Ghana expands generation capacity to improve the reliability of energy, water and sanitation utilities

Text size +-


With a population of 27.4m people growing a rate of 2.3% per year, the provision of reliable electricity and clean water has become a main focus for Ghana. The government has made strides in the past decade, particularly in achieving UN Millennium Development Goals related to increased water access, but ensuring consistent service delivery for utilities remains a vital gap to fill. While the state has prioritised the construction of new generation projects, public and private sector stakeholders will need to ensure that strong transmission and distribution mechanisms are in place so that people and businesses are able to benefit from newly installed capacity.

Electricity Status

Ghana’s current power shortage is both a result of and a key constraint to economic growth. As noted in the Strategic National Energy Plan (SNEP) 2006-20, demand for electricity has grown at a rate of 10-14% each year as new developments are built and the growing population becomes increasingly urbanised. The Ministry of Energy (MoE) reported in its Medium-Term Expenditure Framework (MTEF) for 2017-19 that the government installed 870 MW of additional generation capacity in 2016, and intended to add another 1227 MW in 2017, which should result in a total national capacity of 4381 MW by end-2017.

However, even with augmented generation, much of the country still suffers from rolling blackouts, referred to locally as dumsor, which literally translates to “off/on”. A 2014 study by the Institute of Statistical, Social and Economic Research estimated that Ghana lost around $1bn in 2014 due to dumsor-related productivity declines.

In line with the UN 2030 Agenda for Sustainable Development, the government has set a goal of universal access to electricity by 2030. As of October 2017 World Bank data showed that 78.3% of the population had access to electricity, which far outpaces the average for sub-Saharan Africa, which was around 37.38%. Kenya, for example, stood closer to 55% as of January 2017, even after adding 1.3m households to the grid in 2016.

However, this still leaves roughly one-fifth of the population without power. Access in rural areas is especially limited, with 57% of non-urban households having access in 2015. Average per capita consumption stood at 354.71 KWh in 2014, compared to almost 8000 KWh in OECD countries, according to the World Bank. As reported in the 2016 energy outlook published by Ghana’s Energy Commission (EC), annual per capita electricity consumption has been below 400 KWh since 2010, compared with the global minimum average of 500 KWh for other lower-middle-income countries.

Sector Stakeholders

Historically, Ghana’s energy sector has been divided into power and petroleum, separating oil and gas oversight from electricity generation. In an effort to streamline operations, in January 2017 President Nana Akufo-Addo announced the consolidation of the Ministry of Petroleum, and the Ministry of Energy and Power, naming Boakye Kyeremateng Agyarko as minister of energy at the newly merged MoE, which is charged with overseeing the entire sector.

On the electricity side, the Volta River Authority (VRA) acts as the primary electricity generation utility, involved in both transmission and distribution. The VRA owns and operates 10 of the country’s 18 hydro and thermal plants, and one of its two solar power plants. In 2008 Ghana Grid Company (GRIDCo) was established as the sole operator of the national transmission system after the core staff and electricity transmission-related assets were transferred to it from the VRA.

Ghana currently has three distribution utilities: the Electricity Company of Ghana (ECG), which is a state-owned entity; the Northern Electricity Distribution Company (NEDCo), a subsidiary of the VRA; and the privately run Enclave Power Company. The Public Utilities Regulatory Commission (PURC) is responsible for setting electricity tariffs, while the EC is tasked with providing regulation and licensing for renewables generation and transmission.


The cornerstones of the government’s power policy include the National Electrification Scheme, which was established in 1990 as a 30-year plan to achieve universal electricity access, as well as the EC’s SNEP 2006-20, which forecasts supply and demand for the period.

At the end of 2016 the power generation mix came primarily from thermal (57.8%) and hydro (41.6%). Solar contributes 0.6% to the energy mix, though the country is taking steps to diversify by adding sizeable renewable energy contributions.

The VRA reports Ghana’s total installed capacity stands at 4381 MW, of which 3944 MW is dependable supply. Of this, the VRA provides 2456 MW, while 1925 MW comes from other plants and independent power producers (IPPs), whose contribution is expected to grow in the years to come (see analysis).

Historically, Ghana has relied heavily on its hydroelectric plants, which include the 52-year-old Akosombo Dam, also known as the Volta Dam, the 35-year-old Akuse Dam, and the recently completed Bui Dam. According to a 2016 presentation by the former Ministry of Energy and Power, there are at least 14 potential hydro sites still to be exploited, which have a total capacity of 740 MW.

