The right balance: Ghana seeks to address overcapacity issues while attracting more investment in the transmission and distribution segments

With recent years seeing major expansion in both generation capacity and grid connectivity, Ghana is now close to achieving a UN Sustainable Development Goal: universal access to electricity. Additionally, it has good solar and wind resources, which can be harnessed to shift the energy mix towards more renewable energy. The country is also host to the largest hydropower project in West Africa. In 2020 Ghana ranked among the World Energy Council’s top-10 most improved for energy security, equity and environmental sustainability.

However, the sector is not without its challenges. Overcapacity in the generation segment poses a fiscal burden to the government as it rolls out its Energy Sector Recovery Programme (ESRP). The goal is to strengthen and develop the grid network and metering systems for transmission and distribution, while targeting greater competition at the distribution level. At the same time, tariff cross-subsidisation is once again under the spotlight, as Ghana continues to focus on providing competitive prices in a dynamic region. Nevertheless, the Ghanaian electricity system remains one of West Africa’s most developed, with increasing demand expected to absorb overcapacity in the years ahead as population and economic growth continue.


The Ministry of Energy (MoE) is the main political authority for the utilities sector, with its power directorate directly responsible for electricity. Ghana Grid Company (GRIDCo) is solely responsible for the transmission network, while the Electricity Company of Ghana (ECG) is the larger of the country’s two stateowned distribution companies – the other being the Northern Electricity Distribution Company (NEDCO). The ECG is the distributor in six regions in southern Ghana, while NEDCO is the distributor in the northern regions. There is a third, private distributor – the Enclave Power Company – which operates exclusively in the Tema Free Zone Enclave in Greater Accra.

NEDCO is a subsidiary of the Volta River Authority (VRA), which operates two hydroelectric dams on the Volta River: the 1020-MW Akosombo Dam and the 160-MW Kpong Dam. The VRA also operates 2.5-MW and 6.5-MW solar plants at Navrongo and Lawra in the Upper East and Upper West regions, respectively. Moreover, it owns the 330-MW Takoradi-1 thermal power plant and has a 10% ownership stake in the 330-MW Takoradi-2 thermal power plant, with Abu Dhabi National Energy Company holding the remaining 90%.

The Bui Power Authority (BPA), meanwhile, runs the 404-MW hydroelectric Bui Generating Station, as well as other renewable energy (RE) projects. These include the Tsatsadu Micro Hydropower Project; a 250-MW solar plant in the Bui enclave; and a 1-MW floating solar photovoltaic project on the Tsatsadu reservoir – the first of its kind in Ghana. In February 2020 the MoE transferred the responsibilities of the old RE Authority to the BPA, making it Ghana’s lead agency in this field. Lastly, the Energy Commission is the technical regulator of the electricity, natural gas and RE segments, and advises the government on energy matters.


Since the 1980s the generation subsector has included a growing mix of private sector operators and public sector outfits like the VRA and the BPA. As of September 2021 some 55% of Ghana’s electricity came from independent power producers (IPPs), 40% from the VRA and 5% from the BPA. 17 power plants were in operation that month, with one of the largest IPPs being Cenpower Generation, which runs the Kpone Independent Power Plant, in operation since June 2019. It supplies around 10% of Ghana’s total installed capacity. Another key facility that came on-stream in September 2021 is the 200-MW Twin City Energy gas plant, near Aboadze.

In 2008 the authorities set up the Ghana Nuclear Power Programme Organisation (GNPPO) to oversee development of nuclear power generation. Nuclear Power Ghana (NPG) was established to be the eventual operator of the country’s first plant, which is expected to be built by 2030. In 2021 the government reported that the initial research phase of the nuclear project was complete, having narrowed down the assessment of suitable sites across the country to four. A vendor country will be selected in 2022, with 15 candidates reportedly expressing interest as of December 2021.

Energy Mix

According to International Energy Authority (IEA) data, hydropower was the only significant source of electricity generation in the country up until 1997, with that year seeing oil-based thermal generation begin. Natural gas entered the mix in 2009, and solar and wind followed in 2013.

The IEA reported that Ghana generated 11,590 GWh from gas in 2020, or 58.8% of total electricity supply; 7293 GWh (37%) from hydro; and 57 GWh (0.3%) from solar and wind. Electricity generated from oil was recorded at 774 GWh (3.9%) that year, compared to 2785 GWh (16.1%) in 2019, demonstrating the country’s shift away from fossil fuels in the generation mix.

Ghana’s RE Master Plan, published in 2019, aims to have 1363 MW of RE in the generation mix by 2030. Other goals include a decentralised RE system via 1000 off-grid communities, along with a reduced dependence on biomass and waste for energy at the local level. Biofuels and waste accounted for some 49,097 GWh of Ghana’s energy supply in 2019, or 37% of the total.

Between 2003 and 2013 electricity demand in Ghana more than doubled due to economic growth and rapid population expansion. Meanwhile, growing uncertainty in rainfall patterns due to climate change negatively impacted hydro output and other power sources failed to keep up with demand. These conditions led to severe under-capacity, which was followed by a series of emergency measures to correct the demand and supply imbalance that resulted in overcapacity in the system. Total installed capacity was 5326 MW in 2021.

During the under-supply crisis, IPPs signed power purchase agreements (PPAs) with the VRA, the ECG or the MoE, which also signed with emergency power producers. This led to a legacy debt of $2.8bn as of 2020, with 32 PPAs still in force as of March 2021. The World Bank-supported ESRP was therefore launched to address this problem, and the government is attempting to renegotiate some of its PPAs (see overview).

Smart Solutions

National electricity access stood at 86.63% in 2021. The government aims reach 100% by 2024. GRIDCo, the ECG and NEDCO have made strong progress on reliability in recent years. “Annual outages are now averaging around 60 hours,” Justice OheneAkoto, national vice-president of the World Energy Council’s Future Energy Leaders Ghana, told OBG.

There is still the issue of theft and illegal connection, however, leading to losses that can average around 25% of power production. Smart and tamper-proof meters, along with other tamper-detection mechanisms, are widely seen as remedies for this, yet still have to be invested in and rolled out. Competition in the distribution segment might help overcome some of these investment issues, with the government committed to boosting private sector involvement. A plan to begin this at the retail end was announced in the 2022 budget.