de- are more variable, sometimes changing mand grew and VRA had difficulty rapidly over the day in response to supplying electricity during years of low rainfall, new thermal plants were

5 Guide to Electric Power in Ghana built in the late 1990s. These plants (including a ‘postage stamp’ transmis- have costs ranging from 4.5 to 8 US sion charge of about 0.9 US cents) and cents per kWh, and sometimes higher, a DSC of about 3.4 US cents. depending on the cost of imported There are different tariffs for indus- fuels such as light crude oil. As a trial, commercial (non-residential) and result, the average cost of generation residential customers. The tariff for increased from about 2 US cents per residential customers has a lifeline kWh in the mid-1990s to about 6 US tariff for low consumption, which was cents in 2002. However, tariffs to end- set at 100 kWh per month maximum in users have not always reflected these 1989/90 but was downgraded to 50 costs due to government’s subsidized kWh per month maximum by the year tariff policy. 2000, which is still high compared to Electricity supply is divided into some neighbouring countries (for bulk electricity (transmission level) example, 20 kWh for Benin and 40 and final electricity (distribution level). kWh in Togo). The lifeline tariff is Average bulk electricity price was about US $1.5 (about 13,000 cedis) per below 4 US cents per kWh in the early month. The Government of Ghana 1990s until 1998 when it went up to subsidizes the lifeline consumers to the between 4.0 to 4.5 US cents per kWh, tune of about US $1 per month but it below the cost of generation. has been unable to make regular and After its establishment in 1997, the timely remittances to the utilities. The Public Utilities Regulatory Commis- total subsidies owed by the Govern- sion (PURC) started setting electricity ment to the distribution utilities by tariffs, in consultation with key stake- end of 2003 ranged from US $400,000– holders comprising the generators, 1,400,000. distributors and representatives of The average tariff for final electric- major consumers. PURC developed a ity in general, was below 5 US cents transition plan to trigger a gradual per kWh until 1998 when it shot up to adjustment to economic cost recovery between 5.2 - 8.2 US cents per kWh. by 2003. The automatic price adjust- Above 8 US cents per unit, though ment formula of the Transition Plan relatively low compared to some has been effected once in 2003 and neighbouring countries, it is not twice in 2004 with the latest adjust- attractive to induce high level com- ment in 2004 affecting only the Bulk mercial and industrial usage. At the Supply Tariff (BST) and the Distribu- same time, industrial customers tion Service Charge (DSC). The subsidize residential consumers. These country runs a block end user tariff policies are hampering the develop- system for electricity reaching all ment of an industrial base in Ghana classes of consumers. The sum of the that can compete in regional and BST and the DSC is the End User Tariff global markets and fuel economic (EUT) charged by the distribution growth. companies. The addition of thermal There are a number of other chal- generation has pushed up the End lenges in fixing the distortions in User Tariff to about 8.2 US cents per electricity tariffs. First, utilities need to kWh: a BST of about 4.8 US cents improve their operational efficiencies

6 Guide to Electric Power in Ghana so that they can be financially sound largest generators. In 2001, total re- while lowering tariffs for consumers of gional electricity consumption was electricity. A second and related 31.8 TWh, led by Nigeria's 14.6 challenge concerns the average tariff (45.8%). Ghana (8.8, 27.8%), and La collection efficiency, which has ranged Côte d'Ivoire (3.0, 9.4%) were the next from 75 to 85 percent. PURC has a largest electricity consumers. benchmark of 95 percent. Although There are roughly 234 million po- utilities are called upon to improve tential electricity consumers in the their customer relations and service region. Only about 33 percent of them quality; consumers have the duty to have access to electricity. Demand for procure legal connections and to pay electric power in the region is expected their bills regularly. Otherwise, the to grow by five percent annually over electricity system cannot be expanded the next 20 years, and much faster in reliably to meet the growing demand. some countries (see Figure 1.1). Based on the existing capacity of 10,000 megawatts, the region needs to in- 1.6 Electric power and Ghana’s crease its generating capacity by about neighbours 17,000 megawatts by 2023 to keep up West Africa's total installed electric with demand. Most of the countries in generating capacity was 9.4 gigawatts the region have small power utilities; (GW) at the beginning of 2001, the the largest three are in Nigeria (2,800 majority of which was thermal (about MW), Ghana (1,600 MW) and La Côte 59 percent). Ghana is the second d’Ivoire (1,200 MW). All others have largest electricity market after Nigeria less than 450 MW of capacity. both in terms of generation capacity The electric power transmission and consumption in the region, fol- system of Ghana is connected to its lowed by La Côte d’Ivoire. neighbours, La Côte d’Ivoire on the west by a 226-kV transmission line and Togo and Benin on the east by a 161- Figure 1.1: Average annual growth in electricity demand, 2003-2012 kV transmission line. Ghana also supplies electric power to Burkina Faso in the north through a low voltage distribution network. A high voltage transmission system between Ghana and Burkina Faso is being

developed. In 2002, La Côte d’Ivoire exported 1,563 GWh of electricity (worth about $77 million), of which 111 GWh went to Burkina Faso and another 233 GWh was transmitted across Ghana to Togo and Benin. Also in 2002, Ghana exported an additional Total electricity generation for the 170 GWh of electricity to Togo and region in 2001 was 33.8 terawatthours Benin. (TWh), with Nigeria (15.7), Ghana (8.8) and La Côte d'Ivoire (4.6) being the

7 Guide to Electric Power in Ghana

Under the leadership of the Eco- If this regional approach to electric- nomic Community of West African ity sector development is successful, States (ECOWAS), there is an effort to countries in the region are expected to create a regional power pool, starting save about $3-5 billion over 20 years. with Nigeria, Benin, Togo, Ghana, La The WAPP is now an ECOWAS prior- Côte d’Ivoire, Burkina Faso and Niger ity project for the New Partnership for which are already interconnected. The African Development (NEPAD). A project, known as the West African more detailed discussion on WAPP is Power Pool (WAPP), also aims to provided in Section 6.5. increase energy trade in the region and to promote foreign investment in the electricity sector.

8 Guide to Electric Power in Ghana

2. The Basics of Electric Power

2.1 Introduction lectricity travels fast, cannot be connected wires, electricity may travel stored easily or cheaply, and miles out of any direct path to get Ecannot be switched from one where it is needed. As a result of these route to another. These three princi- three principles, designing and operat- ples are basic to the operation of an ing an electrical system is complex and electric power system. Electricity is requires constant management. almost instantaneous. When a light is Energy is used in diverse ways and turned on, electricity must be readily the most commonly utilized form of available. Since it is not stored any- energy is heat. Energy may be ob- where on the power grid, electricity tained either directly or indirectly must somehow be dispatched imme- from energy sources; electrical energy diately. A generator is not simply or electricity, for instance, is always started up to provide this power. invariably produced indirectly from a Electric power must be managed so myriad of primary energy sources. that electricity is always available for Electricity is one of the key types of all the lights, appliances and other energy; it is made up basically of the uses that are required at any particular flow of tiny particles of matter called moment. electrons. Practically everything on Electricity travelling from one point this earth, including humans, contains to another follows the path of least electrons and therefore can be de- resistance rather than the shortest scribed as partly electrical. distance. With long distances of inter-

2.2 Defining and Measuring Electricity is simply the flow or exchange of electrons between atoms. The atoms of some metals, such as copper and aluminum, have electrons that move easily. That makes these metals good electrical conductors. Electricity is created when a coil of metal wire is turned near a magnet (Diagram 1). Thus, an electric generator is simply a coil of wire spinning around a magnet. This phenomenon enables us to build generators that produce electricity in power plants.

9 Guide to Electric Power in Ghana

The push, or pressure, forcing 1. Watt-hour (Wh): equal to one- electricity from a generator is ex- thousandth of 1 kWh or (1kWh/1,000) pressed as volts. The flow of electricity 2. Megawatt-hour (MWh): equal to is called current. Current is measured 1,000,000 Wh or 1,000 kWh in amperes (amps). 3. Gigawatt-hour (GWh): equal to Watts are a measure of the amount 1,000,000,000 Wh; 1,000,000 kWh or of work done by electricity. Watts are 1,000 MWh calculated by multiplying amps by volts. Electrical appliances, light bulbs 4. Terawatt-hour (TWh): equal to and motors have certain watt require- 1,000,000,000,000 Wh; 1,000,000,000 ments that depend on the task they are kWh; 1,000,000 MWh or 1,000 GWh. expected to perform. One kilowatt The kilowatt-hour (kWh) is also (1,000 watts) equals 1.34 horsepower. known as one unit of electricity. If a The watt (W) represents the unit of 100-W bulb burns continuously for 10 measure of electric power or rate of hours, then 1 unit or 1 kilowatt-hour of doing work. Large amounts of electric electricity has been used. This is power are denoted as follows: described in mathematical form as: 1. Kilowatt (kW): equal to 1,000 W 100-W x 10 hours = 1000 Wh = 1 kWh = 1 unit of electricity. 2. Megawatt (MW): equal to 1,000,000 W or 1,000 kW Most electric plants generate kilowatts (kW) or megawatts (MW) of electric 3. Gigawatt (GW): equal to power while the energy production 1,000,000,000 W; 1,000,000 kW or 1,000 could be in billions of units or kilo- MW watt-hours (kWh). 4. Terawatt (TW): equal to The average electricity customer in 1,000,000,000,000 W; 1,000,000,000 kW; Ghana uses about 350 kWh annually, 1,000,000 MW or 1,000 GW. with large differences between indus- A 60-W incandescent bulb will, for trial users and residential users as well example, require 60 watts of electric as between urban users and rural power to operate or light up. On the users. The world average for electricity other hand, a 3-kW electric kettle will consumption is about 2,900 kWh per need 3,000 watts of electric power to person. In high income countries, boil water. The kilowatt-hour (kWh) is average consumption is more than the basic unit of measure of the 8,000 kWh per person. amount or quantity of electricity Electricity is generated and usually (electric energy) used. A kilowatt-hour transmitted as alternating current is equal to one kilowatt of electric (AC). The direction of current flow is power supplied to or taken from an reversed 60 times per second, called 60 electrical power system for one hour. It hertz (Hz). Because of the interconnec- represents the amount of work done tion within the power grids, the by one kilowatt in one hour. Other frequency is the same throughout the representations of electric energy grid. Operators strive to maintain this utilized are the following: frequency at 60 Hz.

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Higher voltages in many instances can be transmitted more easily by direct current (DC). High voltage direct current (HVDC) lines are used to move electricity long distances. 2.3 Generating Electricity There are many fuels and technologies that can generate electricity. Usually a fuel like coal, natural gas, or fuel oil is ignited in the furnace section of a boiler. Water piped through the boiler in large tubes is superheated to produce heat and steam. The steam turns turbine blades which are connected by a shaft to a generator. Nuclear power plants use nuclear reactions to produce heat while wind turbines use the wind to turn the generator. A generator is a huge electromagnet surrounded by coils of wire which produces electricity when rotated (Diagram 2).

2.4 Transmission and Distribution Once electricity is given enough push (voltage) to travel long distances, it can be moved onto the wires or cables of the transmission system. The transmission system moves large quantities of

electricity from the power plant through an interconnected network of transmission lines to many distribution centers called substations. These substations are generally located long Electricity generation ranges from distances from the power plant. Elec- 13,000 to 24,000 volts. Transformers tricity is stepped up from lower increase the voltage to hundreds of voltages to higher voltages for trans- thousands of volts for transmission. mission. High voltages provide an economical High voltage transmission lines are way of moving large amounts of interconnected to form an extensive electricity over the transmission and multi-path network. Redundant system. means that electricity can travel over

11 Guide to Electric Power in Ghana various different lines to get where it losses that are associated with illegal needs to go. If one line fails, another connections and unpaid consumption.1 will take over the load. Most transmis- Switching stations and substations are sion systems use overhead lines that used to (1) change the voltage, (2) carry alternating current (AC). There transfer from one line to another, and are also overhead direct current (DC) (3) redirect power when a fault occurs lines, underground lines, and even on a transmission line or other equip- under water lines. ment. Circuit breakers are used to All AC transmission lines carry three- disconnect power to prevent damage phase current - three separate streams from overloads. of electricity travelling along three Control centers coordinate the opera- separate conductors. Lines are desig- tion of all power system components. nated by the voltage that they can One or more utilities can make up a carry. Voltage ratings are usually 345 control area. To do its job, the control kilovolt (kV) for primary transmission center receives continuous information lines and 138 kV and 69 kV for sub- on power plant output, transmission transmission lines. Transmission lines, ties with other systems, and voltages in Ghana are presently 69,000 system conditions. In Ghana, VRA and volts, 161,000 volts and 220,000 volts. It ECG manage their control centers as is envisaged to operate 330,000 volts the main transmission and distribution transmission lines along parts of the providers. coastal corridor of the country by 2008. Sub-transmission voltages are 33,000 2.5 Transmission Constraints volts and 34,500 volts. Apart from the There are some important constraints reduced level of voltage, a sub- that affect the transmission system. transmission system is similar to a These include thermal limits, voltage transmission network. limits, and system operation factors. Even though higher voltages help push along the current, electricity Thermal/Current Limits dissipates in the form of heat to the Electrical lines resist the flow of elec- atmosphere along transmission and tricity and this produces heat. If the distribution lines. This loss of electric- current flow is too high for too long, ity is called line loss. The loss will be the line can heat up and lose strength. higher if the lines are not well main- Over time it can expand and sag tained by the utilities. Around the between supporting towers. This can world, best utility practices lower the lead to power disruption. Transmis- technical line loss during transmission sion lines are rated according to and distribution to 7-8 percent. In thermal limits as are transformers and Ghana, this ratio was about 14 percent other equipment. in 2001 (11 percent during distribution and three percent during transmis- Voltage Limits sion). It is also estimated that there is Voltage tends to drop from the send- about 14 percent of non-technical ing to the receiving end of a

