Energy Crisis in Ghana

8/22/2019 Energy Crisis in Ghana

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Energy Crisis in Ghana:Drought, Technology or Policy?

Edited by Abeeku Brew-Hammond and Francis Kemausuor---------------------------------------------------------------------------------------

------------------------------------------------------------------With a Foreword by Francis Momade


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Kwame Nkrumah University of Science and Technology (KNUST) College of Engineering, Kumasi, Ghana, 2007

ISBN #: 9988-8377-2-0

Cover Design by Mr. Eric Anane-Antwi, Department ofPublishing Studies, KNUST, Kumasi


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Foreword

The College of Engineering at Kwame Nkrumah University of Science andTechnology (KNUST) has been at the forefront of energy technology and policyresearch in Ghana for several decades. The decision to organise a seminar series onEnergy Crisis in Ghana marked the beginning of a new wave to engage theuniversity community and experts from the outside the university in a results-orienteddialogue aimed at finding solutions to the countrys critical problems.

This book is living testimony to the practical issues discussed during theseminar series on Energy Crisis in Ghana. Experts drawn from the public andprivate sectors, and their colleagues in the university, found a common agenda in thesearch for practical solutions to our energy problems. As Provost of the College ofEngineering, KNUST, I must say that I was particularly pleased to hear one of theexperts, an economist from Ghanas civil society, pay tribute to the calibre ofengineers (mostly trained at KNUST) working in the utilities.

Our College of Engineering is seeking to institutionalise such positiveinteractions with the society at large through the establishment of The Energy Centre,KNUST. Through this centre we propose not only to talk with colleague experts from

the public and private sectors, but also to walk the talk. The next couple of yearsshould therefore see at least one concrete joint venture undertaken to providesustainable energy here on campus within the framework of a public-privatepartnership business model.

I take this opportunity to salute senior members of the College of Engineering,like Prof Fred Akuffo, Prof Ebow Jackson, Dr David Anipa and Mr Isaac Edwin whohave toiled over the years to build a solid foundation in energy research. I wish alsoto say more grease to your elbows to the editors of this book, Prof Abeeku Brew-Hammond and Mr Francis Kemausuor, and I invite all readers to join me in wishingThe Energy Centre, KNUST, a very bright future.

Francis Momade, June 2007


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Acknowledgements

The College of Engineering is grateful to the authors for their generous contributionof time and knowledge towards the energy seminar series which has resulted in thisbook. The authors agreement to bear all financial expenses related to their travel toKumasi for the seminars is also gratefully acknowledged.

Raymond Asamoah-Barnieh and other teaching assistants and staff of the Departmentof Mechanical Engineering, KNUST provided logistic support including ensuring the

availability of a stand-by generator for the energy seminar series.


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Table of Contents

Foreword.........................................................................................................................i

Acronyms.......................................................................................................................iv

1. Introduction and Key Messages ...........................................................................1Abeeku Brew-Hammond and Francis Kemausuor

2. Why the Power Shortage?....................................................................................6

Theo Sackey

3. Potential for Energy Savings .............................................................................16Alfred Kwabena Ofosu-Ahenkorah

4. Planning for Implementation .............................................................................34Rudith King and Imoro Braimah

5. Role of Renewables ...........................................................................................45Fred Ohene Akuffo

6. Private Sector Participation................................................................................53Ebow Essandoh and Selom Akaba

7. Tariffs and the Poor ...........................................................................................59Ishmael Edjekumhene

8. Energy and Gender ............................................................................................71Rose Mensah-Kutin

About the Authors and Other Contributors .................................................................82


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Acronyms

Term DescriptionAU African Union

bbl BarrelBST Bulk Supply TariffCEB Communaut Electricit du BninCFL Compact Fluorescent LampCMS CMS Energy Corporation (USA)DANIDA Danish International Development Agency

DCS Distributors Control SystemDSC Distribution Service ChargeEAF electric arc furnaceECG Electricity Company of GhanaECOWAS Economic Community of West African StatesEUT End User TariffsGDP Gross Domestic ProductGE General ElectricGECAD GECAD Ghana Limited (Authorized Distributor/Sales Representative of

GE Power Systems)GLSS Ghana Living Standards Survey

GPRS Ghana Poverty Reduction StrategyGSB Ghana Standard BoardGT1 Gas Turbine 1GT2 Gas Turbine 2GWCL Ghana Water Company LimitedH2S Hydrogen SulphideHIV/AIDS Human Immuno-Deficiency Virus/Acquired Immune Deficiency

SyndromeHRSG Heat Recovery Steam GeneratorJICA Japanese International Co-operation AgencyKMA Kumasi Metropolitan Assembly

KNUST Kwame Nkrumah University of Science and TechnologyLCO Light Crude OilLPG Liquefied petroleum gasMDGs Millennium Development GoalsNED Northern Electricity DepartmentPfA Platform for ActionPRSPs Poverty Reduction Strategy Processes


