Light Ebaa! Toward Diversified Power in Ghana

Abstract

Reliable electricity remains a significant challenge to economic development in Ghana. While the country has one of the highest electrification rates in Africa, electricity shortfalls and load shedding have been recurrent features of the power sector since the late 1980s. The approach has typically been generation capacity scale ups from thermal and hydroelectric sources, but this has created dependence and vulnerability to drought and fossil fuel supply. This thesis studies Ghana’s electricity sector and explores alternative technical and institutional solutions for diversified and reliable electricity. Technical options of grid-connected solar and nuclear energy are reviewed for feasibility on account of their precedence in Ghana. Empirical evidence is based on a Levelized Cost of Electricity (LCOE) analysis of power generation in Ghana. Results of this research reveal that given global declines in solar technology capital costs, expensive/unreliable natural gas supply, and exhausted water sources for large hydroelectric dams, solar energy is an economically viable option for Ghana. The nuclear option is discussed in the context of Ghana’s long-held interest in nuclear technology. While political instability and wavering government commitment have impeded nuclear program efforts in the past, growing bipartisan support and political stability indicate a renewed interest in nuclear energy. However, LCOE analysis of nuclear generation confirms its prohibitive costs, which are exacerbated by an institutional preference for large reactors. A description of the country’s electricity sector reforms and new institutional reconfigurations involving the private sector are presented here as the determinants of Ghana’s path toward a more robust energy market conducive to private capital investment. Successful deployment of solar and nuclear power hinges on structural changes to tariff policy, improved regulatory capacity, and sector marketization. To this regard new policy initiatives like the Millennium Challenge Corporation’s Ghana Power Compact, if well executed, stand to benefit the state of power supply—and more critically, alternative energy generation. Data for the quantitative part of the study was gathered from the International Energy Agency, the World Bank, Volta River Company, Ghana Grid Company (GRIDCO), Ghana Energy Commission, and the International Renewable Energy Agency. The qualitative dimension is based on twenty interviews conducted with public and private stakeholders in Accra between June and August 2014. These personal insights have shaped discussions of the quantitative results of this thesis and provided a framework for understanding Ghana’s power policy environment and its implications for solar and nuclear energy.