1 Transitional Plan for Electricity Rate Adjust- ment 2001-2002 prepared by the PURC.

12 Guide to Electric Power in Ghana transmission line. Equipment (capaci- sychronization of the generators and tors and inductive reactors) is installed preventing voltage collapse. Genera- to help control voltage drop. If voltage tors operate in unison at a constant is too low, customer equipment and frequency of 60 Hz. When this is motors can be damaged. disturbed by a fault in the transmission system, a generator may System Operation Constraints accelerate or slow down. Unless Power systems must be secure and returned to normal conditions, the reliable. Operating constraints are system can become unstable and fail. needed to assure that this is achieved. Voltage instability occurs when the Power Flows: Electricity flows over transmission system is not adequate to the path of least resistance. Conse- handle reactive power flows. Reactive quently, power flows into other power is needed to sustain the electric systems' networks when transmission and magnetic fields in equipment such systems are interconnected. This as motors and transformers, and for creates what are known as loop flows. voltage control on the transmission Power also flows over parallel lines network. rather than the lines directly connecting two points-called parallel flows. 2.6 Distribution Both of these flows can limit the ability The distribution system is made up of to make other transmissions or cause poles and wire seen in neighborhoods too much electricity to flow along and underground circuits. Distribution transmission lines thus affecting substations monitor and adjust circuits reliability. within the system. The distribution substations lower the transmission line Preventive Operations: The primary voltages to 34,500 volts or less. In way of preventing service failures Ghana, the median voltage is 11,000 from affecting other areas is through volts. The voltage is then further preventive operations. Some standards reduced by distribution transformers and guidelines developed by the (substations) to the utilization voltages utility or regulator or another entity of 415 volts three-phase or 230 volts are usually desired. Operating re- single-phase supply required by most quirements include (1) having a users. sufficient amount of generating capacity available to provide reserves for Substations are fenced yards with unanticipated demand and (2) limiting switches, transformers and other power transfers on the transmission electrical equipment. Once the voltage system. The guidelines recommend has been lowered at the substation, the that operations be able to handle any electricity flows to homes and busi- single contingency and to provide for nesses through the distribution multiple contingencies when practical. system. Conductors called feeders Contingencies are identified in the reach out from the substation to carry design and analysis of the power electricity to customers. At key loca- system. tions along the distribution system, voltage is lowered by distribution System Stability: The two types of stability problems are maintaining

13 Guide to Electric Power in Ghana transformers to the voltage needed by The effectiveness of a distribution customers or end-users. system is measured in terms of service Apart from voltage magnitude, continuity or reliability, service quality distribution systems differ in other in terms of voltage stability and lowest ways from transmission networks. The cost possible. Distribution systems also distribution network has more feeders face similar cost constraints for trans- or wires and more sources of power mission networks but to a much lesser supply than the transmission network. extent. Customers at the End of the Line The ultimate customers who consume electricity are generally divided into three categories: industrial, commercial, and residential. The cost of serving customers depends upon a number of factors including the type of service (for example, if service is taken at high or low voltage) and the customer's location with respect to generating and delivery facilities.

Industrial Industrial customers generally use The structure or topology of its electricity in amounts that are rela- network is also different: this may be tively constant throughout the day. either radial overhead feeder as are They often consume many times more often used in rural areas or loop/ring electricity than residential consumers. format that are the norm in urban Most industrial demand is considered areas. Ring circuits are usually inter- to be base load. As such it is the least connected to form networks used for expensive load to serve. Industrial enhancing reliability of supply to loads are expected to remain within customers. Radial feeders are cheaper certain levels over time with relatively than ring or loop circuits but are less little variation. Major industrial cus- reliable as there is only one path tomers may receive electricity directly between the substation and the cus- from the transmission system (rather tomer. A failure of any component than from a local distribution system). along the path results in complete loss of power delivery. Ring systems Commercial however provide two paths between Commercial loads are similar to the sources of power (substations or industrial in that they remain within service transformers) and every cus- certain levels over intermediate peri- tomer. Here, each loop is designed ods of time. Examples of commercial such that service can be maintained customers are office buildings, ware- regardless of a break at any point on houses, and shopping centers. the loop.

14 Guide to Electric Power in Ghana

Residential Central, Eastern, Volta and Greater Residential electrical use is the most Accra Regions while the Northern difficult to provide because house- Electricity Department has responsibil- holds use much of their electricity in ity for supplying power to customers the morning and evening and less at in the northern half of the country other times of the day. This is less consisting of the Brong Ahafo, North- efficient to provide and therefore a ern, Upper East and Upper West more expensive use of the utility's Regions. generators. Over time as homeowners There are four electric utilities in the buy new appliances and change life- country, namely VRA, ECG, NED and styles, the expected loads also change. TICO. The Public Utilities Regulatory Examples of residential loads are Commission (PURC) and the Energy individual residences. Commission (EC) are two government agencies that regulate the utilities for 2.7 The Electric Power Industry the public good rather than private Organizations that generate, transmit interests. The PURC is an independent or distribute electricity are called body with primary responsibility for (public) utilities due to the fact that they setting the tariffs that utilities charge have the capacity to satisfy essential their customers. The EC on the other human wants which lead to enhance- hand is tasked with licensing and ment of the quality of life. Utilities regulating the technical operations of may be vertically integrated in which the utilities. Both regulatory agencies case electric power generation, trans- also ensure fair competition in the mission and distribution are power market, enforce standards of performed by one organization. The performance for the provision of Volta River Authority (VRA), a gov- services to customers and protect both ernment owned utility, is largely customer and utility interests. responsible for electricity generation Electric energy policy formulation is and transmission in Ghana and it can the preserve of the Ministry of Energy be described as being partially inte- while the Energy Foundation, a non- grated. Limited generation is also governmental agency, has been very undertaken by a private company, the active in promoting energy efficiency Takoradi International Company measures. (TICo), a joint venture ship between VRA and CMS Energy Inc. of the USA. Two nationally owned utilities are responsible for electric power distribution in the country. These are the

Electricity Company of Ghana (ECG) and the Northern Electricity Depart- ment (NED), the latter being a directorate of the VRA. The Electricity Company of Ghana delivers power to customers in the southern half of the country comprising Ashanti, Western,

15 3. History of Electric Power in Ghana

3.1 Introduction 3.2 Before Akosombo here are three main periods of (1914 to 1966) electricity in Ghana. The first, Before the construction of the T“Before Akosombo”, refers to Akosombo hydroelectric plant, power the period before the construction of generation and electricity supply in the Akosombo Hydroelectric Power Ghana was carried out with a number Plant in 1966. This is a period of of isolated diesel generators dispersed isolated generation facilities with low across the country as well as stand- rates of electrification. The second alone electricity supply systems. These period, “the Hydro Years”, covers the were owned by industrial establish- period from 1966 to the mid eighties, ments such as mines and factories, the Volta Development era. The Volta municipalities and other institutions Development includes the Akosombo (e.g. hospitals, schools etc.). Hydroelectric Plant commissioned in The first public electricity supply in 1966 and the Kpong Hydroelectric the country was established in Sekondi Plant, completed in 1982. By the mid- in 1914. The Gold Coast Railway eighties, demand for electricity had Administration operated the system exceeded the firm capability of the which was used mainly to support the Akosombo and the Kpong Hydro operations of the railway system and Power Plants. The third period, the ancillary facilities which went with “Thermal Complementation”, from its operations such as offices, work- the mid eighties to date is character- shops etc. In 1928, the supply from the ised by efforts to expand power system was extended to Takoradi generation through the implementa- which was less than 10 km away. This tion of the Takoradi Thermal Power system served the needs of railway Plant as well as the development of the operations in the Sekondi and Ta- West African Gas Pipeline to provide a koradi cities. secure and economic fuel source for power generation. There have been In addition to the Railways Admini- efforts to link the power facilities of stration, the Public Works Department Ghana with neighbouring countries (PWD) also operated public electricity including the implementation of the supply systems and commenced Ghana-Togo-Benin transmission line limited direct current supply to Accra as well as the Ghana - La Côte d’Ivoire in 1922. On November 1, 1924, the interconnection carried out during the PWD commenced Alternating Current second period. As the economies of supply to Accra. The first major elec- Ghana and its neighbours continue to tricity supply in Koforidua grow, there are many challenges commenced on April 1, 1926 and remaining in meeting the increasing consisted of three horizontal single demand for electricity in the region cylinder oil-powered engines. Other while at the same time pursuing municipalities in the country which policies of fuel diversification, grid were provided with electricity in- integration and sector restructuring. cluded Kumasi where work on public Guide to Electric Power in Ghana lighting was commenced. On May 27, erators and other units of smaller sizes. 1927, a restricted evening supply Subsequently, three of the original arrangement was effected and subse- units were relocated to Tamale and the quently, the power station became others used as a source of spare parts fully operational on October 1, 1927. for the ten newer units. The plant The next municipality to be sup- when completed was the single largest plied with electricity in 1927 was diesel power station in Black Africa Winneba where with an initial direct and served the Tema Municipality. In current supply, the service was addition, through a double circuit 161- changed to alternating current (AC) by kV transmission line from Tema to extending the supply from Swedru. Accra, the Tema Diesel Plant supplied During the 1929-30 time frame, elec- half of Accra’s power demand. tricity supply of a limited nature was The total electricity demand before commenced in the Tamale township. the construction of Akosombo cannot Subsequently in 1938, a power station be accurately determined due to the operating on alternating current was dispersed nature of the supply re- commissioned. In 1932, a power sources and the constrained nature of station was established in Cape Coast electricity supply. Most of the towns and subsequently another station was served had supply for only part of the opened at Swedru in 1948. Within the day. In addition to being inadequate, same year, there was a significant the supply was also very unreliable. expansion of the electricity system and There was therefore very little growth Bolgatanga, Dunkwa and Oda had in electricity consumption during the electricity power stations established. period. Total recorded power demand The first major transmission extension of about 70 MW with the first switch of the electricity network in Ghana is on of the Akosombo station can be believed to be the 11 kV overhead used as a proxy for the level of electric- extension from Tema to Nsawam ity demand in the country just prior to which was put into service on May 27, the construction of Akosombo. 1949. Subsequently a power station was commissioned at Keta in 1955. 3.3 The Hydro Years (1966 – On April 1, 1947, an Electricity Mid 1980’s) Department within the Ministry of Akosombo Hydroelectric Project Works and Housing was created to The history of the Akosombo Hydroe- take over the operation of public lectric Project is linked with efforts to electricity supplies from the PWD and develop the huge bauxite reserves of the Railways Administration. One of Ghana as part of an integrated bauxite the major power generation projects to aluminium industry. The project undertaken by the Electricity Depart- was first promoted by Sir Albert ment was the construction of the Tema Kitson, who was appointed in 1913 by Diesel Power Plant. The plant was the British Colonial Office to establish built in 1956 with an initial capacity of what is known as the Geological 1.95 MW (3x 650 kW units). This was Survey Department. In 1915, while Sir expanded in 1961-64 to 35 MW with Kitson was on a rapid voyage down the addition of ten 3 MW diesel gen- the Volta River he identified the hydro

17 Guide to Electric Power in Ghana potential of the Volta River and later of the Volta river and by other means, outlined a scheme for harnessing the and of supplying electricity through a water-power and mineral resources of transmission system. The VRA was the then Gold Coast in an official also charged with the responsibility for bulletin. the construction of the Akosombo dam The idea was later taken up by and a power station near Akosombo Duncan Rose, who came across Kin- and the resettlement of people living ston’s proposals in the bulletin and in the lands to be inundated as well as became interested in the idea of a the administration of lands to be hydroelectric aluminium scheme. inundated and lands adjacent thereto. Efforts to develop the scheme further Construction of the Akosombo dam intensified in the 1950’s with the formally commenced in 1962 and the implementation of engineering studies first phase of the Volta River by Sir William Halcrow and Partners Development project with the on the possibility of producing power installation of four generating units from the Volta River by constructing a with total capacity of 588 MW each was dam at Ajena in the Eastern Region of completed in 1965 and formally Ghana. The Halcrow report, which commissioned on January 22, 1966. In was published in 1955 covered the 1972, two additional generating units climate and hydrology of the Volta were installed at Akosombo bringing Basin, evaporative studies, flood the total installed capacity to 912 MW. control, geology, power plant design By 1969, the Volta Lake, created and project cost estimates in detail. following the completion of the An independent assessment of the Akosombo dam, had covered an area Halcrow report by Kaiser Engineers in of about 8,500 km2 and had become the 1959 recommended the construction of world’s largest man made lake in the dam at Akosombo instead of Ajena surface area. It can hold over 150,000 as proposed in the Halcrow report. million m3 of water at its Full Supply This meant a complete redesign of the Level (FSL) of 278 feet NLD and has a dam and the power plant. The major shoreline length of about 7,250 km. advantage in relocating the dam was The Lake is about 400 km long and that the width of the gorge at the covers an approximate area of 3,275 proposed crest elevation of 290 feet square miles, i.e., 3 percent of Ghana. was only 2,100 feet compared with The drainage area of the Lake 3,740 feet at the Ajena site. However, comprises a land area of approximately at the Akosombo site, the maximum 398,000 km2, of which about 40 percent depth to bedrock was minus 80 feet as is within Ghana's borders. The other compared to minus 40 feet at the Ajena portions of the Volta Basin are in Togo, site. Benin, Mali and la Côte d’Ivoire. The average annual inflow to Lake Volta The Volta River Authority (VRA) from this catchment area is about 30.5 was established in 1961 with the MAF (37,600 million m3). enactment of the Volta River Development Act, 1961 (Act 46) and Kpong Hydroelectric Project charged with the duties of generating In 1971, VRA commissioned Kaiser electricity by means of the waterpower Engineers of USA to prepare a plan-