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PURC Public Utility Regulatory CommissionR&M Regulating & Metering StationSLT Special Load TariffSNEP Strategic National Energy planSONABEL Socit Nationale d'lectricit du BurkinaSUSTRAN-Africa Sustainable Transport Action Network for AfricaT1 Takoradi Thermal Power Station 1T2 Takoradi Thermal Power Station 2TTPS Takoradi Thermal Power StationUNCED United Nations Conference on Environment and DevelopmentVALCO Volta Aluminium Company Limited

VRA Volta River AuthorityWAGPCo West African Gas Pipeline CompanyWHO World Health Organisation

Units DescriptionMW MegawattsKV Kilovolts

Km KilometrekWh Kilowatt hoursTOE Tonnes of Oil EquivalentkgOE/ca Kilograms of Oil Equivalent per capitakWh/ca Kilowatt hours per capitakcal KilocaloriesGWh Gigawatt hoursDC Direct CurrentKg/Nm3 Kilogram per Newton metre cubeNm3/h Newton metre cube per hourC Degrees Celsius


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1. Introduction and Key Messages

Abeeku Brew-Hammond and Francis Kemausuor

It is now widely accepted that this is the fourth power crisis Ghana has had inrecent memory. The first in 1984 was caused by an unprecedented drought whoseimpacts were felt throughout the West African sub-region. The second and thirdpower crisis, which occurred in 1998 and 2002, were also attributed to lowrainfall in the Volta basin. The current crisis, following so closely in the heels ofthe last one, has been subject to much public debate and most critical observersnow agree that the old reason of low water levels in the Volta Lake is no longer

tenable.Source: VRA

Figure 1.1: Water Levels in the Volta Lake Reservoir (Crisis Years in Red)

The water levels in the Volta Lake from 1995 to 2006 are presented in Figure 1.1.The minimum levels attained in the current and recent power crises years (1998,2002 and 2006) all fall below the Minimum Reservoir Elevation for safe

VOLTA LAKE REGULATION CHART (1995-2006)

235

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265

270

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

YEAR

ELEVATION(feet)NL

Minimum Reservoir Elevation

VOLTA LAKE REGULATION CHART (1995-2006)

235

240

245

250

255

260

265

270

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

YEAR

ELEVATION(feet)NL

Minimum Reservoir Elevation


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operation of the Akosombo power plant. The frequency of these crises raises aserious question about our ability to learn from previous mishaps.

The actual inflows into the Volta Lake over the longer term period from1965 to 2006 are presented in Figure 1.2. Leaving aside the near-zero inflowsrecorded in the drought years of 1983/84, inflows for the recent and current powercrises years (1998, 2002 and 2006) are indeed some of the lowest recorded overthe last decade. However, these crisis year inflows are significantly higher thansome of those recorded in preceding years (1990 and 1992) which did not see anymajor load-shedding programmes, underscoring the urgency of getting to thebottom of the crises and putting our finger on what are the fundamental causes.

Source: VRA

Figure 1.2: Inflows into the Volta Lake Reservoir (Crisis Years in Red)

Following the load shedding exercise which bedevilled Ghana in August2006, the College of Engineering of the Kwame Nkrumah University of Scienceand Technology (KNUST) organized a series of seminars during which experts in

0

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400000

600000

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1000000

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1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

A

nnualN

et

Inflow

cfs Volta Lake Inflows

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1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

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cfs Volta Lake Inflows


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the energy industry and others who were engaged in policy making were invitedto deliver lectures on various technical and policy issues necessary to address therecurrent crises. The theme of the seminar series was: Energy Crisis in Ghana.This book is a compilation of the key issues that were addressed during theseminar series and these are presented in seven chapters, from Chapter 2 toChapter 8.

Chapter 2 is based on the presentation by Mr. Theo Sackey of the VoltaRiver Authority (VRA) who led the discussion on Planning for Adequate andReliable Power Supply: Issues and Challenges. This chapter addresses the currentand future projected electricity demand and supply including critical generationand transmission requirements. Technical issues affecting VRAs ability tomaintain supply adequacy and reliability, financial issues, challenges and the wayforward for Ghanas energy industry are critically addressed.

Chapter 3 is dedicated to the potential for energy savings based on apresentation by Dr. A. K. Ofosu-Ahenkora of the Energy Commission, onEnergyEfficiency and Conservation. In his presentation Dr. Ofosu-Ahenkora recountedhow far Ghanaians have come abreast with issues of energy conservation and

what tough measures the Commission is currently taking to encourage energyconservation in Ghana. He also gave some good advice for the public on what tolook out for when they go to the market in search of electronic appliances.

Chapter 4 tackles issues in Planning for Implementation. This chapter isbased on a presentation by Dr. Rudith King and Dr. Imoro Braimah of the Collegeof Architecture and Planning at KNUST. The two authors agree that planning inGhana is often done without factoring in financing, and monitoring and evaluationmeasures. This chapter addresses planning not only in energy issues but in everyproject that one may undertake, making it a good reference material foreverybody.

