No better time to increase generation capacity than now

No better time to increase generation capacity than now
3D Electric power lines over sunrise
  • Demand to out-strip current dependable capacity of 4742MW by 2026
  • Peak demand to hit 4460MW, export to ECOWAS to rise to 28550GWh
  • Takes 3-4yrs to build new plant

The country risks a power generation deficit by 2026 if it fails to plan for new capacity now.

Out of an installed capacity of 5167MW, 4742MW is dependable with peak demand currently 3206MW. Demand meanwhile is expected to increase by 1000MW by 2026, which means that the country would have to double steps to avoid power supply crisis in the next few years.

“Contrary to the excess capacity claim, I would like to strongly suggest the need to start contracting additional capacities now. From the sector statistics, the country experienced the highest demand ever, system peak load on 7th April, 2021 with 3206MW. This provides the basis that demand could surge and catch up with supply in the next 3 to 4 years,” said Elikplim Apetorgbor, CEO of Chamber of Independent Power Producers, Distributors and Bulk Consumers (CIPDiB).

He spoke in Accra at a lecture organised by the Institute of Economic Affairs on the topic: “What does Ghana stand to gain from PPA transparency?” and explained that not all dependable capacity is available capacity, hence the need for urgent steps to increase the current generation capacity.

Informing this projection, he said “is the power need in the operationalization of the West Africa Power Pool market, operational activities of the Petroleum Hub Development Corporation (PHDC) of about 500MW, Valco’s power demand of about 500MW -1000MW after their planned expansion, mines, export, steady increase in the production of electric vehicles, residential demand etc.”

Meanwhile, according to a study of the Electricity Market Oversight Panel, electricity requirement for Ghana including power exports to Togo, Benin, Burkina Faso and Mali is projected to increase from 22799Gwh in 2022 to 28550GWh by 2026 at a compound annual growth rate of about 9 percent.

Additionally, Ghana’s system peak is projected to increase from 3539MW in 2022 to 4460MW in 2026 excluding the 18 percent reserve margin.

This, he advocated, makes it imperative for the government to lift the current ban on new Power Purchase Agreements (PPAs). The directive affects all energy generation sources including the issuance of new licenses for wholesale electricity supply and permits for utility scale grid connected solar photovoltaic (PV) and wind power plants and came into effect in 2017.

The move, however, has been widely criticised by a number of organisations including the Africa Centre for Energy Policy and the Africa Centre for Energy Security for having the potential to stifle new investment into power generation to meet ever growing electricity demand, especially as the government embarks on an industrialisation drive.

Many market watchers also see the directive as a knock back on government’s touted agenda to make the country an energy hub within ECOWAS sub-region and as such, a setback for global concerted efforts to transition to much cleaner energy sources.

Intrinsically, Mr. Apetorgbor, whose outfit has been a major voice against the ban on new power purchase agreements, holds the position that since procurement of a cost-effective conventional power plant will typically take 3 to 4 years, planning for a new capacity should be looked at from strategic point of view. “The processes leading to the procurement of the new generation should start now taking into consideration the industry participants’ track record as the country stands to benefit from the flexibility in the negotiation process with them.”

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