18 Guide to Electric Power in Ghana ning study, "the Ghana Power Study: hydroelectric capacity. Engineering and Economic Evaluation of Demand for Electricity during the Alternative Means of Meeting VRA Volta Development Period Electricity Demands to 1985", which recommended the construction of the By 1967, a year after the Akosombo Kpong Hydroelectric Project, with the Hydroelectric Plant was commis- dam located upstream of the Kpong sioned, most of the major electricity Rapids and the Power Station at Penu, consumers were switched off diesel- about 18 kilometers upstream of powered electricity supply and served Kpong. from Akosombo. The major customers of power were an aluminum smelter Other options studied included the and a national electricity distribution Bui Hydroelectric Plant on the Black company established in 1967. Volta, expansion of the Akosombo Plant with the installation of addi- The smelter was owned by the tional units and development of the Volta Aluminum Company (VALCO), Pra, Tano and lower White Volta a company incorporated in Ghana. In rivers. Thermal options, including 1962, VALCO signed a Master Agree- steam turbine plants and gas turbine ment with the Government of Ghana, plants were also considered, in addi- which included a Power Supply tion to the possibility of supply from Agreement for the supply of power Nigeria through the Ghana-Togo- from Akosombo to the 200,000-tonne Benin (then Dahomey) transmission aluminum smelter. VALCO thus line. These options, however, were served as the anchor customer for found to be less economic than the VRA and the first phase of the Volta Kpong hydroelectric development. Development. Construction of the The study also recommended that VALCO smelter commenced in 1964 thermal plants, which could be de- and was completed in 1967 and con- ployed faster than the Kpong plant, nected to the VRA transmission should be considered for implementa- system. tion in the event of a significant In 1967, the Electricity Corporation increase in demand. of Ghana (ECG), established by the In 1974, VRA commissioned Acres Electricity Corporation of Ghana International of Canada to carry out a decree of 1967 (NLCD 125) and Execu- review of the Kaiser Study. Following tive Instrument No. 59 dated June 29, the review, the plant site was changed 1967 vested all assets and liabilities of to Akuse. A major benefit of the the former Electricity Department in change was the drowning of the ECG. Kpong rapids as a result of the dam Total domestic load (excluding construction. This eliminated the VALCO) supplied from the grid in terrible insect, simulium damnosum, 1967 was approximately 540 GWh the agent of river blindness. with an associated peak demand of The Kpong Hydroelectric Plant was about 100 MW. Domestic consumption successfully commissioned in 1982 and in 1967 was therefore less than 20 gave an additional 160 MW of in- percent of the installed capacity at the stalled capacity to the existing Akosombo Station.

19 Guide to Electric Power in Ghana

Between 1967 and 1976, domestic curtailed and export supplies to Togo consumption more than doubled, and Benin were reduced. growing from about 540 GWh to about 1,300 GWh. The average annual 3.4 Thermal Complementation growth rate was about 10 percent. This – The Takoradi Thermal was followed by a period of relatively Power Plant stagnant domestic consumption, 1977 In 1983, following the drought, VRA as to 1980, when domestic consumption part of its Generation and remained around 1,350 GWh. From Transmission planning process under- 1981, domestic consumption declined took a comprehensive expansion to a level of about 1,000 GWh in 1984. study, the Ghana Generation Planning During this period, supply to VALCO Study (GGPS).. The engineering was governed by the VRA – VALCO planning study which was completed Power Supply Agreement. Figure 3.1 in 1985 confirmed the need for a shows consumption of electrical thermal plant to provide a reliable energy from 1967 to 1985. complementation to the hydro In 1972, VRA commenced supply of generating resources at the Kpong and electricity to neighbouring Togo and Akosombo power plants. A major Benin following the construction of a consideration for complementing the 205-kilometre 161-kV transmission line hydro sources was the natural and from Akosombo (Ghana) to Lome inherent characteristic of the Volta (Togo). The supply of electricity was River to have highly variable flows governed by a Power Supply Agree- from year to year. The Volta River had ment executed in 1969 between VRA shown over 10:1 variation in flow and the Commutate Electricité de between its highest inflow in 1963 and Benin (CEB), a power utility formed by the lowest in 1983. Indeed this the two countries, Togo and Benin. In characteristic was not for the Volta 1983, the interconnected Ghana-Togo- River only. Nearly all the tropical Benin power system was expanded rivers of the world have this cyclical through the construction of a 220- variation in inflow over a certain kilometre transmission line from the periodicity. Prestea Substation in Ghana to the The study concluded that by adding Abobo Substation in La Côte d’Ivoire. thermal complementation to the all- The decline in power consumption hydro system, the vulnerability of the in the early eighties was compounded power system in Ghana would be by the most severe drought in the significantly reduced. This was because recorded history of the Volta Basin, in times of insufficient rainfall resulting which occurred from 1982 to 1984. in low inflows into the Volta Lake, the Total inflow into the reservoir over thermal plants could be used to meet this three-year period was less than 15 the shortfall in demand resulting from percent of the long-term expected reduced hydro generation. In effect, the total. Electricity supply during this thermal generators were to serve as an period was consequently rationed. insurance policy against poor Supply to VALCO was completely hydrological years to meet the demand for electricity in Ghana.

Figure 3.1: Consumption of electrical energy from 1967 to 1985

Historic Electricity Consumption

3,500

Domestic 3,000 VALCO Export 2,500 2,000

1,500 Energy (GWh) Energy 1,000

500

0 1966 1970 1974 1978 1982 Years

In addition to thermal easily established, it was extremely complementation, the study also difficult to establish the economic and recommended the rehabilitation of the especially financial feasibility of the 30-MW Tema Diesel Station as an undertaking given the relatively low immediate and short term measure to tariffs then being paid by VALCO and support the operation of the hydro consumers in Ghana. plants and consequently reduce the risk In addition, the late 1980s saw the of another exposure to poor rainfall and beginning of significant increases in reduced power generation. The Tema the demand for power in Ghana. This Diesel plant faced delays in its could largely be attributed to the rehabilitation but work was completed impact of the Economic Recovery in 1993. Given its state and importantly, Programme embarked on by the the cost of generation, the Tema Diesel Government in 1984/85. A study was plant has been used intermittently and also carried to determine the optimal is currently not in commercial technology for the thermal plants to be operation. developed especially in the light of the Between 1985 and 1992, a number of profile of the rapidly growing power studies were carried out to confirm the demand in Ghana. The study, named technical, economic and financial the Combustion Turbine Feasibility feasibility of introducing thermal Study, was completed in 1990. The plants within the generation mix. Study recommended the addition of Although, the technical feasibility was combustion turbine power plants in Ghana. Guide to Electric Power in Ghana

With the continued increase in aged the introduction of private sector demand for power, another study, participation in infrastructural devel- Takoradi Thermal Plant Feasibility opment for the sector to meet growing Study was finally completed in 1992 demand. with a recommendation for the con- In 1999, in line with Government’s struction of a 600-MW plant, with an policy, the VRA entered into a joint initial 300-MW combined cycle plant venture arrangement with CMS En- and a 100-MW Combustion Turbine ergy of USA to expand the Takoradi unit to be commissioned by 1995. Thermal Power Plant Station to 550 There were however, delays in financ- MW with the addition of 2x110 MW ing approvals by the International Combustion Turbine plants. With the Development Association, which expansion of the Takoradi Thermal eventually resulted in the first 330- Power Plant, thermal generation MW tranche of the Takoradi Plant increasingly started playing a major being commissioned in 1999. It is role within the power generation mix noted however that the first 110-MW of Ghana. The two combustion turbine combustion turbine unit went into units were put into commercial opera- commercial operation in December tion in March and September 2000 1997 and the second in January 1998. respectively. Figure 3.2 shows the In 1998, the power system in Ghana significant impact of low rainfall on experienced another crisis resulting in the Ghanaian power system. Clearly, the rationing of power to consumers. the addition of thermal generation The crisis was brought on largely by capacity in recent years has been poor rainfall and consequently low helpful but remains limited. inflows into the Volta Lake affecting power generation, and also the inability to obtain sufficient back up power Figure 3.2: Electricity generation in from La Côte d’Ivoire. Ghana, 1966-2003 In order to deal with the power shortage, the Government contracted Historic Electricity Generation two emergency power producers, 9,000 namely, AGGREKO LTD and 8,000 Imports CUMMINS Ltd both of the UK to Thermal 7,000 Total Hydro produce and sell into the distribution ) grid in Tema up to 30 MW each. This 6,000 GWh

( 5,000 arrangement was ended in 2000 when

the crisis was over and normal power gy 4,000 generation had been restored. The 3,000 Ener power crises set the basis for the 2,000 addition of power plants to the genera- 1,000 tion system in Ghana through the 0 private sector for the expansion of the 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 Takoradi Thermal Power Plant. In 1994, the Government launched a new Years policy framework for the development of the power sector. The policy envis-

22 Guide to Electric Power in Ghana

3.5 Current Power System result of which local consumption of Facilities electricity will reach 9,300 GWh by 2010. There is also the potential for The total installed generation capacity is significant electricity exports and 1,778 MW. This comprises: supply to VALCO when the smelter The Akosombo Hydroelectric resumes operations. Power Plant with an installed The firm capability of our hydro capacity of 1,038 MW. The system of about 4,800 GWh represents Akosombo plant has been about half of the projected domestic retrofitted with the replacement consumption for 2010. This implies of the old turbine runners with that at least 50 percent of Ghana’s new ones as well as electro- electricity requirement will be pro- mechanical works aimed at vided from thermal sources by the restoring the plant to its original year 2010. condition. The retrofit was completed in March. On the basis of the studies carried out, the next generation addition is the 160-MW Kpong Hydroelectric completion of the expansion of the Power Plant Takoradi power station. This involves 550-MW installed thermal ca- the addition of 110-MW steam unit in pacity at the Takoradi Thermal order to complete the combined cycle Power Station and; arrangements for the TICO power 30-MW Diesel Power Plant at plant. Tema. In the medium to long term, up to A 125-MW Power Barge “the Osagyefo 600 MW of additional generating Power Barge” is also available and is capacity will be required by 2012. It is currently berthed at Effasu Mangyea in planned that this additional capacity the Western Region with arrangements will be met through the establishment ongoing to establish viable fuel sources of thermal as well as hydro plants such for it. The Osagyefo barge was as the Bui Hydroelectric Plant. An developed by the Ghana National attractive candidate for generation Petroleum Corporation in order to expansion is the 300-MW combined utilize the natural gas available in the cycle thermal power plant to be lo- Tano oil and gas fields for power cated at Tema. The operation of this generation. The barge has been plant is intended to be synchronized completed and is yet to go into with the delivery of natural gas commercial operation. through the West African Gas pipeline project. 3.6 Need for Additional Currently, the Takoradi Thermal Generation Power Station is fuelled with light Domestic electric energy consumption crude oil, the price for which has in 2004 was 6,004 GWh. An additional appreciated significantly on the world 660 GWh was supplied to CEB. It is market. In order to secure a sustain- projected that the average local able and cost-competitive fuel source, (Ghana) load growth over the next Ghana is involved in the West African decade will be about six percent as a

23 Guide to Electric Power in Ghana

Gas Pipeline (WAGP) Project for It is expected that the first gas will be power generation. delivered to the Takoradi power The West African Gas Pipeline station by the beginning of 2007. (WAGP) Project involves the construc- In addition, Ghana is involved in tion of a natural gas pipeline of about the development of the West African 600-kilometres to supply natural gas Power Pool (WAPP), aimed at estab- from Nigeria to meet the energy lishing a regional market for electricity requirements of Ghana and other West trades. The WAPP is expected to allow African countries. The countries the sharing of available energy re- presently involved in the project with sources and increase the reliability of Ghana are Nigeria, Benin and Togo. electricity supply in the West African The WAGP project will provide a region source of clean fuel for VRA’s thermal generating facilities and other future thermal plants, and is expected to deliver natural gas at relatively lower costs than light crude oil currently does.