Chapter 5 shifts our focus toRole of Renewables in Ghanas energy sectordevelopment, based on an address by Prof. F. O. Akuffo of KNUSTs Departmentof Mechanical Engineering. Prof. Akuffo is of the view that the technical aspectsof renewable energy exploration in Ghana are well in place and what is left now isfor government to come out with the right policy frameworks to enable the privateindustry begin to explore the market.


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Chapter 6 is based on the presentation by Mssrs. Ebow Essandoh andSelom Akaba of GECAD who took seminar participants through a discussion onThe Role of the Private Sector in Energy Supply in Ghana. The Chapter arguesthat mankinds energy problems have political, economic and environmentalissues at stake and that resources such as capital, manpower, access to technologyand good government policy initiatives are needed to address these issues. Theauthors are of the view that there are huge prospects for the private sector inGhanas energy supply industry which includes the need for new power plants,alternate and renewable sources of energy such as solar, wind turbines and biofuels exploration

Chapter 7 discusses a very sensitive issue, Tariffs and the Poor. Mr.Ishmael Edjekumhene of KITE, a local energy and environment NGO, thinks thatlike every good or service, the price of electricity should reflect or cover the full-cost of production and supply. He however acknowledges that differentialincome levels among households means that some households will not be able toprocure electricity if asked to pay the full-cost of production and supply, and forsuch households price subsidies are inevitable. Subsidies should however be well-

targeted and cost reflective: fostering markets rather than distorting them.

Chapter 8 takes a critical look into Gender and Energy in a country wherethe female population is more than 50%. The Chapter is based on a presentationby Dr. Rose Mensah-Kutin of ABANTU for Development, the local section of aregional NGO involved in gender advocacy. Dr. Rose Mensah-Kutin stresses theneed for governments to accept and understand the inequalities that gendersystems generate between women and men, and the need to promote policies foraddressing them, and she hits hard on the fact that womens concerns and rightshave to be factored into policies of energy resource mobilisation and utilisation.

An important feature in some of the chapters is the Addendum. Thisfeature is found in those chapters based on presentations which were following bylively discussions. It is important to stress that the views expressed in theAddendum represent the main points raised in participants contributions and theydo not necessarily reflect views of the authors.


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The key messages that emerge from all eight chapters of this book may besummarised as follows:

The current power crisis in Ghana is due more to the shortage ofgeneration capacity in the country than to low levels of water in theVolta Lake Reservoir;

There is considerable potential for energy savings particularly inthe residential sector where simple measures like the use of energyefficient lighting can result in a significant reduction in thecountrys demand for electric power;

Planning without adequate provision for financing the planimplementation is a major constraint in power sector developmentin Ghana and until this is addressed we may not be able to realisethe dream of making power crisis a thing of the past;

Renewable energy in general and solar energy in particular canmake an important contribution to electricity supply in rural areaswhich do not currently have access to the national grid if we gearourselves up to overcome the challenge of policy implementation;

Given a favourable policy environment the private sector should beable to help address the need for new power plants, natural gasdistribution systems to make full use of the West African GasPipeline, and renewable energy systems including solar PV, windand biofuels;

Cost-reflective tariffs are a critical component of a favourablepolicy environment and it is important that subsidy schemesrespect this in addition to being well targeted to support the poor;and

Women constitute the bulk of poor people with poor access tomodern energy services in Ghana and this makes it imperative forlinkages between energy and gender to be factored into povertyreduction schemes across all sectors of the economy.


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2. Why the Power Shortage?

Theo Sackey

Background and description of existing facilitiesThere have been three major power system planning studies in Ghana beginningin 1971 when we carried out what was known as the Ghana Power Study:Engineering and Economic Evaluation of Alternative Means of Meeting VRAElectricity Demands to 1985. This was followed in 1985 with the GhanaGeneration Planning Study and then the Generation and Transmission SystemMaster Plan Study in 2001. Each of these studies established generation andtransmission facilities required by the country over a 15-20 year period.

Ghanas installed generation capacity as of October 10, 2006 stood as follows:- Akosombo 1,020 MW = 6 x 170 MW units- Kpong 160 MW = 4 x 40 MW units- Takoradi T1 330 MW = 2GT(2x110 MW) +110MW ST

units- Takoradi T2 220 MW = 2GT(2x110) units

Existing transmission facilities also include:- 4,100 km of 161 kV lines- 74 km of 225 kV lines- 133 km of 69 kV lines- 42 Transformer and Switching Stations- Interconnections

Benin La Cote dIvoire Togo

An aerial view of the Akosombo and Takoradi power stations are presented inFigures 2.1 and 2.2 respectively.


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Current situation and projected electricity demand and supplyGhanas energy demand from 2004 to 2006 is presented in Table 2.1.The 2006 energy demand was projected at 9,518 GWh (excluding CEB wheeled)with the following composition:

Domestic demand of 7,196 GWh VALCO supply of 1,240 GWh CEB supply of 700 GWh SONABEL supply of 4 GWh System usage of 378 GWh

The projected domestic demand of about 7,200 GWh was an increase of 12.2%over the 2005 demand.

