The Electricity Situation in Ghana: Challenges and Opportunities

In the past decade, Ghana has experienced severe electricity supply challenges costing the nation an average of US $2.1 million in loss of production daily. This situation has developed even though installed generation capacity has more than doubled over the period; increasing from 1,730 MW in 2006 to 3,795 MW in 2016. The peak electricity demand only increased by 50 percent during this same period, increasing from 1,393 MW in 2006 to 2,087 MW in 2016. The electricity supply challenges can be attributed to a number of factors, including a high level of losses in the distribution system, which is mainly due to the obsolete nature of distribution equipment, as well as non-payment of revenue by consumers. Other factors are overdependence on thermal and hydro sources for electricity generation and a poor tariff structure, which makes it difficult for the utility companies to recover the cost of electricity production. In the face of these challenges, however, Ghana could achieve universal access by the year 2020 with an annual electrification rate of about 4.38 percent. 82.5 percent of Ghana’s population had access to electricity by 2016. Solving Ghana’s electricity challenges would require measures including, but not limited to, diversifying the electricity generation mix through the development of other hydro power and renewable energy sources for which the country has huge potential, expanding the prepaid metering system to include all public and private institutions, restructuring the tariff regime to ensure utilities can recover their cost of generation, and promoting energy efficiency programs.