24 4. Regulation and Policies the development of a sustainable 4.1 Introduction electricity industry. rior to 1997, the Government and the state-owned electricity It is contended that the reform utility organizations combined process and the resulting policy de- P terminations, including the regulatory operational responsibilities with policy and regulatory issues. Almost a cen- mechanisms, were a natural response tury after the commencement of a to both the external demands and public electricity service in what was internal factors. Following the relative to become the modern Ghana, the successes of restructuring elsewhere country’s electricity sector began a and the evolution of regulatory institu- restructuring process in the mid tions, notably in Chile and Britain in 1990’s, among other things, to over- the early 1980’s and learning from the come the limitations of the traditional long established traditional American set up. As far as utility regulation is regulatory experience, the tone was set concerned, perhaps the most dramatic for Ghana and indeed most of the change was the policy shift towards African continent to embrace reforms autonomous regulation of the sector generally and also the concept of by bodies that operate at arms length independent regulation. from government. Quite significantly, by the end of The current regulatory policy 1997, the sectoral structures had been evolved as result of the restructuring well defined and established and the of the electricity sector, itself a compo- electricity industry positioned to nent of a broader national advance. Two key regulatory institu- infrastructure and public institutional tions were duly created by acts of reform program. The structure of the Parliament. These were the Public electricity industry in Ghana is similar Utilities Regulatory Commission to the situation in most developing (PURC) established under the Pubic countries where service providers are Utilities Regulatory Commission Act, state-owned monopoly organizations. 1997 (Act 538) and the Energy Com- Although the reform in the electricity mission (EC) established under the sector is attributable to several factors Energy Commission Act, 1997 (Act it was prompted largely by multilat- 541). As their names imply, the func- eral donor agencies, fatigued from a tions of these institutions are broader, decade and a half of concessionary but this synopsis is limited to their financial support and considering regulatory mandates regarding the reallocation of funds to other sectors. electricity industry. The following Some of the objectives of the reforms, structure was adopted under the which envisaged introduction of revamped system: the Ministry of competition in supply as well as Energy is responsible for the broad encouragement of private sector policy direction of the electricity investment, necessitated transparency industry; the Energy Commission is in regulation of the sector leading to responsible for indicative national planning, licensing of electricity Guide to Electric Power in Ghana utilities and technical standards; and ing urbanization, a long term program the Public Utilities Regulatory Com- was initiated to accelerate the supply mission has responsibility for of electricity to the other big towns economic regulation, ensuring fair and commercial centers. competition among utilities and To streamline the development and monitoring quality of service. operations of the power stations and ensure speedy growth of the electricity 4.2 History of electricity policy industry, a prerequisite of an ambi- and regulation tious industrialization and national There is a close linkage between the development drive, certain measures evolution of electricity policy and where initiated by the government. regulation and the development and These included the enactment of the growth of the industry from colonial Volta River Development Act, 1961 times to the post independence era. In (Act 46) which established the Volta addition, the various institutional River Authority (VRA) mandated to arrangements and the legal develop- build and operate hydro power sta- ments in the sector are useful in tions within the Volta Basin and to considering historical perspectives. As construct and operate the national such the antecedents of the current electricity transmission system as well electricity structure are summarized as the Electricity Act, 1961 (Act 48), below. which vested licensing and other Ghana’s electricity supply dates regulatory powers in respect of elec- back to 1914 when the Gold Coast tricity in the Minister responsible for Railways Administration started the Public Works. first thermal power generation and The enactment of the Electricity public electricity supply in the mu- Corporation Decree, 1967 (NLCD 125) nicipalities of Sekondi and Takoradi. and the repeal of the Electricity Act, The development and growth of the established the Electricity Corporation industry was slow. From 1924, the of Ghana (ECG). For the next two Public Works Department which was decades, ECG was to remain the entity to dominate the industry for a long solely responsible for electricity supply time started operating diesel plants and the distribution networks nation- which had been installed in certain wide. In 1987, the corporation’s sphere municipalities, notably in Accra, of operation was limited to the south- Kumasi, Koforidua, Winneba, Swedru ern parts of Ghana which also had the and Cape Coast. greater concentration of customers. In 1947, the Electricity Department Service provision in respect of the which later became the Electricity sparsely populated northern parts of Division within the Ministry of Public the country devolved on the Northern Works was created as a separate entity Electricity Department (NED) which to assume responsibility for the gen- was formed as the distribution arm of eration and supply of electricity from the VRA. This position had been in both the Railways Administration and place until the radical changes intro- the Public Works Department. After duced with the creation of the EC and the take-over, and in the face of grow-

26 Guide to Electric Power in Ghana

PURC with regulatory responsibility or holders of the most senior civil over the sector. service positions in the Ministry with Before independence in 1957, the responsibility for Energy, the Ministry Electricity Supply (Control) Ordinance with responsibility for Finance as well (Cap 66) provided the legal basis for as the Chief Executive of VRA consti- regulating the electricity supply and tuted an overbearing government distribution activities in Ghana. The presence on the utility’s board. regulatory authority was exercised by VRA on its part was also required to the Chief Electrical Engineer of the operate on a commercial basis and at a Public Works Department. The licens- profit and was mandated to build and ing, regulatory and operational generate hydro electricity and supply framework for the industry was, it in bulk to various entities as well as however, redefined with the enact- to control and regulate the Volta Basin ment in 1961 of two pieces of as the construction and operation of important sector legislation; the Elec- the national transmission system got tricity Act and the Volta River underway. Indicative planning for the Development Act. Under the Electric- national electricity system was also ity Act, the Minister responsible for undertaken by VRA. Public Works was vested with licens- Both utilities had the power to issue ing and other regulatory power for the regulations in the form of subsidiary electricity sector. In practice the regu- legislation. But the inherent arbitrari- latory function was performed by the ness in the system was compounded Chief Electrical Engineer of the Minis- by the fact that these government try. The repeal of the Electricity Act monopolies had the ultimate power to and its replacement with the Electricity fix their own tariffs. The shortcomings Corporation of Ghana Decree estab- of that arrangement were self evident lished the industry structure as it was in the ensuing market failure that known until the commencement of the occurred. The absence of an independ- electricity reform in the mid-1990’s. ent regulator meant that decisions Both Acts effectively made the two relating to regulation of services were state-owned electricity organizations, made by the ministries, which were ECG and VRA, self regulatory mo- not insulated from political considera- nopolies with oversight by the tions. Minister responsible for energy. ECG Meanwhile, both VRA and ECG which was required to operate on a have been converted from their statu- commercial basis was mandated to tory corporation status to companies purchase electricity from VRA in bulk registered under the Companies Code, for distribution. Governmental control 1963 (Act 179) under the provisions of of the electricity industry is evident in the related Statutory Corporations the functions of the ECG and the (Conversion to Companies) Act, 1993 composition of the governing board of (Act 461). This Act signified Govern- ECG. Among the eight-member board, ment’s strategy to encourage private three were civil servants and the chief participation and investments in executive of a state-owned enterprise various sectors of the economy, includ- (SOE). Thus, the Principal Secretaries ing the electricity sector.

27 Guide to Electric Power in Ghana

The importance and necessity for an future electricity infrastructure. The independent regulator in the energy World Bank provided suggestions for sector was underscored by the Power dealing with existing statutory restric- Sector Reform Committee which was tions to the entry into the sector by established in 1994 to look into ways of private investors owing to the domi- bringing about efficiency and to nant and powerful role of the VRA encourage private participation in the and ECG; these were insufficient power sector. However the process regulation in terms of the lack of towards the establishment of regula- definition of the rules of practice and tory institutions, in particular the regulations intended to govern opera- PURC, was accelerated by the imposi- tions of the sector; unclear tariff setting tion of tariffs by the utility companies criteria and unpredictable tariff setting which precipitated disaffection in the regime; lack of transparency in market consuming public, resulting in the access and a nebulous government suspension of tariffs. The upshot was policy on measures for assisting the establishment of PURC as the investors in mitigating the risks posed economic regulator and EC as the by the unfavorable investment climate. technical regulator and licensing The objectives of the reform in- authority. cluded structural changes within the sector to bring about competition in supply, transparency in the regulation 4.3 Restructuring of electricity of the sector operators, effective com- sector mercialization of operations of Ghana’s electricity sector has been electricity utilities and encouragement significantly reformed in recent years. of private investment in the develop- Several factors have driven the re- ment of the electricity sector. The forms. In June, 1994, the Government industry structure envisaged under the issued a Statement of Power Sector reform was the unbundling of the Policy which outlined electricity sector with multiple generators of reform in Ghana. This statement of public private partnerships, a single policy was driven by the indication transmission utility to be publicly given by the World Bank in a policy owned, creation of distribution zones paper that it would no longer be in a and the establishment of a transparent position to provide funding for elec- regulatory regime. tricity sector projects in developing In 1997 two regulatory bodies were countries. Following the Government established to superintend electricity policy statement, the Minister of service provision, among their many Energy initiated the power sector functions. The PURC, established reform process to establish the re- under Act 538, sets rates and monitors quired conditions in Ghana to improve quality. The EC was established under operational efficiency of the utility Act 541 as the licensing authority of companies and streamline tariff setting electricity utilities with further statu- that would be transparent and inde- tory responsibilities for technical pendent of Government. These were standards and indicative planning. prerequisites to securing private sector participation in the development of

28 Guide to Electric Power in Ghana

Both bodies have power to issue ¾ to monitor the standard of per- regulations for the sector. formance of the utilities; In accordance with the provisions of ¾ to promote fair competition. the Statutory Corporations (Conver- In furtherance of its regulatory respon- sion to Companies) Act, 1993 VRA and sibilities, PURC has issued guidelines ECG have been converted into compa- for setting tariffs in respect of genera- nies under the Companies Code. tion, transmission and distribution of Additionally, the physical unbundling electricity. These guidelines provide a of VRA has occurred and there has transparent and predictable mecha- been separation of hydro generation, nism for setting rates. In addition, an thermal generation and transmission Automatic Adjustment Formula has functions into separate organizations. been introduced to allow for quarterly revision of tariffs to reflect fluctuations 4.4 Current regulation of elec- in crude oil prices and foreign ex- tric power in Ghana change rates, the hydro-thermal The current regulatory framework for generation mix and changes in the the electricity industry is provided by consumer price index. With the auto- Acts 538 and 541 which established the matic adjustment formula in place, PURC and EC respectively. major tariff reviews would take place EC’s regulatory mandates are: every four years. The tariff review process is quite transparent and the ¾ to receive and assess applica- public and consumers are involved tions and grant licenses to through the public hearings system. public utilities for the transmis- Licensing decisions rendered by the sion, wholesale supply and EC are subject to appeals to the Minis- distribution of electricity; ter of Energy or the courts but tariff ¾ to establish and enforce, in con- decisions are not subject to appeal. sultation with PURC, standards of performance for the relevant public utilities; ¾ to promote and ensure uniform rules of practice for the transmission, wholesale supply and

distribution of electricity.

PURC’s regulatory mandates are:

¾ to provide guidelines on rates chargeable for electricity services; ¾ to examine and approve the rates;

¾ to protect the interests of consumers and providers of utility services;

29 5. Major Electric Power Issues bill they have to pay and the reliability 5.1 Consumer issues of the service (ii) the level of tariff he use of electric power has price in comparison to reliability, become widespread in Africa; adequacy and safety of service being Tand Ghana is no exception. Over provided. the last two decades, demand for electricity for various purposes includ- Residential Customers ing domestic and industrial uses has As a large proportion of residential been increasing at a rate of 10-15 customers are low-income earners, the percent per annum. This has signifi- cost of electricity is critical for them. cant implications for the rate of Therefore a pricing arrangement that economic development. While the use will ensure that they can enjoy the use of electricity for domestic purposes of electricity for their basic needs at an (e.g., lighting, radio, television, iron- affordable price is important. The ing) will normally lead to current “lifeline tariff” targets the improvement only in the lives of rural and urban poor whose consump- consuming individuals, productive use tion is less than 50 kWh per month. of electricity by industries (all things The life-line tariff is typically 60-70 being equal) will lead to general percent of the economic cost of sup- macroeconomic improvement and a ply. rise in the standard of living of the populace. The major consideration for Non-Residential Customers Ghana is the ability of the country to match the rate of electricity demand This comprises major offices, banks with adequate supply as well as the and small businesses. For this group, proportion of energy produced which the cost of energy is also important is consumed for productive use. It is particularly for small businesses estimated that about 50 percent of whose electricity cost is a significant electricity produced in Ghana is component of their operating cost and consumed by domestic users. If this who require lower energy costs to be proportionate use can be changed in more competitive in the market place favour of industrial use and/or pro- to survive. ductive use then Ghana stands to gain. Industrial Customer Special Load Tariff In Ghana electricity customer Customers (SLT) groups comprise Residential, Non- The major industries whose operations Residential and Industrial customers. depend to a large degree on a reliable Each group has its requirements and supply of power are also concerned needs. For most ordinary consumers about cost and reliability in order to electricity has become an important ensure their competitiveness in the factor in their lives, particularly for markets within which they operate. lighting purposes. The main issues for ordinary consumers are (i) the price at which the electricity is bought, i.e., the Guide to Electric Power in Ghana

5.2 Electric Power and Electricity costs are important, but Economic Development so are the costs for land, labor, materials, transportation and other factors. Electricity, like other forms of energy, Usually, employment in electric utility is a vital ingredient in the economic services is only a small portion of total development of countries the world employment in an economy. However, over. Not only is it a critical factor and we also have jobs tied to companies cornerstone of the accelerated devel- that provide equipment, materials and opment and growth of any nation, it is services to the electric power industry, also a measure of the standard and and jobs in electric power services quality of life of a people. Without a outside of the utility companies them- safe, sustained, reliable and reasonably selves. affordable supply of electricity to meet demand, a country can hardly make Though the electricity supply progress in its economic and social industry Ghana contributes only 10 development. percent of its energy-supply mix, the industry is a key driver of economic Population growth and economic growth and development, powering expansion are the major factors driv- the country’s industrial, commercial ing growth in the electric power and urban development. The indus- industry. As the number of house- trial, agricultural, mining and services holds grows and as more and more sectors of the Ghanaian economy, households add on electric appliances, which together account for 75 percent electric power generation capacity has of the country’s GDP, rely critically on to keep up. the electricity industry for their sur- At the same time, electricity is an vival. The electricity industry accounts essential input for industrial and for 14.7 percent of total energy share in economic performance, although there the industrial sector, and 32.6 percent are other things that are equally or energy consumption in the formal more important. In general, when both manufacturing sector.2 It also contrib- household and economic growth are utes 2.8 percent of real GDP and 10.65 taken together, they account for most percent of industrial GDP. With a if not all of the net growth of electric customer base of approximately 1.4 generation capacity. million, it is estimated that 45-47 Growth in the electric power indus- percent of Ghanaians including 15-17 try is also influenced both directly and percent of the rural population have indirectly by population growth and access to grid electricity with a per general economic performance. The capita electricity consumption of direct effects come from demand for 358kWh while the average annual 3 electricity as households are added or growth rate stands at 9.7 percent. businesses and industries expand. The According to the Ministry of Mines indirect effects come from the contribution that electricity makes to our life-styles and quality of life and 2 Armah, B. 2002, Economic Analysis of the technological development. Energy Sector, Institute of Economic Analysis (IEA) Ghana 3 ECG Management Support Services Contract 2004