A map of VRAs transmission network is shown in Figure 2.3

Figure 2.1: Akosombo hydro generating plant


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Figure 2.2: Takoradi thermal power generation plant

Figure 2.3: Map of VRAs transmission network


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Table 2.1: Ghanas energy demand in GWh from 2004 to 2006

The VRA planned to meet the total 2006 demand of 9,518 GWh with thefollowing supply resources:

5,862 GWh from Hydro 1,997 GWh from T1 859 GWh from T2 800 GWh Imports from Cote dIvoire

The minimum reservoir elevation to meet this provision was projected to be239 feet based on planned average hydro draft rate of 16 GWh/day andexpectation of average inflows in 2006. This did not happen and by July 2006,the Akosombo reservoir elevation had fallen to about 238 feet due to lower

than expected rains.

Meanwhile there were losses from some of the other generating sources fromwhich we had some hope. Significantly there was

Reduced T1 availability

Loss of about 150 MW from T1 in April from generatorrotor winding insulation failure

Domestic Customers

Actual2004

Actual2005

Projected

2006

ECG 4,820 5,053 5,277

NED 473 501 550

Direct Customers 112 110 156

Mines 599 753 1,217

Total Domestic 6,004 6,417 7,200

Growth Rate 6.9% 12.2%

Valco 10 259 1,240Supply to CEB (Togo/Benin) 662 635 700

CEB - Wheeled 371 394 313

System Usage 333 292 378Total Demand 7,380 7,996 9,831Note:** NED Supply includes supply to SONABEL


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Reduced imports from Cote dIvoire

Unscheduled outages at the Vridi Thermal plant

Disruptions in natural gas supply which affected thermalplant supply

Retrofit of the Buyo hydro plant (55 MW)

These unexpected trends greatly affected power supply to the country and thatbrought about the load shedding in August 2006. The 2006 Volta Lake depletioncurve is shown in Figure 2.4. It can be seen from the curve that the water level has

been significantly reducing from January 2006.

2006 Volta Lake Depletion Curve

January -- August

Planned Hydro Draft Rate -- 16.1 GWh

236

237

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Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06

Months

Elevation(feet)

Base case (5,862 GWh) Actual

Figure 2.4: Volta Lake depletion curve


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As at August 1, 2006, the Akosombo reservoir elevation was 236.99 feet andinflow projections indicated that below average inflows could occur. Continuedhydro draft at the current rate could result in the reservoir attaining an elevation ofless than 236 feet at which level generation the Akosombo dam may have to belimited to two units only and this could result in the loss of about 520 MW ofgeneration.

Critical generation and transmission requirementsDemand-side and short-term supply options to meet deficits are:

Intensive energy conservation measures nation-wide of which themajor focus is the replacement of incandescent lamps. 50,000 energysaving lamps were to be installed by end of October 2006 and one (1)million are being imported by the Ministry of Energy before the end ofthe year.

Upgrade of the Tema Diesel Power Station by installing 70 100 MWnew and high efficiency units by January 2007

126 MW Plant (Frame 9E) from mid 2007 125 MW Osagyefo Power Barge in 2007

The projections as presented in Figure 2.5 indicate that by the year 2010 the totalelectricity demand will be about 12,210 GWh which includes the following:

Domestic demand of 9,100 GWh VALCO supply of 1,970 GWh (3-potlines) CEB supply of 700 GWh SONABEL supply of 70 GWh System usage of 370 GWh

Over the medium term (2006-2010), domestic demand for electricity is expected

to grow at an average rate of about 6% with major growth drivers being newmining loads and increased domestic consumption. The main domestic customersare projected to have the following growth rates over the medium term

- ECG - 4.7%- Mines supplied by VRA - 11.3%- Other VRA Direct Customers - 3.3%


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Projected Medium Term Electricity Demand (2005 - 2010)

0

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4000

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12000

14000

2005 2006 2007 2008 2009 2010

Years

Energy(GWh)

Total Domestic Valco CEB Supply CEB Wheeled SONABEL System Usage

Figure 2.5: projected medium term electricity demand (2005-2010)

Technical Issues Affecting Supply ReliabilityThere is a tight demand/supply situation requiring draw down of the VoltaReservoir below the minimum recommended level of 240 feet; power generationfrom T1 is lower than expected due to an outage of one combustion turbine unit;

there is inadequate transmission capacity in the western sector resulting instability problems during maintenance outages. Also aged transmission lines andsubstation equipment and reduction in scheduled imports are some of thetechnical issues that have all contributed towards the present predicament we findourselves in.

Ongoing system enhancement activities are the T1 Performance EnhancementProject including conversion to natural gas operation, development of additionalthermal plants and reinforcement and retrofit of the transmission system network.