However, increasingly unreliable rainfall has affected the country’s water levels. This has prompted efforts to encourage diversification; the government is planning to achieve this through involvement from the private sector, while the public utilities focus on expanding hydro production. In April 2017 Kwaku Kwarteng, deputy minister of finance, told local press that the VRA would begin selling thermal plants to IPPs to maximise efficiency in generation, enabling the government to work on developing its latent hydropower and encourage private players to take part in developing thermal.

Until recently, Ghana’s thermal generation plants have been fuelled primarily by light crude oil or diesel, both of which are energy-inefficient and expensive options. With the completion of the West African Gas Pipeline (WAGP) in 2011, natural gas has become an increasingly common feedstock, although supply disruptions from Nigeria have amplified calls to make use of domestic gas output from the offshore Jubilee field (see Energy overview). Additionally, following the resolution of the border dispute with Côte d’Ivoire, exploration and drilling activities are able to recommence at the Tweneboa, Enyenra and Ntomme (TEN) field (see analysis).

In March 2017 African energy infrastructure investment platform Quantum Power, in cooperation with the state-owned Ghana National Petroleum Corporation (GNPC), began work on the construction of a $600m liquefied natural gas (LNG) terminal at Tema for the import, storage and regasification of LNG. According to statements made by Quantum to the local press, it should save Ghana around $300m in annual fuel costs, and help prevent breakdowns at thermal plants caused by use of other fossil fuels. Located 12 km from shore, the floating storage vessel will send the gas to be processed via a pipeline before transporting it to the power stations in Tema, where it will be used to generate electricity.

Powering Up

In 2017 the government continued to increase the installed generation capacity by a targeted 1227 MW to meet the rising demand for electricity, as detailed in the 2017 budget. Recent progress has included the ongoing construction of the $900m, 350-MW Kpone Independent Power Plant, a combine-cycle gas turbine plant located in the Tema Industrial Zone scheduled to be complete by the end of 2017 (see analysis). The project is an IPP developed by special purpose vehicle Cenpower Generation, funded by a consortium of investors and supported by Power Africa, a US Agency for International Development-sponsored initiative.

Other recent progress includes the 360-MW capacity expansion of Shenzhen Energy Group’s Sunon Asogli Thermal Power Station, which came on-line in January 2017; completion of the 20-MW Beijing Xiaocheng Company Solar Project in April 2016; and local firm Tojan Power’s projects in Tema, which include a 50-MW power plant.


Although the drive to rapidly increase generation capacity is understandable, these initiatives come with the caveat that a lack of oversight and coordination of the new capacity could result in excess generation without the matching evacuation capability to ensure it is properly utilised. The minister of energy has acknowledged this could indeed be the case; in May 2017 he told local press that as much as $680m could be lost annually if the government were to maintain the 43 power purchase agreements it had signed with power producers, since this would result in approximately 5800 MW of excess capacity.

According to GRIDCo, Ghana’s transmission system includes over 4000 km of high-voltage transmission lines operating at 161 KV and 69 KV, as well as a 225-KV interconnection to Côte d’Ivoire. The company has announced the goal of achieving 99.99% reliability on the national interconnected transmission system with fully automated, integrated and paperless business processes by 2019.


In addition to supplying large industrial consumers, GRIDCo supplies three primary offtakes: NEDCo is responsible for the supply of power to north of the country; the ECG distributes electricity in six regions in the south, including the heavily population Ashanti, Greater Accra and Eastern regions; while the EPC – which is the only private, licensed electricity supply company in Ghana – services the Tema Free Zones Enclave.

As is the case with many African markets, Ghana still suffers leakage in its distribution networks caused primarily by piracy, illegal connections and undermaintained infrastructure. Over the past decade, there have been mixed results in minimising losses caused by transport. The most recent data from the World Bank put power loss estimates for 2014 at 22.59% of total output.

To address these issues, GRIDCo and Japan’s Hitachi Plant Construction broke ground on a $39m, 161-34.5-KV substation in March 2017, which will supply electricity to the central business district in Accra. The project is scheduled for completion in October 2018, and funding is coming from the Japan International Cooperation Agency.