31 Guide to Electric Power in Ghana and Energy (1996)4 rapid growth in advantages. Coal, one of the lowest domestic demand for electricity, which priced fuels, requires considerable averaged 10 percent per annum be- treatment of emissions to meet envi- tween 1985 and 1993, increasing ronmental standards and its use further to 15 percent by 1995 was a triggers concerns about global warm- result of positive economic growth and ing. Natural gas, a more expensive the National Electrification Pro- fuel, burns cleaner than coal but can gramme embarked upon by the contribute to ozone formation in urban government during this period led to areas. Wind and solar power which electricity demand gradually catching- require relatively high capital costs up and eventually surpassing genera- produce no direct emissions and have tion capacity. virtually no fuel cost but they can be unsightly or impact wildlife nega-

tively. Nuclear power plants emit no 5.3 Environment and Energy combustion gases but have raised the Policy Issues issue of long-term disposal of spent fuel. Environmental concerns are a promi- nent part of every industry today and Ghana generates most of its power the electric power industry is no from hydroelectric facilities, which do exception. Coal and lignite are taken not cause emissions of harmful ele- from underground and strip mines. ments into the atmosphere; but their Natural gas wells are drilled to pro- large reservoirs have some impact on vide fuel to generate electricity. Power the environment by flooding large plants that use fossil fuels emit pollut- areas, causing people to move, chang- ants that are subject to emissions ing the ecology and causing silt regulations. Transmission lines are formation. spread across the state, affecting Air Pollution human and natural environments. These activities are monitored and Acid rain, urban ozone depletion, regulated, but because of the size and particulate emissions and global scope of the industry there will con- warming are the four primary air tinue to be concern about electric pollution concerns for the electric power and its environmental effects. power industry. Power plants contribute relatively little to emissions of Fuel Choices volatile organic compounds (VOCs - Power plants use various fuels that are associated with ozone formation), linked to problems like acid rain, carbon monoxide, nitrous oxide (a urban ozone depletion, global warm- greenhouse gas and oxide of nitrogen), ing and waste disposal. Each fuel has or methane (a greenhouse gas). Be- environmental advantages and dis- cause of effective control devices, power plants contribute little to the 4 Load forecast studies suggest that peak problem of particulates. demand on the Ghana system would double in 10 years requiring over 2000 MW of peak Acid Rain: Acid rain refers to precipi- capacity compared to the present peak tation which has a high acidity level demand of 980 MW (Opam and Turkson, that poses a risk to human and ecosys- 2000)

32 Guide to Electric Power in Ghana

tem health. SO2 emissions from burn- Transmission Lines and Stations ing coal (or any fuel containing sulfur) Development of new transmission reacts with water vapor and becomes lines, expansion of existing lines, and an acid. The acids may mix with water, construction of new distribution fall to the earth, or combine with dust facilities are often met with public particles. These may damage plants, resistance. Environmental concerns are marine life, or human health, includ- part of the reasons given for this ing increasing mortality rates in resistance. humans. SO2 is subject to federal and state air quality standards. Transmission lines may require intrusion on natural areas, be visible Urban Ozone: Power plants produce a from scenic areas or intrude on resi- substantial portion of NOX as a prod- dential neighborhoods. They may uct of combustion. These oxides react destroy or disrupt wildlife habitats. with VOC’s in the presence of sunlight Solar and wind power facilities sup- to produce ozone. Ozone has various ported by environmental groups have nonfatal effects on human health and faced similar public reaction. some types of vegetation. NOX and VOCs are subject to federal and state There has been ongoing public air quality standards. concern about the health effects of high voltage power lines. The National Global Warming: Greenhouse gases Research Council in the U.S. has found keep the earth's temperature within a that there is "no conclusive and consis- certain range by capturing part of the tent evidence" that electromagnetic sun's heating effect within the earth's fields cause any human disease or atmosphere. Some fear that global harmful health effects. However, warming will result from increased despite these findings, this issue will CO2 levels (and other greenhouse likely continue to be an environmental gases) in the atmosphere, leading to and health concern for the general increased temperatures, changes in public. precipitation and other harmful effects. CO2 and NO2 are two Related Energy Policy Issues greenhouse gases produced by fossil Environmental concerns are also fuel (coal, natural gas, and petroleum) linked to energy issues such as the use power plants. Natural gas has about 60 of alternative fuels to generate electric- percent of the carbon content of coal ity and energy efficiency. Alternative and, as such, produces less CO2. fuels are defined in different ways, but Particulates: Although power plants are often simply alternatives to con- contribute relatively little to this ventional fuels. There are usually problem, particulates are the subject of environmental or energy-related increasing concern for their impact on benefits associated with alternative human health. Particulates are associ- fuels. For example, natural gas used as ated with other pollutants, such as SO2 a transportation fuel is considered an from power plants, and are likely to be alternative that can be cleaner than subject to future air pollution control conventional gasoline, but natural gas strategies. for power generation is not considered to be an alternative fuel (it is consid-

33 Guide to Electric Power in Ghana ered by many to be a cleaner fuel, Geothermal power relies on the heat however). energy in the earth's interior. Some Alternatives for power generation resources cannot be used for electricity include hydroelectric power, solar production. However, heat from these electricity, wind energy, biomass resources could be used as a substitute energy and geothermal power. The for heat from an electrical source. The fuels for each of these are available at economics and environmental effects little or no cost; they are often renew- of such applications limit their viabil- able fuels; and they may produce little ity. if any direct emissions. Proponents While the benefits of cleaner, alter- argue that the environmental costs of native energy sources for electricity are conventional electric power are not appealing, they do pose operational reflected in the cost of electricity considerations for the management of produced. If these costs (externalities) electricity services. For one thing, they were included, alternative fuel electric- are "intermittent" power sources (the ity would be very competitive. sun does not shine at night, the wind is Solar electric power can be pro- variable), and peak availability of duced through various technologies. alternative energy sources does not Costs have declined substantially and always coincide with peak demand. Options like solar and wind cannot in some applications, solar electricity is economically competitive. Solar panels provide consistent power production, and large solar arrays face environ- in contrast to the coal and nuclear mental and community opposition facilities that are usually used for "base similar to placement of other large load" (the units operate continuously electric power facilities. providing a consistent power base). Many solar technologies tend to be Wind energy technology is available implemented in conjunction with today at competitive prices (advanced natural gas turbines. In addition, both wind turbines). Wind resources are solar and wind require large amounts fairly site specific. of acreage when deployed for large- Biomass energy is produced from scale power generation. conversion of plant and animal matter Technological advances are such to heat or to a chemical fuel. It encom- that some success in integrating wind- passes the widest range of generated electricity has been technologies including converting achieved. Likewise, hydro facilities garbage to methane, burning materials provide a readily available power to produce heat to generate electricity reserve (interrupted only by periods of and fermenting agricultural wastes to extreme drought). Solar poses more of produce ethanol. Many biomass a problem, because some form of energy approaches rely on renewable storage is required. Scientists are fuels. Because of the differences in experimenting with a variety of stor- these technologies, it is difficult to age solutions, like letting daytime heat generalize on the environmental issues accumulate in fluids like molten salt so associated with them. that turbines can continue to operate after sunset. However, it will be some

34 Guide to Electric Power in Ghana time before the economics of utility- energy lighting, improved insulation scale renewable technologies become and high efficiency refrigeration. Co- favorable. The operating cost of new generation can provide an energy natural gas turbines has dropped by efficient means to sequentially pro- half or more during the past decade, so duce both power and useful thermal that electricity from most renewable energy (steam/chilled water) from a energy technologies is usually 150 to single fuel. Technological improve- 400 percent more expensive than ments have substantially increased natural gas-fired turbines with the fuel efficiency and lowered capital range dependent upon the age of gas costs during the last decade. turbine and the price of natural gas. Reduced energy use also includes The cost of wind power, however, has changes in operations and behavior fallen significantly to a range of 4 to 6 that result in less electricity consump- cents per kWh within the last decade tion; for example, turning out the and costs are expected to drop another lights when leaving a room or build- 20 to 40 percent over the next 10 years. ing. What many renewable technologies Utilities can implement energy (and some small scale technologies like efficiency and conservation efforts natural gas microturbines and fuel through programs called demand-side cells) do offer are options for users in management (DSM). Utilities help remote locations. An isolated commu- customers to reduce electricity use by nity can distribute electricity to its providing energy audits and informa- residents "off-grid" (meaning that tion on energy saving appliances and there does not have to be a connection habits ("bill stuffers"). Other initiatives to a transmission line). Or, excess include offering rebates to customers power from location-specific genera- who install energy saving appliances, tion, including co-generation, can be compensating utilities that reduce distributed "on grid." Distributed and electricity load through efficiency off-grid generation bear significant programs by allowing them to earn a implications for the future. higher rate of return or encouraging Energy Efficiency and Conservation customers to reduce peak-period demand (i.e., installing devices that Energy efficiency and conservation are reduce a customer's load during daily two sides of the same environmental peaks in demand). and energy policy coin. The impacts of the environmental issues discussed However, many economists argue above are all reduced by simply using that if costs and benefits are correctly less electricity. New electricity demand measured, electric utilities may be is met through energy savings rather spending much more on efficiency than the provision of more electrical programs than the value of benefits power. obtained. Other strategies, like marginal pricing which would force Energy efficiency usually applies to customers to pay more of what it technological improvements that actually costs to provide electricity, reduce electricity needs, for example, may be more effective for rationing more efficient electric motors, low electricity use. Retail electricity pro-

35 Guide to Electric Power in Ghana viders in restructured markets where the years by inflation (which affects retail choice is allowed have already the cost of labor and materials), inter- started to provide energy services, est rates (which affect the costs for which include inspection of the site, utilities to borrow money), dealing installation of energy efficient equip- with environmental concerns (costs ment and insulation, monitoring of associated with environmental studies energy usage, and so on. With the and mitigation) and other factors. In growing attention to efficiency and contrast, the costs associated with conservation, new businesses have generation have generally declined emerged and existing ones have due to technological improvements, grown, creating numerous opportuni- including those for alternative electric ties. These businesses include every- energy sources, and lower costs for thing from companies that research, conventional fuels. develop and manufacture energy The impact of technological innova- saving devices (like lighting and tions has had a significant impact on building materials, automatic/remote generation costs. Improvements in thermostat controls, advanced real- natural gas turbine design have made time meters, storage devices, etc.) to gas much more competitive with coal. those that provide independent audits New turbines are essentially jet en- and information services. gines that use a pressurized mixture of gas and air to spin the turbine. New 5.4 Financing and Operations "combined-cycle" turbines take excess Electricity infrastructure (power heat generated from the gas turbine generation plants, transmission and and use it to power a conventional distribution lines, metering) is expen- steam turbine. This combination has sive to build, maintain and operate. pushed turbine efficiencies beyond 50 Financing of these projects can be percent, and continued improvements challenging. State companies that fail are expected in coming years. The new to recover their investments because of generation of turbines is relatively inefficiencies, inability to collect bills cheap, modular and can be brought or charge cost-reflective tariffs cannot on-line quickly. Gas derived from coal be expected to finance future expan- or biomass can also be used to drive sion or maintenance. Regulated mono- combined-cycle turbines. Turbines polies can secure financing more easily using higher pressures and efficiency but they can invest more than neces- gains in performance are improving sary and inflate costs, and they will rapidly. face similar challenges regarding tariffs and collection. Policies to make Because of the development of the electric power industry more turbine technologies and improve- competitive have big financial and ments in alternative energy operational impacts on these invest- technologies (mainly in solar panel ments. and wind turbine design), the costs of electricity generation from natural gas Electricity Investments and Technology and alternative fuels are on a down- ward trend, while flexibility and ease Transmission and distribution costs of installation are on an upward trend. have been most heavily impacted over

36 Guide to Electric Power in Ghana

Where investments of billions of power utilities. To that end, the Gov- dollars were a matter of course for ernment, the VRA and ECG each nuclear and coal facilities, it is likely adopted Financial Recovery Plans that the financial requirements of the which led to significant debt relief to electric power industry in the future the ECG amounting to US$ 95.6 mil- will be much different. However, it is lion.5 In addition, total debt relief clear that for the electric utilities, amounting to US$88 million was also especially those that have invested written-off by the Government. heavily in coal and nuclear facilities, As part of its macro-economic the advent of cheaper, more flexible restructuring programme with the turbine design and generation alterna- World Bank and IMF, the Government tives means that financial pressure agreed to continue to provide the ECG everywhere in the electric power with further debt relief annually up to industry is likely to increase. 2008, while undertaking to secure Historically, financing of the opera- further funding for the company to tional activities of Ghana’s electric undertake critical short-term invest- power industry has been from gov- ments in the company’s distribution ernment, either through multilateral or system. These recipes, if observed and bilateral loan agreements. The first if the company is able to manage its major government financing of opera- operations prudently, should signifi- tions of the country’s electricity cantly improve the current financial industry dates back to the early 1960’s position of ECG in the coming years. when the Government contributed £35 The government also granted the VRA million as its equity investment in the total debt relief amounting to US$ Volta River Project. This was followed 144.9 million under the Heavily In- by several other loans and grants debted Poor Countries (HIPC) which were on-lent to both the Volta Initiative Debt Relief programme, River Authority and the Electricity while discussions with International Company of Ghana. Despite Govern- Development Association (IDA) are ment efforts at financing the on-going on the preparation of a new operations of the VRA and ECG, the Distribution Sector Upgrade Project; two state-owned generation and this is intended to inject a further distribution utilities have continued to US$105 million of support for North- incur huge debts which in turn un- ern Electricity Department (NED). In dermined their operational capability. addition, the Government continues to To address the problems posed by the meet the US$ 10 million quarterly high level of debt and also enhance the crude oil supply to Takoradi Thermal operational performance of the two Power Plant. It is argued that these companies, the Government in 1998 measures, especially the debt relief, undertook restructuring and re- have drastically reduced VRA’s debt capitalisation of the VRA and ECG. portfolio and raised its return on Following the approval of tariffs by average net fixed assets (regulated the Public Utilities Regulatory Com- mission in September 1998, the 5 The Government of Ghana under pressure Government initiated action to deal from the World Bank and the IMF opted for with the mounting liabilities of the the Heavily Indebted Poor Countries (HIPC) Initiative in 2000.