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Generation projects that have been outlined by the VRA for the next few yearsinclude:

- 2007: 70-100 MW Tema Diesel Upgrade126 MW Tema Thermal 1 Project125 MW OECF Osagyefo Barge

- 2008/9: 300 MW Tema Thermal project- 2009: Expansion of TTPS to 660 MW- 2012: 400 MW Bui Hydro

The power generation system reserve of over 20% in 2003 has been steadily

eroded over time and is now about 10%. Strong demand for electricity isprojected to continue with expected economic growth and improved access toelectricity. This means that if additional generation is not implemented, all thesystem reserves would be eroded which would result in severe deterioration ofsupply adequacy and reliability.

Financial Issues and challengesTariffs have not been adjusted to reflect the increased cost of supply with theintroduction of thermal generation which has significantly increased the cost ofpower production. History of bulk supply tariff and average cost of supply of

electricity in Ghana from 1990 to 2005 is shown in Figure 2.6.At existing Bulk Supply Tariff (BST) of 425/kWh (4.7 cents/kWh), net

loss for 2005 was 749 billion for a generation mix of 74% hydro and 26%thermal & Imports. There is an increasing thermal proportion in the generationmix with 2006 mix projected to be 62% hydro and 38% thermal. Meanwhile drawdown of the Volta Reservoir to minimum level brings aboard the issue for asignificant investment into higher thermal power generation than exists at themoment. This increase in thermal energy production will further increase the costof energy in the country. Unfortunately there has not been any tariff adjustment toreflect the higher fuel cost and current generation mix.


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History of Bulk Supply Tariff and Average Cost of Supply

0.000

0.010

0.020

0.030

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0.050

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1990

1991

1992

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2004

2005

Year

$

/kWh

Bulk Supply Tariff

Average Cost of Supply

Figure 2.6: History of bulk supply tariff and average cost of supply

Currently, the total Monthly billed receipts are about US$28.0 millionwhile Monthly cash requirement for the purchase of Light Crude Oil (LCO) fuelalone is US$31.5 million, based on cargo size of 450,000 bbl and delivered priceof $70/bbl. We can therefore safely conclude that the current total monthlyrevenue cannot meet even the monthly fuel purchases alone.

Strategic actions to be taken to curb the energy crisis and its associated low tariffsinclude the following.

- Implementation of planned power projects should be carried out withoutdelay

- Government support and the support of multilateral and bilateral donoragencies are critical for project funding

- Private investments should be encouraged to partner the public sector inproject implementation

- Electricity pricing should be urgently reviewed to provide the correct pricesignals and dampen growing demand


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Funding of required infrastructure for power generation will be a challenge ifpricing policies are not reformed to ensure that power utilities are financiallyviable. Significant capital requirements imply that both public and private sectorfinancing is needed to be able to curtail the situation. VRAs experience withCMS and WAGPCo in energy infrastructure projects indicates that Rates ofReturn would be in order of 15% with upward pressure on tariffs.

The sector should progress into a regime such that legitimate costs are passedon in a sustainable manner. Attaining and sustaining cost reflective prices willensure effective development of required infrastructure and efficient operations.There is also the need to clarify roles as well as responsibilities for the differentplayers in the sector.

ConclusionsMajor thermal based infrastructural developments are needed and the WAGP andcurrent thermal plants are the backbone for future production facilities. Futureoperation and development of the power sector will increasingly involve theprivate sector. The major challenge however is how to sustain the operational andcapital requirements to ensure reliable electricity supply into the future. Meetingthis challenge successfully will ensure that ample production facilities aredeveloped to meet future demand for electricity

Addendum: Discussion Arising out of Lecture

As a country, only 40% of our population has access to electricity1

. At themoment we are growing at a GDP of 5-6%. To become wealthy, we need to begrowing at between 8-10% and these growth rates require significant amount ofelectricity. We have significant numbers of people who come in with the intentionto invest in the country but who require stable electricity supply in order to do so.We also have a problem in this country where the industries tend to subsidise theresidential customers but this is not supposed to be so; it does not happen like thatin the industrialised countries. When some of these structures are changed, it willencourage investors to come into the country to invest and hopefully the powercrisis in Ghana will become a thing of the past.

1 Some estimates put the current rate of access to electricity in Ghana at about 50%.


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3. Potential for Energy Savings

Alfred Kwabena Ofosu-Ahenkorah

In 1975, the world experienced what has been known as the energy shock whenthe Arab oil suppliers decided to use oil as a weapon and therefore stopproduction knowing the effect it will have on the non-oil producing westerneconomies. Prices shot up and there was a general shortage and panic, promptingcountries such as Ghana to start learning some lessons. Before 1975 energy was inabundance in Ghana. Electricity was in abundance and people were encouraged tofreely use electricity, to the point that they were even advised not to switch lightsoff. The utilities, deliberately as expected at the time, promoted the use of electricboilers, furnaces and kilns in industry so as to promote electricity consumption.Since then things have changed drastically. The population has increased,economic growth rates have increased steadily but the energy supply base has notcaught pace with the growth. In the case of wood fuel the supply base hasdwindled below sustainable levels as a result of deforestation.