Local press reported that the MoE is pursuing private equity of over $1bn to be invested in the sector, with financing needed for the construction of distribution substations as well as billing infrastructure to help increase the efficiency of the overall system. In addition, in May 2017 the ECG announced the commission of a $7.9m distribution substation capable of serving some 40,000 customers in the city of Asamankese in order to stabilise power supply in parts of the Eastern Region.

Energy Sector Debt

At the end of 2016 the government’s net debt in the energy sector stood at around $2.3bn, largely as a result of high costs for feedstock, capital upgrades and the limited ability to collect customer payments, including from government users. The inability of the distribution companies to retrieve debts owed them by customers leaves them unable to pay power producers.

A breakdown of the debt shows that the VRA owes banks and fuel suppliers $782m and $440m, respectively. Other entities owed include GRIDCo, NEDCo, Asogli and GNPC. This problem is urgent; as estimated by the World Bank, over the next decade Ghana will need to invest $200m per year to meet growing energy needs, but currently many of their investments are funded by expensive short-term commercial debt and supplier credits. Agyarko told local press in January 2017, “As it stands now, roughly 40-45% of installed capacity is idle… because we cannot get the gas, the [light-cycle oil] or the [heavy fuel oil] to power these plants. In certain circumstances, we do not have the money to do scheduled and regular maintenance, therefore threatening the plant in terms of warranty and insurance, so the problem has largely been one of how the money has been managed in the energy sector.”

In an attempt to clear remaining energy debts, the government issued a $2.3bn local currency bond in September 2017. This bond will most likely be issued in two to three parts, with the first batch expected to raise roughly GHS6bn ($1.4m).

Renewables Strategy

One option the government has turned to for affordable feedstock and potential off-grid options is renewable power, which remains an underused resource for Ghana. According to the SNEP 2006-20, the country had set a target of sourcing 5 GW of overall power generation from renewable sources by 2016, with a longer-term goal of having 10% come from renewables by 2020.

While the first target was not met on time, there is potential to make progress on the second. The 2015 Scaling-up Renewable Energy Programme investment plan announced investments of $230m to be used for mini-grids and standalone solar photovoltaic (PV) systems, solar PV-based net metering with storage, and utility-scale solar PV and wind power generation. Additionally, in February 2017 the recently elected government of President Akufo-Addo announced it would resume renewable energy programmes with further incentives to attract private sector investment in solar and wind.

Other notable MoE targets set for 2030 include a utility-scale wind park with a generation capacity of 150-500 MW and 150-300-MW utility-scale solar farms. A 2016 study by the Dutch government highlighted the available incentives for private investment in the renewables sector, including regulations to license and provide power purchase agreements to service providers, clear feed-in tariffs for renewables and a separate fund managed by the EC to support renewables development. A potential exemption from import duty on renewable energy equipment is currently under review. “Given the power deficit, there is tremendous demand for projects related to power generation. Ghana certainly has the resources to close the gap, even via renewable sources such as solar,” Omane Frimpong, CEO at Wilkins Engineering, told OBG.


Currently, solar is the most widely used renewable energy resource in the country. The MoE reports high irradiation levels of 4-6 KWh per sq metre per day, placing Ghana in a comparable position to parts of India and the US state of Nevada. At of the end of 2016 Ghana had 22.5 MW of PV capacity, most of which was generated by the 20-MW solar IPP completed by BXC Ghana, a subsidiary of China-based industrial conglomerate Beijing Fuxing Xiao-Cheng Electronic, that came on-line in April of that year. In terms of upcoming efforts, the 2017 budget outlines plans for solar to provide 2-3% of supply to the national grid, as well as develop 38,000 solar-powered homes in off-grid communities.

In March 2017 the EC relaunched the Rooftop Solar Programme, originally started in 2015 under the previous administration, which provides household with free solar panels with up to 500-W peak capacity, though applicants have to pay for installation costs. The EC has stated a goal of installing 200 MW of capacity under the initiative, which was expanded to cover non-residential facilities. The first step saw the installation of a solar PV system on the Accra offices of GIZ, a sustainable development firm owned by the German government.

Contributing to the renewables mix, the US Trade and Development Agency authorised a grant for over $860,000 to Ghanaian company Buipe Solar to support a feasibility study for a 20-MW PV project. In addition, the German KfW Development Bank announced a $24.4m concessional loan facility for the construction of a 12-MW VRA solar project in the Upper West Region. Small-scale entrepreneurs and start-up teams have also worked towards setting up solar facilities, especially given the decentralised individual systems that can be established in rural communities. One such start-up is local company Back Star Energy, which installed an electrified micro-grid in the city of Daban, enabling residents to run electrical appliances in their homes and for local health care operators to safely store medicines.