37 Guide to Electric Power in Ghana assets) in operation from negative (4.5 5.2. For example, the total debt stock of percent) in 2002 to 2.25 percent, in the VRA including medium to long 2003. Available records show that, term and short-term loans as at De- between 1997 and 2002, both the Volta cember 31, 2002 amounted to 3,910.9 River Authority and the Electricity Billion cedis and 1,075.1 Billion cedis Company of Ghana had recorded huge respectively. losses from their operations, details of which are shown in the Tables 5.1 and

Table 5.1: Financial performance of VRA, 1997-2002 (in ¢Billion)

Year 1997 1998 1999 2000 2001 2002 Operating Profit/(Loss) 61.2 18.7 79.2 (257.9) (220.0) (582.5) Net Profit/(Loss) (58.6) (105.2) (283.2) (983.3) (329.7) (1,269.1) Source: Volta River Authority (VRA), Annual Reports and Accounts for 1997-2002

Table 5.2: Financial performance of ECG, 1997-2002 (in ¢Billion)

Year 1997 1998 1999 2000 2001 2002

Operating (33.9) 6.0 17.3 (13.6) 152.9 (85.3) Profit/(Loss)

Net Profit/(Loss) (80.9) (27.5) (79.2) (394.0) 110.1 (380.5)

Source: Electricity Company of Ghana (ECG), Financial Statements for 1997-2002

pany also owns a 90 percent share- 5.5 Performance of Ghana’s holding in a 330-MW Combined Cycle Electric Power Industry Gas Turbine (CCGT) (Takoradi Ther- Ghana’s electricity supply industry mal Power Company, TAPCO) with infrastructure comprises two hydroe- CMS Energy of Michigan USA holding lectric dams, which until the late 10 percent and a further 10 percent 1990’s virtually supplied all of Ghana’s equity holding in a 220-MW Simple electricity (99 percent), two thermal Cycle Gas Turbine (SCGT) (Takoradi generating plants and a network of International Company), with the CMS transmission and distribution infra- Energy of Michigan USA holding the structure. The two hydroelectric remaining 90 percent. plants, namely the Akosombo Gener- The Volta River Authority also ating Station and Kpong Generating owns and operates a high voltage Station both of which are owned and transmission network infrastructure, managed by the Volta River Authority which consists of 3,670 circuit kilome- (state-owned generating company) ters of 161-kV lines, 133 circuit have installed capacities of 1020 MW kilometers of 69-kV lines and 35 and 160 MW respectively. The com-

38 Guide to Electric Power in Ghana associated substations. Other trans- circuits within the major urban centers mission network assets owned by VRA and approximately 4,049 km of other include a 129-kilometer double circuit lower voltage distribution circuits for of 161-kV lines connecting Ghana to retailing electricity. The total length of Togo and Benin and a single 220- the company’s distribution network is kilometer line of 225kV line connecting about 63,474 km.7 Power supply La Côte d’Ivoire to the west of the capability in the Ghanaian electricity country. supply industry including imports from neighbouring La Côte d’Ivoire As part of the arrangements to exists and is well above the system expedite the Northern Grid Extension maximum demand of 1,200 MW by and System Reinforcement Project, the about 57 percent. However, the total government in 1987 extended VRA’s amount of energy that can be deliv- mandate to distribution of electricity in ered is constrained by several factors the northern part of Ghana. This led to including the low level of water in the the creation of the Northern Electricity country’s hydro system (Akosombo Department (NED) as a subsidiary of reservoir), technical problems with the the VRA to implement the northern distribution zone component of the 330-MW state-owned combined cycle National Electrification Project. As thermal plant and transmission bottle- such, the VRA became a vertically necks on the Western Corridor. integrated monopoly in generation, As with the country’s generation transmission and distribution of system, Ghana’s electricity distribution electricity. As a corporate body, the sector has been bedevilled with several VRA has since its establishment in problems including: (i) inadequate and 1961 under the Volta River Develop- outdated infrastructure; (ii) under- ment Authority Act, 1961 (Act 46) been funding and under-investment; (iii) operated as a quasi-enclave within managerial problems; and (iv) low Ghana enjoying a high degree of tariffs coupled with under recovery autonomy.6 and inability to collect bills etc, all of The Electricity Company of Ghana which have led to unreliable supply (state-owned distribution utility) is the and long outages, high system losses, premier national distributor and unsustainable debt levels and severe retailer of electric power in the south- liquidity problems. These factors have ern sector of Ghana. The company contributed not only to the lack of owns and manages the distribution competitiveness of Ghana’s electricity network infrastructure. It has an industry, but have also created significant social issues.8 It has been argued installed transformer capacity of about that for Ghana to achieve its GDP 3,004 MVA and 6,149-km of sub- growth target of eight percent, it is transmission lines, which are made up absolutely essential that the minimum of 1,200 km of 33-kV sub-transmission power supply growth rate be at a lines, 450 km of 11-kV distribution

6 Edjekumhene, Amadu, and Brew Hammond 7 Energy Commission (2005), Strategic Na- (2003) “Power Sector Reform in Ghana in the tional Energy Plan 2005-2025. 1990’s: The Untold Story of A Divided Coun- 8 State of the Ghanaian Economy 2002, ISSER, try Versus A Divided Bank.” University of Ghana, Legon.

39 Guide to Electric Power in Ghana factor of 1.5 of the GDP growth.9 It is though the company has established a observed that limitations on electricity sound record of system planning as services delivery to consumers are well as in projects implementation, both technical and infrastructural in ECG is an electric utility in crisis.13 The nature10 and cut across all aspects of report reveals the inefficiency of ECG the electricity generation and supply operations and the shortcomings of its business. Ghana’s distribution net- commercial performance. work is bedevilled with bottlenecks Under-performance on the part of resulting from poor maintenance of management and staff has led to equipment installed over 30 years ago several negative impacts; for instance, and overloads in the low voltage the continued government interven- systems. tionist role in the industry, which goes According to Center for Policy beyond the policy and ownership role Analysis (CEPA),11 the long-term of the state. The current level of liabili- energy problem of Ghana was com- ties of the distribution utility for pounded by the public sector instance, which is estimated at about dominance of the power sector. These US$300 million, it is argued is too high constraints have led to serious deterio- to be sustainable considering the ration in the performance of the current annual revenue base and industry over the last several years collection rates of the company. The resulting in customer dissatisfaction absence of effective control systems of and general discontent by Govern- critical expenditure, particularly fuels ment. While inadequate investment in and capital expenditure in respect of generation and distribution infrastruc- distribution system extensions for ture,12 have played a significant role in which the company has no funding, the unsatisfactory performance of the has also compounded the difficulties industry, to a larger extent the difficul- of the company. ties faced by the state-owned electric The operations of ECG and NED are utilities as the key players in the also characterised by high system electricity industry may be attributed losses (unaccounted for electricity in to poor management and staff dissatis- the system) of about 26 percent and 30 faction. According to a 2001 percent per annum respectively. Of Management Audit of the operations these, 16 percent is non-technical loss of the Electricity Company of Ghana, resulting in an annual revenue loss of

9Address delivered by the Minister for Private about US$40.3 million, whilst low Sector Development at an International collection rates of electricity bills Investments Forum for Electricity Sector averaging 87 percent per annum has Investors in Accra on January 26, 2005. resulted in a further loss of about 10 Study on Electricity Services Delivery to the US$27.7 million per annum. It is Private Sector, Private Enterprise Foundation, 2003. estimated that revenue losses resulting 11 Ghana Mid-Year Micro-economic Review. Jan- from the company’s operations will June, Centre for Policy Analysis, Accra, 1998. grow significantly as the demand for 12 Sources within the ECG intimated that no and supply of electricity grows if significant investments have been made in the company’s distribution network over the past 10 years resulting in unreliable supply and 13 ECG Management Support Services Con- periodic extended outages. tract, 2004.

40 Guide to Electric Power in Ghana nothing is done about the huge system address the issues of technical and losses and poor collection rates. In non-technical losses that impede the general, the technical and financial increase in access to electricity and performance of ECG continues to improvements in the quality of service deteriorate as the company does not such that ECG is no longer servicing generate enough financial resources to its current debt obligations.

41 6. Future Trends Ghana are in commercially significant 6.1 Introduction quantities. f the recent past is the prologue, then we can be assured that the The electric power industry has electricity industry will continue to often been criticized as a "low technol- I ogy" industry, but nothing could be become more competitive and that some changes will take place. Electric- farther from the truth. In this docu- ity will remain an important ment we have discussed a number of component of our daily lives, perhaps technologies that are vastly changing increasingly so as we move forward the way electricity is produced, deliv- into the Information Age. There is sure ered and priced. Future expectations to be conflict about how to best pro- for electric power should be no differ- vide electricity to all users, how best to ent, but the outcomes may take a facilitate consumers' desire for choice different form. Around the world, and how to manage all of this while utility spending on R&D may be protecting the environmental and affected by increased competition, but social values that are important to us. new R&D arrangements are likely to emerge from smaller technology We can strive to consider what the companies such as Ballard (manufac- future will hold in today's decision turer of fuel cells), major corporations making, but that is often not possible. such as General Electric, Siemens and Looking back at the historic changes in Westinghouse as well as state-owned telecommunications, airlines, trucking, entities in China, India and South banking and natural gas around the Africa. world, there are many things that could have been done differently. New Generation Technologies Perhaps the best we can do is to watch In addition to the advances in natural the key trends and try to anticipate the gas turbine design, new ways to actions of today with the needs of achieve clean combustion of coal and tomorrow. Here are four key trends to fuel oil and improvements in alterna- watch in the electric power industry. tive energy technologies, there are technologies on the horizon that may 6.2 Technological changes completely change the industry. Often In the past, the main source of power discussed are fuel cells, which use generation in Ghana has been hydro electrochemical reactions - like auto- with some amount of generation from motive batteries - to produce diesel plants. It is anticipated that electricity. Most promising are fuel thermal power generation mainly from cells that can use natural gas as feed- natural gas will become a significant stock for producing hydrogen. Fuel source of electricity generation. Natu- cells are smaller and modular and ral gas supply is expected to come could be used to power individual mainly from Nigeria, possibly from La buildings or neighborhoods with none Côte d’Ivoire and possibly from of the noise and unsightliness of domestic sources if natural gas finds in traditional generating stations. Fuel Guide to Electric Power in Ghana cells, improved solar technologies and in technology lowered costs and other developments may lead to a offshore offers a less objectionable "decentralizing" of electric power frontier for wind farms. systems, allowing small scale applications and resolving many of the Transmission, Distribution and Storage potential reliability problems that Technologies customers fear. As electricity travels over the trans- Further into the future, economic mission grid, much of it is lost nuclear fusion technologies may (sometimes upwards of 10 percent). finally be achieved. Unlike nuclear This is because the materials typically fission, fusion is the combination of used in transmission wires can only atoms to produce heat. Fusion is a long withstand a certain amount of heat. sought technology that holds the New superconducting materials may tremendous promise of clean, renew- change that. At research centers able energy, if it can be achieved. around the world, scientists are developing new materials that can Given the abundance of coal re- withstand levels of heat and stress sources around the world and the beyond anything achievable with recent concerns about natural gas traditional metals. These materials, if resource base and prices, there is an they can be economically developed increasing interest in technologies that for applications like electricity trans- may help lower the emissions from mission, will dramatically reduce the coal-fired generation. Older coal plants amount of electricity that must be with higher emissions will need to be generated and allow electricity to be replaced in many countries. Neither efficiently transported over long renewable nor gas-fired generation distances. Experiments with short- may be sufficient to substitute for all of distance high voltage lines that use the coal-fired capacity. One of the most superconducting materials have promising and definitely most talked produced encouraging results. about technologies is the integrated gasification combined cycle (IGCC) For electricity to be more easily approach where coal is gasified. managed, new ways of handling electricity are needed that take advan- Microturbines, solar power (either tage of superconducting materials and as large collector farms or photovoltaic devices. One such technology is the cells on buildings), and ocean power use of superconducting devices for (using either the tidal currents of instantaneous management of electric waves) are other technologies that are power. Such devices would enable being watched closely by the investor various power management services community. On the other hand, wind such as stability enhancement, in- energy, which has established itself as creased transmission capacity, voltage the most rapidly growing renewable and frequency control and other technology, started to face problems as quality enhancements for a transmis- public opposition to wind farms sion company or utility. became more vocal and government subsidies were challenged in some Storage technologies are the biggest countries. Nevertheless, improvements hope and at the same time challenge

43 Guide to Electric Power in Ghana for the electricity industry. Flywheel "nonjurisdictional" or unregulated technology seems to be the most affiliates of gas pipelines or gas or advanced. A Texas company, Active electric utilities - act as intermediaries Power developed the first commer- in a complex marketplace. Using cially viable flywheel energy storage electronic information, they are able to system and has distribution deals with package services and build flexible companies such as Caterpillar, GE and arrangements and contractual terms Invensys. between suppliers of gas and electricity and end users. Information Technologies The development of electronic The sophistication of electronic infor- information systems has been one of mation systems is one of the most the most important factors in the re- important factors in the drive to conceptualization of what monopoly restructure industries like natural gas in a gas or electricity service is. These pipelines and utilities and electricity tools have enabled the separation of transmission and utilities. These the commodities gas and power from information systems have removed the physical systems used to deliver many of the barriers to common them to customers. The result is that carriage by allowing real-time man- the scope of regulation can be nar- agement of energy flows and rowed to the physical systems, where exchanges. before it applied to both the systems Electronic bulletin boards and and the commodities (which were not software systems required by regula- commodities since there were not tors for pipeline transportation and separate markets for the exchange of electricity transmission include infor- gas and electricity). This has been a mation on capacities, prices, critical step in the evolution of both the transactions and other variables. This natural gas and electricity industries. information is necessary to facilitate a properly functioning marketplace. It 6.3 Financing also facilitates the development of According to the International Energy "secondary" markets so that holders of Agency’s World Energy Investment excess capacity on pipelines or trans- Outlook 2003, an investment of roughly mission grids can release or resell that $10 trillion worldwide will be needed capacity. This prevents many of the between 2001 and 2030: $4.4 trillion for kinds of disruptions and shortages new generation capacity; $1.6 trillion that have posed serious problems in for transmission lines; and $3.6 trillion the past. for distribution grids. Although more than half of this investment will be in Finally, the advent of information developing countries, there would be systems for natural gas and electricity about 1.4 billion people without access has supported the growth and effec- to electricity in 2030. Only about $2 tiveness of new businesses, trillion will be invested in building independent third party marketers of new generation in the developing gas and power in advanced markets. world. The IEA estimates that an These companies - they may be en- additional $665 billion will be neces- tirely unaffiliated or they may be sary for 100 percent electrification.