The total electricity consumption in Ghana increased from 782 GWh in 1970 toabout 1,328 GWh in 1980 at an average annual growth rate of 5.50%. Theaverage annual GDP growth rate for this period was 0.2%. As a result of adrought in 1983, electricity consumption decreased from 1,361 GWh in 1981 to1,007 GWh in 1984 at an average annual rate of minus 6.5%. During this period,the average annual GDP growth rate was minus 2.0%. Thereafter, totalelectricity consumption increased from 1,251 GWh in 1985 to 5,286 GWh in2004 at a steady average annual growth rate of 8.86% compared to an averageannual GDP growth rate of 4.46%.

Figure 3.1 shows the shares of final energy consumption in 1970 and 2004 whilstfigure 3.2. shows the sectoral shares of total energy consumed in Ghana in 2004.


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Figure 3.1: Share of Final Energy Consumption (1970 and 2004)

In 2004 the residential sector accounted for 59% of total energy consumption.This refers to electricity, petroleum fuel and woodfuel which makes about 88% ofthe total residential sector final energy consumption. Transport in Ghana is mostlypetroleum based and that accounted for 16% of total energy consumed.Agriculture took some firewood and petroleum, whilst energy consumed inindustry is made up of electricity, petroleum and wood fuel. These have been thetrend since the year 2000. In 2004 the total energy consumption was 6.16 milliontonnes of oil equivalent. The breakdown in terms of electricity, petroleum and

wood fuel is shown in Figure 3.2. Wood fuel is by far the largest contributor toenergy in this country.

Taking 2004 alone and breaking it into actual figures, electricity constituted only7% of total energy consumption as shown in Figure 3.4.

There has been some dynamics in the share of energy to the various sectors. In the70s and 80s, wood fuel was about 79% but things are now changing and veryfast for that matter. Comparing the years 2000 and 2004 in Figure 3.5 VALCO

was in operation in 2000 and consumed a greater proportion of electricity. In 2004VALCO was not in operation and the whole industrial sector took only 39% ofelectricity.

Share of Final Energy Consumption

(1970)

Woodfuel

67%

Fossil

fuels

23%

Electricity

10%

Share of Final Energy Consumption

(2004)

Fossil

fuels

30%

Electricity

8%

Woodfuel

62%

7


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Sectoral Shares of Total Energy Consumed in 2004

Residential

59%

Commercial11%

Industrial

10%

Agriculture

4%

Transport

16%

Figure 3.2: Sectoral shares of total energy consumed in Ghana in 2004

0

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2

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7

LevelofConsumption(MTOE)

2000 2001 2002 2003 2004

Year

Energy Consumption by Type of Fuel (2000 - 2004)

Woodfuel

Petroleum

Electricity

6.165.835.845.605.48

Figure 3.3: Energy consumption by type of fuel


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Shares of Fuels in Total Energy Consumption 2004

Electricity

7%

Petroleum

30%

Woodfuel

63%

Figure 3.4: Shares of fuel in total energy consumption in 2004

Figure 3.5: Comparing 2000 and 2004 consumptions

Distribution of Total Electricity (2004)

Household

51%

Industrial

39%

Commercial

10%

Distribution of Total Electricity (2000)

Household

34%

Commercia

l

7%

Valco

36%

Industrial

23%


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It is trite knowledge that any economy where households are taking abigger percentage of the energy than the industries is in for trouble, becausehouseholds dont produce anything from the electricity they consume. They useenergy only for their comfort and convenience. Therefore if the householdconsumption is greater that the industrial consumption, then there is somethingfundamentally wrong with the economy. For the sake of comparison, SouthAfrica has 80% industrial energy consumption and 20% household consumption.

A striking observation that has been made in the electricity sector is therapid expansion in the power demand of the residential sector by 23% in 5 yearsfrom 1,585GWh (26%) in 2000 to 1,957GWh (37%) in 2005. In contrast the

share of power consumption in the industrial sector, which includes agriculturereduced by 37% from 4,026.4GWh (67%) in 2000 to 2,542.6GWh (49%) in 2005.Within the same period system losses increased by 20% from 1,177GWh to1,418GWh in 2005. This trend is worrying especially since the residential sectorwhose contribution to GDP is minimal is subsidized by the other sectors whichhave been paying near economic rates for electricity.

The energy supply figures for Ghana in 2005 are presented below.

Domestic Energy Supply Electricity Generation: 6787.91 GWh

Hydro generation 87.5 % Thermal generation 12.5 %

Energy Imports Electricity: 814.62 GWh Crude oil and Petroleum Products: 2.2 million

tonnes Import dependency for Commercial Energy Supply 83 % Import dependency for Electricity Supply 10.8%

The bulk of our commercial energy supply is imported including 10.8% ofelectricity from Cote dIvoire.

