Ghana's changing electricity supply mix and tariff pricing regime: implications for the energy trilemma.

Acheampong, Theophilus; Menyeh, Bridget Okyerebea; Agbevivi, Doris Edem

Abstract

This article reviews recent developments in Ghana's electricity market, examining regulatory structures, consumption trends and tariff pricing. It further assesses the implications of the country's changing generation mix from hydroelectric to thermal power production on the energy trilemma: that is, energy security, energy equity, and environmental sustainability. Our findings show that thermal generation will continue to form the backbone of Ghana's electricity mix over the next ten years (2021-2030), driven by recent increments in thermal supply. This success in generation security, evidenced by excess grid capacity, has been by virtue of government's strong policy focus since 2015 on meeting current and future demand. Nonetheless, our analysis shows energy security in the Ghanaian context is often viewed as being about power generation and not one that encompasses the entire value chain. So, although there is excess grid capacity, there is lack of investment in distribution infrastructure, evidenced by the persistent 25% losses of all power purchased compared to a Sub-Saharan African average of 12%. This increases susceptibility to persistent power outages, which is a major energy security issue that needs addressing. Furthermore, despite the considerable 85% improvement in access in terms of grid connection, the electricity tariff structure masks inefficiencies in the distribution system by offloading the price burden on to some consumer categories while also creating unintended consequences of unpaid bills and electricity theft. Finally, at a sub-regional level, a comparison of electricity tariffs with some neighbouring West African countries shows that the cost of power in Ghana remains relatively expensive, especially for industry. This can negatively impact the country's competitiveness given that cheaper power is a critical determinant in attracting both domestic capital and FDI inflows and meeting SDG Goals 7 and 13, especially modern energy services.

Citation

ACHEAMPONG, T., MENYEH, B. and AGBEVIVI, D.E. 2021. Ghana's changing electricity supply mix and tariff pricing regime: implications for the energy trilemma. Oil, gas and energy law [online], 19(3), pages 1-28. Available from: https://www.ogel.org/article.asp?key=3974

• Journal Article Type: Article
• Acceptance Date: Apr 1, 2020
• Online Publication Date: Apr 9, 2021
• Publication Date: May 31, 2021
• Deposit Date: Jul 29, 2022
• Publicly Available Date: Jul 29, 2022
• Journal: Oil, gas and energy law
• Print ISSN: 1875-418X
• Publisher: Maris
• Peer Reviewed: Peer Reviewed
• Volume: 19
• Issue: 3
• Pages: 1-28
• Keywords: Ghana; Electricity market; Transition; Energy trilemma; Energy security; Energy equity; Environmental sustainability; West African
• Public URL: https://rgu-repository.worktribe.com/output/1712949