44 Guide to Electric Power in Ghana

Similarly, the World Bank estimates $45-50 billion in 1997 to less than $6 that developing countries will need billion in 2002. Over the same period, $120 billion a year between 2004 and the number of transactions also de- 2010 in infrastructure investments in clined from about 125 to about 30. The the electricity sector.14 financial crises in Asia, Argentina, and Since the 1980’s, numerous states Turkey that led to currency devalua- and nations have attempted significant tions and macroeconomic instability electricity reform. In those nations rendered these investments riskier. where electricity assets have been Exposure of some investors to these publicly owned, privatization and/or riskier countries as well as problems corporatization have been a major experienced by some companies in element of reform. Many nations have their home markets (e.g., some U.S. also opened their doors to foreign companies suffered significantly investment in the electric power following the California crisis and the industry for the first time. As a result, collapse of the energy trading busi- about $200 billion dollars were in- ness) restricted the ability to raise financing in international capital vested by the private sector in developing countries, mostly in East markets. Moreover, many companies Asia and Latin America, between 1990 overpaid based on optimistic estimates and 2001.15 In East Asia, almost 70 of potential return or changes in percent of roughly $95 billion invested markets. has been in greenfield projects while in In order to meet investment needs Latin America, almost 75 percent of of the electric sectors in the emerging approximately $80 billion has been markets governments need to create invested in privatized state assets. frameworks attractive to private Note that this amount of investment investors as public funds, money- losing state companies, and develop- is significantly less than the investment levels estimated by the IEA as ment assistance cannot provide the needed in the next three decades. investment needed. These frameworks Governments, state companies or need to be transparent, fair, stable, and multilateral agencies cannot be ex- credible. The independence, stability pected to supply the difference. More and competence of regulatory agencies private investment needs to flow into from political interference are vital. the electric sector in developing coun- Governments, multilateral agencies, tries. and investors need to be honest with the public and not raise expectations Unfortunately, after 1997, private with unrealistic promises about lower investment in developing country prices and increased access to electric- power sectors fell significantly from ity. At the same time, safety nets and subsidy structures must be put in 14 Global Development Finance 2004, the World place to protect the most vulnerable. Bank. April 2004. 15 See What International Investors Look for When These measures must be independent Investing in Developing Countries: Results from a of electricity prices. The segments of Survey of International Investors in the Power the society which truly cannot afford Sector. Energy and Mining Sector Board to pay market prices for their electric- Discussion Paper No. 6, The World Bank ity need to be identified carefully and Group, May 2003.

45 Guide to Electric Power in Ghana financial support provided to them regulated market structure, Ghana from general government funds and should expect to see more private not via the electricity system. generation to come online. Finally, governments need to lay 6.4 Industry Re-organisation the foundation for competition by improving commercial practices at The re-organisation of the electric vertically integrated state companies power industry in Ghana was initiated before they face competition. This in 1995 under a Power Sector Reform commercialization will require the Programme (PSRP). The reforms were freeing of the government budget from intended to create the environment to financing losses and reorganizing the attract private sector investments in companies along functional lines with the power sector owing to the fact that separate cost accounting. Most impor- Government of Ghana and its tradi- tantly, governments must allow tional financiers (the World Bank and electricity prices to adjust until they other bilateral donors) were not able to are high enough to recover costs so provide the significant funding re- that these companies can become quired for future expansion of the profitable. Improved productivity and power system. Following from the cost reductions can be achieved initiation of the programme in 1996, through management contracts, the Energy Commission (EC) and the capacity-building programs, and other Public Utilities Regulatory Commis- human resource actions. These sion (PURC) were established as part changes, supported by government of the reforms in 1997. reforms, will help to improve corpo- Other aspects of the reforms, par- rate governance and transparency in ticularly the re-structuring of the Volta the sector. With these reforms, it will River Authority (VRA) and the divesti- be much easier to attract private ture of the Electricity Company of investment to the electricity sector or Ghana (ECG), were not effected. The restructure the market. re-structuring of the sector involved: The power sector of Ghana has, in i) Reconstitution of VRA into two the past, been financed through bilat- companies – a Hydro Company eral loans contracted with Government (including non-core activities) to guarantees on behalf of the sector be responsible for hydro genera- organisations and Government direct tion, and another company to financial support. In recent times, own the Aboadze Thermal Government’s policy has been to Power Complex; attract the private sector to finance the ii) Establishment of a separate development of the sector. The first Transmission Company, wholly- mainly private sector owned power owned by Government to pro- generation plant, the Takoradi Interna- vided non-discriminatory, open tional Power Company (TICO), with a access transmissions service in 220MW capacity was constructed in order to offer a level playing 2000. With the arrival of natural gas field for all participants in the through the West Africa Gas Pipeline power market; (WAGP) and the existence of a well-

46 Guide to Electric Power in Ghana

iii) Reconstitution of ECG and NED, electricity sector investment required the existing distribution utilities, in those countries. State utilities also into a single Distribution Com- suffer from high production costs pany. which primarily result from opera- iv) Establishment of a Wholesale tional and maintenance problems that Power Supply Market (WPSM) lower efficiency and from a high level to create an environment for the of system losses (both technical and competitive procurement of non-technical). Poor fuel quality, high power. It is envisaged that and cost of equipment due to non- Independent System Operator competitive and/or non-transparent will manage the operations of the procurement practices, and poorly electric power market in Ghana. designed electrification policies neces- sitating high levels of investment in Key Drivers transmission and distribution networks also contribute to higher costs. Like in many other countries, the fundamental drivers for restructuring Governments cannot, and should the Ghanaian electricity sector are not, be expected to continue to support primarily three-fold: inefficient state utilities or finance new projects while their budget deficits and ¾ Investment shortages sovereign debt increase. Their reve- ¾ High electricity prices nues are usually low and ¾ Technological developments, parti- unpredictable due to inability to cularly those related to the growing collect taxes and volatile economic efficiency of natural gas turbines. performance. Governments have other priorities such as health and education Investment Shortages: In the develop- and are better placed to focus on ing world, a lack of access to capital providing services in these areas. has hindered investment in infrastruc- Traditional funding for infrastructure ture projects, including power investments from development assis- generation, transmission, and distribu- tance, and especially bilateral aid, has tion facilities. State utilities in many declined significantly as donor coun- countries are not profitable and hence tries have meticulously examined past are unable to finance their own pro- results. Development agencies such as jects. The utilities are not able to the World Bank started to require generate sufficient revenues because of economic reforms, including energy low electricity prices (usually subsi- sector restructuring, as a precondition dized by governments), payment and to further assistance. collection shortfalls, and system losses. If they are also required to purchase As a result of these developments, fuel, especially oil products, for their many countries have opened their power plants at world prices their electricity sectors to foreign invest- financial situation becomes even more ment, primarily in generation. This has precarious. The IEA expects fuel been particularly true for countries purchases by developing country that suffered most during the debt generators to cost almost $5 trillion by crisis of the 1980s, especially in Latin 2030 – roughly equivalent to total America. Moreover, during the 1980’s,

47 Guide to Electric Power in Ghana financial institutions, in particular such, industries will continue to push commercial banks, incurred severe for restructuring that can lower their losses from loan defaults among electricity prices. Clearly, low-cost developing nations which may have electricity is important for developing had a limiting impact on the develop- countries as well because it helps to ing world’s access to some world increase access to electricity and allows capital markets and may have driven local industries to develop cost com- developing countries to allow greater petitiveness. direct investment from abroad. Technological Developments: Electric- High Electricity Costs: Electricity costs ity generation has always been vary considerably across regions and thought to exhibit economies of scale countries, mostly depending on fuel requiring construction of larger plants diversity and reflecting poorly fi- and expansive transmission and nanced (or regulated) large distribution networks. Technological investments, technical and non- developments (in particular, in natural technical system losses, and opera- gas turbine technology) however, have tional inefficiencies. Sometimes prices changed this. It is now possible to reflect these costs but at other times build smaller, more efficient units. For they are shielded by government example, a state-of-the-art combined- policies such as subsidies. Electricity cycle gas turbine (CCGT) generating prices also vary considerably with the unit is more efficient than coal or ownership structure of the industry nuclear units (roughly 50 percent and the degree of regulation. The versus 35 percent on average – 6,800 resulting price differentials can have a versus 9,800 heat rate).16 Gas-fired significant effect on a region’s degree plants also have shorter construction of competitiveness. They can also times. The time needed to build a affect real standards of living. There- natural-gas-fired generation unit fore, it is not surprising that many averages two to three years, compared high-cost electricity regions were with three to five years for coal plants, among the earliest reformers. For and five to seven years for nuclear instance, both California, where 1995 plants. Construction time is only one electricity prices were 43 percent of the factors that increases the capital higher than the U.S. average and cost of coal and nuclear facilities, Germany, where industrial electricity which are on average 2-3 times more prices were 15 percent higher than in costly on a kW basis than a modern the Organization of Economic Coop- CCGT plant. Natural gas plants are eration and Development (OECD), also more flexible. The maximum were early reformers. The consumers efficiency of a gas-fired power plant is (in particular, large industrial and achieved at a much smaller level of commercial consumers) in these capacity than a coal-fired unit. As a regions were avid proponents of result, the size of a new natural gas competition. The price of electricity plant can be adapted readily to various continues to be a key cost factor for most industries, perhaps even more so now than before due to increased 16 GE’s new H-series turbines promise heat automation of many processes. As rates as low as 5,700, raising efficiency to about 60 percent.

48 Guide to Electric Power in Ghana changes in demand and the plant can technologies at different stages of be built closer to the load. development will play a dual role. All of these advantages make the Their commercialization is stimulated financing of gas-fired plants easier for by increased competition and market smaller, independent players and price signals. At the same time their hence lower the need for integrated continuous improvement impels and utilities. Accordingly, in recent years, supports restructuring efforts because almost all new generation capacity they provide options to market par- added around the world has been ticipants and offer increased efficiency natural gas-fired. In resource-rich in energy production and consump- countries, gas-fired power plants tion. provide an opportunity to monetize Key Characteristics stranded gas resources by creating local demand. In most places, low cost Electricity restructuring has usually of construction, higher efficiency, and involved a separation of the industry lower emissions of gas plants increase along the lines of its different functions their popularity. The liquefied natural as well as a rewriting of rules to allow gas (LNG) industry, which has been for competition in generation and cutting costs across the LNG value marketing. New regulatory agencies chain from liquefaction to regasifica- were created to supervise the activities tion, now makes natural gas available of private players in this new market- to an increasing number of consumers place, to protect consumers against around the world. The IEA expects market manipulation, to develop more than 40 percent of new capacity service quality standards, and to to be gas-fired. Almost half of this ensure the successful implementation increase will happen in OECD coun- of the competitive model. There are tries; there are significant uncertainties differences among the approaches in most other countries regarding the used by different countries, but they ability to attract capital needed for all involved a combination of the infrastructure investments such as following actions: upstream development, pipelines, • Unbundling of generation, trans- LNG terminals and ships, and power mission, distribution, and facilities. marketing functions Developments in other generation • Open access to the transmission and technologies from renewable tech- distribution grid nologies such as wind and solar to clean coal will continue to provide • Creation of electricity trading alternatives. As consumers’ exposure arrangements (e.g., pools) to market prices expands, their interest • Creation of independent system in energy efficiency and conservation operators (ISO’s) technologies will also increase. Storage • Creation of an independent regula- technologies and small scale distrib- tory agency (if one does not uted generation technologies may also already exist) play an important role in the electricity industry of the future. These and other

49 Guide to Electric Power in Ghana

• Privatization of electricity assets egy it promoted in many countries: through sale or public auction, or “the Bank’s project-level outcomes the corporatization of the govern- were disappointing, mostly because ance of the assets the Bank underestimated the complex- ity and time required for reforms to • Deregulation of electricity prices achieve lasting and equitable out- • Retail competition. comes. At the sector level, outcomes In many places, these are politically have been poor or, at best, mixed, challenging reforms. Caught between except in countries fully committed to investment needs of the power sector reforms. Private sector development of and the difficulty of implementing the electric power sector is a work in restructuring of the sector, many progress because the power sector governments sought ways of inviting reform process is complex, takes time, private capital to build new generation is resource-intensive, and requires capacity via models such as build- phasing and careful sequencing to operate-transfer and build-operate. create the conditions for sector trans- 17 Investors responded but required formation.” power purchase agreements (PPA’s), It is now clear that there is no single which, in many instances, reflected model that applies to all countries. As significant risk premiums in their price such, instead of following a rote structures. Not only have some of checklist of market characteristics, these PPA’s become political issues, each country needs to develop its own they also present serious obstacles to commercial framework that reflect its opening the market to competition. own socioeconomic and electric sector Some of these agreements ended up in circumstances and priorities while arbitration while others were renegoti- following certain fundamental guide- ated. lines. On the other hand, some countries pushed forward with significant 6.5 Electric power and Ghana’s reforms although the market was not neighbours – West African large or diverse enough for a competi- Power Pool tive model. If the market is not large Ghana’s electric power transmission and diverse enough, it probably is not system is connected to La Côte appropriate to pursue a full-scale d’Ivoire’s on the west and to Togo and restructuring with unbundling, open Benin’s on the east. Ghana also sup- access and all its associated changes. plies electric power to Burkina Faso in Even if the market is large, the state the north through a low voltage entities will not attract investors distribution network. The high voltage because of their inefficiencies and transmission system between Ghana cumbersome bureaucratic practices. Of and Burkina Faso is being developed. course, it is not a simple matter to There are other interconnections decide what is too small and what is large enough. 17 Power for Development: A Review of the World Bank Group's Experience with Private Participa- The World Bank itself recognizes tion in the Electricity Sector by Fernando the shortcomings of the reform strat- Manibog, published by the World Bank, January 2004.