Ghanas energy consumption for 2005 was slightly less than 2004 but ithovers around the same 6 million tonnes and each time, electricity and petroleumare the most commercially consumed energy sources. Wood fuel is taken outbecause it is difficult to commercially quantify firewood and charcoal, as manypeople produce this by themselves. Commercial energy consumption per capita is


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only 113kg of oil equivalent which is in line with international standards and doesnot look so huge if compared to countries like the United States. Our electricityconsumption is 174kWh per person while it is 1000kWh per person in othercountries. These consumption rates do not only consider residential electricityconsumption but takes the whole economy into consideration. The energyconsumption indices of the Ghanaian economy are presented in Table 3.1. Thepercentage of commercial energy is very low.

Table 3.1: Energy Consumption indices of the Ghanaian economy

Item Unit of Measure 2000 2001 2002 2003 2004Total Energy TOE 5,968 6,101 6,265 6,326 6,633

Energy per capita kgOE/ca 324 323 324 319 326

Electricity Per capita kWh/ca 404 409 382 294 294

Total Energy Intensity kgOE/$1000GDP 668 820 928 944 962

Total Commercialenergy

TOE 1,073 1,229 1,311 1,239 1,257

Percent CommercialEnergy

% 18 20 21 20 19

Energy-Development NexusThere is a direct link between energy supply and development and yet a complexrelationship with economic growth indicators. In order to develop, every countryrequires adequate, reliable and efficient energy supply. The per capita energyconsumption in Africa is 25,000-30,000kcal per day, less than the average percapita consumption in England in 1875. This means that more energy is needed to

propel African economies if we decide to develop by the business as usualscenario. It has been projected that Ghana will need more than 7 times its presentelectric power capacity by 2020 if we are to succeed in developing Ghanaseconomy into a middle income economy. Development by the old path willrequire massive injection of energy with its implications on climate change,supply resources and cost.

Adequate Energy Supply is necessary but not a sufficient condition foreconomic growth. Increased energy use must go with improved end-useefficiency, otherwise the supply will become inefficient and a burden on


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consumers which will slow down economic growth. The increased use of energyalso has its environmental implications. There is evidence that end-use energyefficiency is highly possible and it has been used in many countries such as Japan,Germany, USA and UK.

Energy Productivity MeasureThere is an index that measures energy productivity in an economy and this isgenerally referred to as the energy intensity ratio. It isthe energy that is used toproduce 1000 dollars of GDP. This figure is critical because it gives an indication

of how the economy is structured. Unfortunately many African countries havehigh energy intensity ratios with the reason being that most of our industries areextractive. We use a lot of energy and produce semi-finished products which havevery little commercial values. In Ghana as in many other developing countries,this measurement is high primarily due to the fact that these countries producemainly primary products with high energy input but low value added. We exportthese and they are reprocessed abroad where very little energy is used but thevalue added is very high.

In the year 2000, Ghanas energy intensity ratio was 668kg of oilequivalent per 1000 dollars of GDP and this rose to 962 in 2004. It has been risingand is about three times what is observed in the developed countries. For lack of

current data, available indices for 1989 were for Brazil - 640 kg, USA - 370kg,England - 260kg, France - 210kg and for Japan - 150kg. But even in 1989, thetechnology that was being used was not as efficient as it is today which meansthat these countries could be doing better today. If we compare these figures withGhanas own in 2004, it means if we are buying energy with these countries onthe same market, then we are out of the competition. If we use 668kg to produce1000 dollars of GDP, then if the price of energy goes up such that 668kg of oilequivalent of energy is going to be 1000 dollars, then we are really not doinganything. Fortunately for us we use lots of charcoal and firewood which is notpurchased and some of which we dont consider commercial, but the trend is notgood enough.

Energy efficiencyEnergy efficiency is the use of the minimum amount of energy to produce thelargest amount of energy service possible. Energy is used to provide a service and


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some of these services are refrigeration, air conditioning, transportation, lighting,etc. Energy Conservation comes from the English word conserve which meansto save some of what you have today for future use. Conserve does not mean donot use but to use in such a way as to save a part for the next day. Energyefficiency measures cut operating costs and makes available money for companiesto be more competitive and institutions to reach their goals. In other words,energy efficiency reduces cost and improves a companys environmentalperformance.

In the 70s when the energy efficiency and conservation was introducedpeople dissected this word to mean so many things. Some people even referred toconservation as non-usage. But the English word conserve means to keep somefor the future.

