Joseph Cudjoe, Ghana’s Deputy Minister of Energy responsible for Finance and Infrastructure, tells us how he sees the country’s power sector developing in the aftermath of Covid-19
How has the Covid-19 pandemic affected Ghana’s energy demand and what measure are being taken to alleviate any financial impact for both consumers and the power sector?
Ghana’s power demand has not been adversely affected by Covid-19. Demand has remained within forecasted levels during the period. The system peak demand to date is 2,957 MW, on March 19, 2020. Installed generating capacity is 5,018 MW. Dependable generating capacity is 4,742 MW and available generating capacity is approximated as 3,158 MW.
The Ministry of Energy met with key government agencies including the Volta River Authority, Bui Power Authority, GRIDCo and the Electricity Company of Ghana as well as the independent power producers to develop a Covid-19 preparedness plan.
With regards to measures to alleviate any financial impact on the sector, the regulator, the Energy Commission, issued ID cards to key personnel in the power sector to carry out critical works. This ensured the continuous flow of work within the sector, hence minimising any disruptions.
To ensure continuous power supply, special dispensation was given to all expatriate workers providing power supply related services and activities in the country, as well as the importation of materials and equipment for critical maintenance works.
How has the pandemic affected the construction of new energy, power and transmission projects?
Construction activities in the power sector are the worst hit, due to private sector involvement in the development of these projects. Some contractors served Force Majeure notices indicating that global movement restrictions have affected supplies of equipment and materials, as well as personnel for the projects. Projects also suffered delays due to inability of contractors to clear imports from ports, with delays in delivery of shipping documentation by courier companies following travel restrictions.
Are differing spending requirements as a result of the pandemic likely to affect spending on new infrastructure projects?
All over the world, government spending has shifted to the health sector, hence lowering spending on other sectors. It is obvious that projected annual revenue will decline. Irrespective of this global phenomenon, critical infrastructure projects that are at a certain stage, with funds available, will continue. Prioritisation is key and that is what we are doing in Ghana.
What are Ghana’s plans for expansion of power generation and distribution?
Ghana is maintaining strict adherence to the recommendation of the power purchase agreement rescheduling report and the continuous enforcement of the moratorium for the short-term. These are part of measures to address the current excess generation capacity contributing to the growing indebtedness of the sector.
Projects allowed to continue include the Early Power Project in Tema and some renewable projects, including the Pwalugu Multi-purpose dam and irrigation project.
Long-term generation expansion measures include the implementation of the Integrated Resource and Resilience [IRRP] report and the Strategic National Energy Plan [SNEP] under the supervision of the Energy Commission.
The national access rate to the electricity grid is estimated at 84.30% as at the end of 2019. The objective is to achieve universal access to electricity – at least 90% – by 2030. This is being realised through rural electrification projects to extend the grid and mini or off-grid projects, which are targeted at communities that are inaccessible by the grid.
The aggressive extension of the electricity distribution network impels regular maintenance, improvements and upgrades to improve on system performance and distribution losses above industry standards. The current distribution system loss is above 23%.
Will future domestic gas demand growth be able to absorb supply from Ghana’s offshore fields? Where is that demand going to come from?
It is the government’s long-term policy to make natural gas the primary source of fuel for power generation. For this reason, the power sector remains the main driver for natural gas consumption in the country.
The current peak demand for power is about 2,900 MW and this is expected to grow to about 3,300 MW by 2023. Today’s gas demand is about 315m cubic feet per day (cf/d), of which the non-power sector consumes less than 5%. Total demand for gas from the power sector is expected to increase to 350m cf/d by 2023. The domestic gas fields, with the existing facilities can reliably supply about 350m cf/d.
In line with the drive to boost industrialisation, the government is aggressively pursuing non-power consumption of gas and one of the key areas identified is the petrochemical industry. The government is currently preparing the ground for the siting of petrochemical plants, such as fertiliser and methanol plants, in the Western Region that will require natural gas as feedstock. The fertiliser plant for example, will consume about 100 cf/d.
The government is undertaking an LNG regasification project in Tema [to ensure the anticipated surge in gas demand from the non-power sector is covered]. The infrastructure installation is expected to be completed before the end of 2020. In addition, the government is in talks with the neighbouring countries over gas exports to them, as the country [seeks to become] the natural gas supply hub in the sub-region.
Ghana has struggled to absorb gas supply derived from take-or-pay contracts. Is the government changing how it does business with gas suppliers to avoid this problem in the future?
It may be worth recognising that the gas sector in Ghana is quite nascent and perceived to be risky. Many of these agreements were signed at the time it was necessary to provide incentives for investors to develop and supply gas to the power sector, which, for a long time, was confronted with fuel supply shortages that led to erratic power supply.
The country’s gas sector is gradually maturing, and lessons learned from the previous agreements will be factored into the future ones. The government is also trying to renegotiate some of these agreements, where necessary, to reduce the impact they have on the gas price.
What are Ghana’s plans for increasing the amount of clean energy (hydro and renewables) in the power mix? Which are the most notable projects?
We plan to increase clean energy in our power mix to 10% by 2030. This includes a combination of renewables and alternative energy sources.
Broadly speaking we have earmarked the following: an increase in utility-scale solar generation to 250 MW by 2030; implementing grid-tied solar rooftop generation of 200 MW by 2030; installing about 55 mini-grid electrification facilities in island communities by 2030; developing about 150 MW of small hydro power by 2030; having about 2m solar systems through our Off-grid Standalone Electrification Program by 2030; and distributing some 2m improved cookstoves by 2030.
Are you confident that private investors and those from international financial institutions will continue to find Ghana’s power sector an attractive investment destination?
Yes, they will. The government has worked tirelessly and continues to work hard to make Ghana attractive in terms of investment. Digitisation is in full swing and the necessary measures that ensure that we have a conducive environment for success are in place, so I am very confident that investors will find Ghana an attractive investment destination.
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