50 Guide to Electric Power in Ghana between countries in the region, Table 6.1: WAPP international transmission lines Load Voltage Length Capital including links between Burkina Faso Line capacity (kV) (km) Cost ($ and La Côte d'Ivoire, Niger and Nige- (MW) million) ria, and Benin and Togo (Table 6.1). Benin- 150 161 183 existing Togo The existing interconnections are Burkina 200 225 150 existing being extended to link all the countries Faso-La Côte in West Africa with the view of creat- D’Ivoire ing a power pool that would Ghana- 256 161 129 existing consolidate the power generating Togo Ghana- 327 225 220 existing resources of all the countries in West La Côte Africa. In October 2000, 14 ECOWAS D’Ivoire (Economic Community of West Afri- Niger- 70 132 264 existing Nigeria can States) members signed the West Benin- 560 330 16 20.00 African Power Pool (WAPP) agree- Nigeria ment which calls for developing Gambia- 20 225 110 27.83 Senegal energy production facilities and Guinea- 150 19.27 interconnecting their respective elec- Senegal tricity grids to boost power supply in Guinea- 150 225 450 65.22 La Côte the region. According to the agree- D’Ivoire ment, the WAPP will be accomplished Guinea- 80 110 93 13.48 in two phases. The first phase involves Sierra Leone countries that are already intercon- Guinea- 150 225 123 17.82 nected, including Nigeria, Benin, Togo, Guinea Ghana, La Côte d'Ivoire, Niger and Bissau Guinea- 90 225 368 53.33 Burkina Faso (known as Zone A). Mali Liberia- 80 13.48 The second phase involves coun- Guinea tries which are yet to have Liberia- 80 13.48 interconnection facilities, which in- Sierra Leone Mali- 150 225 821 111.34 Senegal Mali-La 100 225 616 88.18 Côte D’Ivoire Burkina 30 225 116 7.5 Faso- Ghana Source: The West African Power Pool & Optimal Long-Term Planning of International Transmission with a Free-Trade Electricity Policy, Interim Report, 2001, F.T. Sparrow and Brian H. Bowen, Purdue University.

In December 2003, member states signed the ECOWAS Energy Protocol, which calls for the elimination of clude Guinea, Guinea-Bissau, Liberia, cross-border barriers to trade in en- Mali, Senegal, Gambia and Cape ergy, and encourages investment in Verde (known as Zone B). the energy sector by providing for international arbitration for dispute

51 Guide to Electric Power in Ghana resolution, repatriation of profits, the French Ministry of Foreign Affairs, protection against expropriation of and the Japanese International Coop- assets, and other terms considered eration Agency (JICA). USAID-funded attractive by potential investors. The implementing partners working with Protocol provides open and non- ECOWAS and national utility corpora- discriminatory access to transmission tions include PA Consulting, Nexant, facilities. A regional regulatory body Associates for International Resources and common standards for maintain- and Development, Purdue University, ing grid reliability are also being and the U.S. Energy Association. developed. Although slightly behind schedule, The ECOWAS Energy Information some of the interconnection projects Observatory (EIO), one of the first are under construction or near comple- permanent bodies of WAPP, was tion. Nigeria and the AfDB signed a established in February 2003. The $15.6 million loan agreement in De- WAPP EIO is based at the headquar- cember 2002 for the interconnection of ters of the Communauté Electrique du NEPA (Nigerian Electric Power Au- Bénin (CEB) in Cotonou, Benin. The thority) and Compagnie Electrique du EIO is set to benefit from substantial Benin (CEB) networks in Benin and local contributions by CEB, Togo Togo. Electricité, and the National Electric Growing demands for power have Power Authority (NEPA) of Nigeria. prompted Burkina Faso to seek import USAID and the French Cooperation electricity from neighboring La Côte currently support the Observatory; but d'Ivoire. A 225-kV power line, connect- the EIO is expected to become self- ing the city of Ferkessedougou in supporting by means of a small fee northern La Côte d'Ivoire with the assessed on all cross-border electricity Burkina Faso’s capital, Ouagadougou, trading within the region. is expected to begin operations in 2005. The WAPP EIO will collect monthly Burkina Faso employs diesel genera- energy supply and demand balances, tors to produce electricity, but high provide forecasts of potential energy production costs attributed to fluctuat- surpluses available for trading, coor- ing oil prices prompted the dinate maintenance schedules, and government to begin interconnecting engage in long-term generation and Burkina Faso's grid with that of transmission capacity expansion neighboring countries like Ghana and planning. The EIO is designed to have la Côte d'Ivoire to import additional access to the electricity companies’ electricity requirements. data and information in each of the Work began in early 2003 on a member countries. Eventually, access project to connect portions of Niger to should be allowed in real time. Nigeria's electricity grid. The project Key multi-lateral partners in the involves the construction of three development of the WAPP are separate networks at an estimated cost ECOWAS, the World Bank, and the of $16 million. The imported power African Development Bank. Other will be much cheaper than the domes- important bilateral donors are Agence tically oil-generated electricity cur- Française de Développement (AFD), rently consumed, and the project will

52 Guide to Electric Power in Ghana help eliminate several diesel-powered generators.

Overall, WAPP is an ambitious project initiated by ECOWAS Energy Ministers and championed by the ECOWAS Department of Infrastruc- ture. Many international entities and bilateral aid institutions have become involved in this undertaking mainly because they realized its potential benefits for the region.

If the WAPP initiative succeeds in building the interconnections, estab- lishing a transparent and efficient regional regulatory framework, and attracting private investment in power generation, regional economic development will receive a significant boost while saving the regional economies several billion dollars over the next couple of decades.

53 Guide to Electric Power in Ghana

Bibliography

Akorli, Simons (2005). Electricity Industry Policy Options for Small Economies: The Case of Ghana. A PhD dissertation Proposal. ABB (1995). Introduction to Integrated Resource T & D Planning, 3rd Printing, ABB Power T & D Com- pany Inc., Cary. ABB (1950). Electrical Transmission and Distribution Reference Book, ABB Power Systems Inc., Pittsburgh. Armah, B. (2002). Economic Analysis of the Energy Sector, Institute of Economic Analysis (IEA). Ghana. ECG (2004). ECG Management Support Services Contract 2004. Accra. Ghana. Edjekumhene, Amadu, and Brew Hammond (2003). Power Sector Reform in Ghana in the 1990s: The Untold Story of A Divided Country Versus A Divided Bank. Energy Commission (2005), Strategic National Energy Plan 2005-2025 Energy Commission Act, 1997 (Act 541) Gonen, Turan (1988). Modern Power System Analysis, John Wiley & Sons Ltd, New York. Government of Ghana (1999). Statement of Power Sector Development Policy, April. Gross, Charles A., Power System Analysis, John Wiley & Sons Ltd, New York. IEE (2002). Renewable Energy in the UK, An Environment & Energy Fact File, 2nd Edition, Savoy Place. IEE (1979). IEE Introductory Booklet on The Power Station Game, Savoy Place. ISSER (2003). State of the Ghanaian Economy in 2003. Institute for Statistical, Social and Economic Research, University of Ghana, Legon James Moxon (1984). Volta Man’s Greatest Lake. Pitman Press, Bath. Public Utilities Regulatory Act, 1997 (Act 538). Volta River Authority (2001). VRA Generation and Transmission System Master Plan, Acres Interna- tional, July. Volta River Authority (1985). Ghana Generation Planning Study, Acres International Limited. Volta River Authority (1971). Ghana Power Study, Engineering and Economic Evaluations of Alterna- tive Means of Meeting VRA Electricity Demands to 1985, Kaiser Engineers, August. Weedy, B.M. (1987). Electric Power Systems, 3rd Edition Revised, John Wiley & Sons Ltd, Chichester. World Book (1994). The World Book Encyclopedia, Volume 6, World Book Inc., London.

54 Guide to Electric Power in Ghana

Appendix 1: Ghanaian Electricity Infrastructure

Source: Energy Commission, March 2005.

55 Appendix 2: Energy Sources for Generating Electricity Fossil Fuels non-hydrocarbons in a gaseous phase or in solution with crude oil in under- Fossil fuels are derived from decaying ground reservoirs. vegetation over many thousands or millions of years. Coal, lignite, oil Ghana has some gas production (petroleum) and natural gas are all associated with oil in the Central and fossil fuels. Fossil fuels are non- Western Regions of Ghana. More gas renewable, meaning that we extract can be found if more exploration takes and use them faster than they can place either offshore or onshore. possibly be replaced. Fossil fuels are Fuel Oil combusted in boilers in order to convert water to steam that is used to Fuel oils are the heavier oils in a barrel power the turbines in an electric of crude oil, comprised of complex generator. hydrocarbon molecules, which remain after the lighter oils have been distilled Coal off during the refining process. Fuel A black or brownish black solid com- oils are classed according to specific bustible fossil fuel typically obtained gravity and the amount of sulfur and from surface or underground mines. other substances that might occur. Coal is shipped by rail to power plants Virtually all petroleum used in steam and may be imported from other electric plants is heavy oil. Currently, countries. In Texas, as in other coal roughly 30 percent of electricity in producing states, electric generating Ghana are generated using light crude stations are often "mine-mouth," oil, which is somewhat unusual. meaning that they are built at the mine Renewables and extracted coal is taken directly to Renewable fuels are those that are not the generator. depleted as they are consumed. The Coal is classified according to wind, sun, moving waters (hydroelec- carbon content, volatile matter and tric), water heated in the earth heating value. Lignite coal generally (geothermal) and vegetable matter contains 9 to 17 million Btus (British (biomass) are typical renewable energy thermal units, a measure of heat sources for electricity. content) per ton. Sub-bituminous coals Hydroelectricity range from 16 to 24 million Btu per ton; bituminous coals from 19 to 30 Electricity can be created as turbine million Btu/ton; and anthracite, the generators are driven by moving hardest type of coal, from 22 to 28 water. Ghana depends heavily on million Btu per ton. hydroelectricity, most of which comes from two facilities, Akosombo and Natural Gas Kpong stations. Natural gas is a mixture of hydrocarbons (principally methane, a molecule Wind Electricity of one carbon and four hydrogen Electricity can be created when the atoms) and small quantities of various kinetic energy of wind is converted Guide to Electric Power in Ghana into mechanical energy by wind Nuclear turbines (blades rotating from a hub), Nuclear energy is a non-renewable, that drive generators. Currently, there non-fossil fuel form of energy derived are no wind facilities in Ghana. from atomic fission. Solar Electricity Nuclear Electricity Radiant energy from the sun can be The heat from splitting atoms in converted to electricity by using fissionable material, such as uranium thermal collecting equipment to or plutonium, is used to generate concentrate heat, which is then used to steam to drive turbines connected to convert water to steam to drive an an electric generator. Uranium is a electric generator. Solar electricity is heavy, naturally radioactive metallic about a decade behind wind electricity element which has two principle in development for commercial appli- isotopes, uranium-235 or uranium-238. cations. Solar electricity can represent Uranium-235 is the only isotope an important future energy source, existing in nature in appreciable especially for niche markets like off- quantities and is thus indispensable to grid power. Solar energy depends on the nuclear industry (which includes available sunlight and is reliant on applications other than electric power storage or supplementary power for civilian use). Uranium-238 absorbs sources. There are some rural applica- neutrons to produce a radioactive tions of solar energy in Ghana in the isotope that decays to plutonium-239, form of photovoltaic cells used to which is also fissionable. Nuclear charge batteries and to generate direct plants have been by far the most use electricity. expensive to construct, although Biomass and Geothermal uranium is the least expensive fuel to Electricity can be created when various use (apart from questions about dis- materials (like wood products and posal costs). Disposal of waste fuel, agricultural waste, or even crops which remains radioactive for a long grown for use in electricity produc- time, has been a major concern. For tion) are combusted. Heat from these reasons, no nuclear plant has combustion is used to convert water to been ordered in the U.S. since 1978. steam for power generation. Electricity The costs and hazards associated with can also be created when steam pro- decommissioning nuclear facilities are duced deep in the earth is used to run likely to be substantial and the dis- turbines in a generator. Ghana has posal of radioactive wastes from these some agricultural waste but there are facilities remains an unresolved issue no biomass generation facilities, in the U.S. On the other hand, coun- mainly because the technology is tries such as France, Japan, South relatively expensive and waste quanti- Korea and Finland continue to depend ties are limited. on nuclear power at significant rates (for example, more than 70 percent in France) and to build new facilities.