According to the MoE, there is wind power potential along the coast, and data collection continues across 13 sites. In 2017 Ghana saw the inking of two key wind energy projects. In June French multinational electric company ENGIE and UK-based infrastructure firm eleQtra, focused on sub-Saharan Africa, signed a joint development agreement to build the 50-MW Ada Wind Power Project in eastern Accra. With initial studies completed, the $120m plant is expected to start operations in early 2019. Meanwhile, Dublin-headquartered Emerging Markets Power-Ghana is working on a 75-MW wind farm in the Shai Osudoku District in Greater Accra. Local press reported that project feasibility works started in 2016, with operations scheduled to begin in 2021.

Going Nuclear

The country has explored the idea of using nuclear power as an environmentally friendly, partial solution to its energy shortage since the 1960s. While planning is still in a nascent phase, in January 2017 Accra hosted the International Atomic Energy Agency (IAEA), bringing together experts to assess Ghana’s infrastructural readiness for nuclear power. In June 2017 Benjamin Jabez Botwe Nyarko, director-general of the Ghana Atomic Energy Commission, announced at a public forum that the country was progressing through the milestones set by the IAEA.

Water & Sanitation Reorganisation

As was the case for the power sector, the new administration made some strategic shifts in the water utility space in 2017. Until the end of 2016 Ghana’s water provision was overseen by the Ministry of Water Resources, Works and Housing, but in January 2017 the administration made the decision to create the Ministry for Sanitation and Water Resources (MSWR). Three entities operate under the new ministry’s umbrella: the Water Resources Commission is responsible for overall management; the state-owned utility Ghana Water Company (GWC) manages urban distribution; and the Community Water and Sanitation Agency oversees water and related sanitation services to rural communities. As with the energy sector, the PURC sets water tariffs.


Major progress has been made in increasing the nation’s safe water provisions. According to the World Bank, access to improved water sources has been rising steadily, from 83.1% of the population in 2010 to 87.6% in 2014. The current Water Sector Strategic Development Plan 2012-25, which includes the overall goal of sustainable water and basic sanitation for all by 2025, builds on other existing documents, including the Community Water and Sanitation Agency Strategic Investment Plans for 2008-13 and 2015, GWC Strategic Investment Plans for 2007-15 and 2025, and the Draft Integrated Water Resource Management Plan for 2011-15.

However, rapid urbanisation has put increased stress on access in cities, particularly for sanitation services. In March 2017 Joseph Kofi Adda, the minister of sanitation and water resources, announced a funding gap of over $200m to achieve the country’s 2025 universal access goals.


The government provided GHS255m ($61m) and laid out several key initiatives in the 2017 budget to support the MSWR’s initiatives. These included plans to construct 15,000 toilets in low-income housing communities throughout Greater Accra, and the establishment a national sanitation fund to encourage the private sector to build more waste landfill sites and processing facilities that turn waste into energy and fertiliser.

In June 2017 the World Bank announced the approval of an International Development Association credit of $45.7m to support the Sustainable Rural Water and Sanitation Project in constructing an additional 20,000 household toilets and supporting some 490 communities in promoting hygiene. Furthermore, the project will finance water supply systems in the Northern Region, where access to water supply and sanitation are below the national average. To further promote sanitation, the government announced plans in June 2017 to build two waste management plants in each region to improve sanitation. In line with overall power generation goals, the MoE has voiced commitments to ensure that Ghana moves forward with the treatment of waste for energy use by 2019.


Maintaining access to basic utilities will be crucial to further economic development in the coming years, especially as the economy appears to be picking up again. A focus on rural communities will be key, as currently rural areas remain behind urban centres in access to water, sanitation and electricity. If cooperation between the government and new private players stays strong, Ghana could be on the way to resolving many of its legacy energy issues and providing increased services to residents.

You have reached the limit of premium articles you can view for free. 

Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.

If you have already purchased this Report or have a website subscription, please login to continue.

The Report: Ghana 2018

Energy & Utilities chapter from The Report: Ghana 2018

The Report: Ghana 2018

The Report

This article is from the Energy & Utilities chapter of The Report: Ghana 2018. Explore other chapters from this report.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart