Ghana has one of the highest electrification rates in sub-Saharan Africa, with more than 70% of rural areas and 95% of urban dwellers having access to electricity. A recent drive to develop the country’s electricity infrastructure has brought to an end a period of unstable supply and raised installed generation capacity to 4780 MW as of the outset of 2019. However, this development brought its own challenges: oversupply in the system resulted in the government paying for power it did not utilise, in turn leading to contract renegotiations with private sector power producers that threaten to undermine investor confidence. The government has also suffered a setback in its strategy of privatising key components of the utilities sector. How the authorities respond to these challenges will have a significant bearing on the development of Ghana’s generation, transmission and distribution systems for years to come.


At the outset of 2019 around 3200 MW, or 6%, of Ghana’s 4780 MW of total grid capacity was accounted for by 11 thermal power plants. The largest of these is the 560-MW Sunon Asogli plant located near the port city of Tema, which came on-line in 2010. The second-largest thermal power plant in the country is the 470-MW Karpower barge, which until recently was moored at Tema fishing harbour in the east of the country. In 2019 a long-running dispute regarding its location came to an end when the floating unit was moved to Sekondi, in the west of the country, where domestically produced feedstock is available. The most recent addition to Ghana’s thermal power capacity began commercial operations in June 2019: the 340-MW Kpone Independent Power Plant at Tema Industrial Zone is currently owned by the special purpose vehicle Cenpower Generation, and is the first project-financed greenfield thermal plant in the country.

Ghana’s thermal plants use a combination of oil, natural gas, diesel, and heavy or residual fuel oil. The country’s largest generation facility, however, is not a thermal unit, but one which takes advantage of the region’s relatively high level of rainfall: the 1020-MW Akosombo hydropower facility. The facility sits at the head of Lake Volta, which became the world’s third-largest manmade lake in the 1960s, when the government flooded the Volta Basin to tap its hydropower potential. By providing power to the nearby Volta Aluminium Company (VALCo), the Akosombo plant played a central role in the post-colonial industrialisation effort. Since that time, the hydropower segment has been enlarged by two new plants at Kpong and Bui, with capacities of 160 MW and 400 MW, respectively. In 2019 hydropower accounted for around 33% of Ghana’s installed grid capacity, and the segment’s infrastructure continues to develop.

At the close of 2019 the government was preparing to break ground on a multipurpose dam project in Pwalugu, located in the Upper East Region. The $300m facility will include a powerhouse consisting of two turbines with 60 MW of installed capacity and 16.5 MW of continuous capacity. Lastly, three solar power plants and a small biogas facility make up the grid-connected renewable energy infrastructure, accounting for around 1% of total generation capacity. The Navrongo solar plant, located in the Upper East Region, became the first grid-connected solar facility in the country when it was inaugurated in 2013. With a capacity of 2.5 MW at the time, it was also the largest photovoltaic (PV) plant in West Africa besides those in Cape Verde. The first large-scale solar project in Ghana, the 20-MW solar power plant operated by China’s BXC Ghana, was connected to the grid as recently as 2016. It has since been joined by the Meinergy solar facility, which also has a nameplate capacity of 20 MW.


Power from Ghana’s grid-connected generation plants is transmitted to the country’s 64 bulk supply points by approximately 5900 km of transmission lines, collectively known as the National Interconnected Transmission System. Transmission takes place at 69 KV, 161 KV and 330 KV. Ghana is also connected to its western neighbour Côte d’Ivoire and its northern neighbour Burkina Faso via 225-KV lines, while a similar connection has been established with Togo through two 161-KV lines and a 330-KV line. The system control centre in Tema is charged with operating and monitoring the entire Ghana power network, and is furthermore responsible for cross-border power exchanges with neighbouring countries. “Ghana is expanding its electricity exports to Burkina Faso,” Jonathan Amoako-Baah, CEO of domestic electricity transmission firm GRIDCo, told OBG. “These exports to Burkina Faso stood at 90 MW in mid-2019 and the aim is to increase capacity to 150 MW by late 2020.”

Ghana’s transmission network has been the focus of a sustained capacity-building effort over recent years, as the authorities have sought to connect more of the country’s citizens to reliable power. As of the end of 2018 the network had 134 transformers installed at various load centres across the country – seven more than in 2017. Transmission losses, meanwhile, have run at a relatively low level throughout this period of expansion. According to the Energy Commission, in 2009 around 3.8% of gross transmission was lost, and in 2018 system losses stood at around 4.4%.

Sector Control

For nearly four decades after Ghana’s independence, a single body controlled the provision of electricity to the market. The state-owned Volta River Authority (VRA) was established in 1961 and given a mandate to generate, transmit and distribute electricity across the country. Following a major legislative change in 2005, however, the market was opened up to attract independent power producers (IPPs) to the domestic utilities arena. The Takoradi power station, the first IPP, was constructed in 2004 at Aboadze, and there are currently 10 IPP thermal and solar generation plants feeding power to Ghana’s grid. In 2019 approximately 45% of generation capacity was provided by private participants. The VRA, meanwhile, controls some of the most important power plants in the country, including the Akosombo and Kpong hydrogeneration stations on the Volta River, as well as a number of thermal and solar facilities. The 2005 legislation that started the sector’s liberalisation process also transferred the VRA’s control of the transmission system to the Ghana Grid Company (GridCo), established in 2008 to provide fair and non-discriminatory transmission services to power generators and bulk consumers. “There are a large number of opportunities for public-private partnerships (PPPs),” Michael Cobblah, CEO of regional investment bank C-Nergy, told OBG. “However, without a watertight PPP Law that transcends governments, investor confidence will remain low and few PPPs will be implemented.”

The most significant bulk customers in the power market are the Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCo), as well as a number of large mining operations. The ECG is wholly owned by the government and is the primary distribution company in the country, claiming a market share of over 70%. NEDCo was established as a subsidiary of the VRA to distribute power in the northern part of Ghana. The only privately owned distribution company in the market is Enclave Power Company, which feeds power to industries in the Tema free zone.

Policy Reversal

Liquidity challenges at the ECG have been a concern for the sector for some time. The company has faced a number of difficulties in collecting payments from customers, including government entities, and in turn it has been unable to pay IPPs for the power it has received. The government has attempted to overcome the issue through a cash waterfall mechanism (CWM), intended to facilitate the equitable distribution of all cash collected in the power sector. However, the CWM distributes funds that are already in the system and therefore does not effectively tackle the fundamental challenge of the EGC’s inability to collect all of the revenue owed to it.

More recently, the government attempted to address the problem through a privatisation process, the plans for which date back to 2014, when Ghana and the US – acting through the Millennium Challenge Corporation – entered into a compact that would see Ghana receive a grant of up to $498m in a five-year economic development programme. As part of the deal, the government agreed to put the ECG in private hands to be supervised by the Millennium Development Authority (MiDA). Ghana later negotiated a reduction in the size of the foreign stake required by MiDA, and in March 2019 signed the operations and management of the ECG to Power Distribution Services Ghana (PDS). Domestic firms hold 51% of the new consortium and 49% is held by foreign players, with the largest stake belonging to Philippine electricity giant Meralco. PDS was expected to improve revenue collection, cut costs and maintain stable power for two decades while injecting over $500m into the company. However, political opposition to the deal and accusations of procedural irregularities resulted in the government suspending the concession agreement with PDS in July 2019, after which it announced an inquiry into the circumstances of the arrangement. As a result of the move, the ECG has resumed full operation and financial control of electricity distribution. The government, therefore, continues to face liquidity challenges: in December 2019 hundreds of GridCo staff gathered in Accra to protest against the debts owed to it by power transmitters, including the ECG, NEDCo and VALCo.

Demand & Supply

In addition to the ECG’s ongoing liquidity difficulties, the government faces a challenge in the form of Ghana’s radically altered supply and demand scenario. Previously, the country lacked the generation and transmission capacity to reliably serve its growing urban centres and industry. Power shortages in 2014 and 2015 were especially felt by the mining and manufacturing sectors, damaging the economy and pushing up inflation. Lacking the financial resources to tackle the problem, the state’s response was to fasttrack private sector investment in the sector, and from 2014 to 2017 it contracted three emergency power producers and signed 43 power procurement deals.

Having emerged from a period of power shortages that peaked in 2015, Ghana now faces the challenge of over-capacity. A raft of power procurement deals has raised the country’s installed capacity to almost double its peak demand level of approximately 2700 MW. In mid-2019 the government revealed that it was paying around GHS2.5bn ($484m) a year for power that it does not need, while the bill for excess gas in 2020 may be as high as $850m. The effect of energy costs on the national budget has prompted the government to seek new terms for existing deals. Accordingly, the government has announced its intention to convert all power procurement arrangements with independent producers and gas suppliers to take-and-pay contracts, in which it would only pay for resources it has used. Under the existing take-or-pay model, IPPs are paid according to the agreed tariff irrespective of whether or not the offtaker utilises it. The policy change would therefore result in savings for the government in the short term. Over the longer term, however, it runs the risk of reducing investor appetite for power projects.


The resolution of the government’s dispute with IPPs regarding the suggested shift to a take-or-pay model for power contracts may have significant effects on Ghana’s power sector over the coming years. Private sector investment has played a central role in the country’s effort to meet its increasing power demand.

While current capacity is sufficient, a population growth rate of around 2.2% and increasing urbanisation levels mean that demand for electrification and reliable power will continue to rise. The IPPs are likely to argue their case more effectively in 2020 due to the recent establishment of their industry body – the Chamber of Independent Power Producers, Distributors and Bulk Consumers – in June 2019. In the view of many, the longterm solution to the payment problem may be a tariff structure that accurately reflects the cost of power. “Tariffs are far below costs,” Jo Ann Sackey, senior policy analyst a the Africa Centre for Energy Policy, told OBG. “This has put the distribution company in the state that it is in today. We want tariffs to be more cost-effective; however, this has become a political issue,” she said. A further threat to the ongoing expansion of supply arises from the ongoing challenge of energy sector debt. By the close of 2019 the ECG’s outstanding debt was an estimated GHS1.2bn ($232.4m) and further strike action within the sector remains a possibility.

Elsewhere in the utilities sector, the government faces a strategic decision. The 2019 completion of the West African Gas Pipeline Company’s reverse flow project has allowed gas from oil fields located off the western coast to be transported to thermal plants sited in Tema (see Energy overview). This, combined with new gas discoveries, promises to alleviate pressure on gas supply that has arisen from supply shortfalls out of Nigeria. In light of this, the government’s decision to construct a liquefied natural gas facility at Tema has been called into question by a number of industry participants, including the Africa Centre for Energy Policy. Ghana has already contracted two companies out of China to build the plant, which is expected to process gas purchased from Russian oil giant Rosneft.