Despite significant growth in installed power generation capacity, Ghana’s energy sector continues to grapple with inefficiencies that undermine its reliability and performance.
According to the Institute for Energy Security (IES), while installed capacity rose from 4,599MW in 2016 to 5,639MW by the end of 2023, frequent power outages and generation deficits persist, highlighting critical gaps in planning and capacity utilization.
The dependable capacity—representing the portion of installed capacity consistently available for delivery—has struggled to keep pace with demand, which grew from 2,078MW in 2016 to 3,618MW in 2023. This mismatch, IES argues, stems from inefficiencies in managing and maintaining the sector’s infrastructure.
The power sector was once on a trajectory of recovery and growth, benefiting from resources such as the Energy Sector Recovery Levy (ESLA). However, IES in a statement to B&FT has criticized the collateralization of ESLA, which has left the sector burdened with over US$2 billion in debt, despite generating approximately US$650 million annually.
Instead of using the funds to clear legacy debts and stabilize operations as intended, poor management decisions have derailed progress, leaving the sector with operational inefficiencies, mounting debts, and diminished public confidence.
Although infrastructure has expanded, dependable capacity has failed to provide a sufficient buffer to meet peak demand reliably. Factors such as poor maintenance of power plants, outdated transmission systems, and over-reliance on specific energy sources, particularly hydropower, exacerbate the issue. Changing weather patterns have further strained the sector, exposing vulnerabilities in its current energy mix.
The restoration of the 550MW Asogli Power Plant, while a positive step, has been deemed insufficient to address the broader challenges. Other plants, such as Amandi, Siemens, and Karpower, remain underutilized, contributing to deficits that persist during peak demand periods.
In October 2024, Ghana signed a $260 million deal with the World Bank under the Energy Sector Recovery Programme. This agreement includes a $250 million credit metering procurement package and a $10 million clean cooking grant component, aiming to reduce the sector’s $1.2 billion losses and improve operational efficiency.
Despite these efforts, the IES emphasizes the need for a comprehensive strategy that addresses generation, distribution, and financial management to achieve long-term stability and reliability in Ghana’s power sector. Recommendations include resolving arrears owed to independent power producers, enhancing maintenance and upgrades of existing infrastructure, diversifying the energy mix to incorporate more renewable sources, and improving energy planning with accurate demand forecasting.
With regards to independent power producers (IPPs), Dr. Elikplim, the CEO of the IPP Association, has also advocated for licensing IPPs under the Free Zones Authority to enhance their operational flexibility and financial viability. This, he suggests, could be a significant step toward resolving the financial constraints currently faced by IPPs.