There is a tremendous scope for energy saving, in lighting, in industry,residential areas, entertainment, etc. To highlight a few of these things referenceis made to a Residential Energy Profile survey that was undertaken in 2003 bythe Energy Foundation in collaboration with KNUST. The survey captured across section of households in Ghana and found out that 54% of all lighting isincandescent lamps; florescent lamps are 32% and the Compact FluorescentLamps (CFL) were 15%. In terms of energy consumption, the 54% of

incandescent accounted for 63% of electricity that was used per day. The 32%fluorescent lamps also took 32% of the energy and the 15% CFLs used only 4%of electricity. Now talking of lighting itself which is measured in terms of lumens,the 54% of incandescent lamps that consumed 63% of electricity gave 38% of thelighting, the 32% of fluorescent lamps which consumed 32% of the electricityproduced 52% of the lights whiles the 15% of CFL which consumed only 4% ofelectricity gave 10% of the lighting.

Power factor improvements

This is a measure of the electricity demand to the use. KNUST was selected asone of five tertiary institutions to benefit from a power improvement programme.The initiative was from 2004 but as of now we have not installed the equipmentfor KNUST yet even though that for the University of Ghana is in operation. Iwill present the results of the equipments performance in the University of Ghanaas we carry on.

Ghanaians have the habit of buying high capacity electrical motors forcorn mills and other milling machines and wastes energy in the process. Whenthese motors malfunction and are sent for repairs, the mechanics put in any coil


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they have available without considering the power ratings of these coils. Thesecause the motor to consume even more energy. An unpublished survey resultsshow that most refrigerators in Ghana uses more that 4kWh per day. In a month,120kWh of the bills will be coming from the refrigerator alone. If we comparethis to what happens in Europe and the US, the average is less than 2kWh a dayand their refrigerators are even much bigger than ours. The reason for this is theuse of inefficient refrigerators with worn out seals, and wrong placement ofrefrigerators in our homes. We push them in corners where they do not getventilation and therefore draw more electricity than necessary.

Many people start life with battery operated radios, progress gradually andend up with remote controlled appliances. The remote control is very convenient

but some of the early types of these devices have standby power as high as 10W.If for example you have four appliances at home such as a TV, stereo, fan and anair-conditioner each with a standby power of 10W, that makes 40W standbypower for a single house. That is equivalent to a 40W bulb burning in the housefor a whole year. Standby power is an issue that must be tackled seriously inGhana. Many countries have already enacted legislation limiting standby power toabout 2W.

The power factor correction case study for the University of Ghana ispresented in Figure 3.6. The period from October 2004 to November 2005 wasthe period when the old system was in place and was monitored. A decision wastaken to improve power factor at the university and the installation was completed

in November 2005. Let us compare the bill of the university before and after theintervention.

On the Y-axis is the cost of electricity to the university. The cost fell from over1.2 billion to 600 million within a month of implementation. It went further downwhen students were on vacation. Data up to October 2006 reveals that theuniversity has reduced its electricity consumption by 50%. Power factor in Legonwas 0.8 before the installation was done and after the installation, it moved up to1 which is the ideal power factor.

Bottlenecks to Efficient Energy UtilisationLack of information on efficient methods and technologies in energy conservationis a handicap to decision makers who often lack the knowledge and access toenergy efficiency information.


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Electricity Cost, Legon

-

200,000,000

400,000,000

600,000,000

800,000,000

1,000,000,000

1,200,000,000

1,400,000,000

Oct-04 Nov-04 Dec-04 May,

05

June,

05

July,

05

Aug,

05

Sept,

05

Oct, 05 Nov,

05

Dec,05 Jan, 06 Feb, 06

Months

Cost,GHC Total Levies

P.F. Surcharge

kWh, Charge

kVA Charge

Figure 3.6: Electricity cost for Legon before and after power factor improvements

The information gap can be attributed to- Shortage of skilled energy management professionals- Absence of energy efficient technologies on the local market- High initial cost of energy efficient technologies- Difficulty in accessing financing for energy efficiency projects- Absence of clear policy and regulations on performance of industrial and

commercial equipment and appliances.

Institutional arrangement to promote efficiencyIn every country there are institutional arrangements to promote energyefficiency. The United States have what they call the Demand Side Managementwhich they charge the utilities themselves to do. Unfortunately they have foundout that the utilities use the money but do not do exactly what they are supposedto do. The utilities are more interested in selling more kWh of energy and are nothappy to


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reduce sales but they are forced by the regulatory bodies. This ensures that thereis some reserve energy to use when energy demand is high or when fresh energyproductions are not able to meet existing demands. Demand Side Management aspertains in the United States was not taken as the way forward in Ghana becauseof the state of the utilities. The consciousness of efficiency grew in Ghana rightfrom 1973 to 1979 during the Nigerian oil embargo on Ghana.

There are several energy efficiency projects which have been initiated and arecurrently going on. Some of these are

- Power factor correction- Monitoring and targeting energy management- Targeted technical services- Building energy management retrofits- Energy management training- Energy service development

To monitor how productive you are, you must always measure what amount ofenergy you use. Some companies measure this daily or weekly and therefore keeptrack of what they are doing. If the specific energy consumption (energy used toproduce a unit of a product) changes, it will help to detect whether or notsomething is going wrong. If for example a company uses 100 kWh to produce 10units of a particular product and this proportion changes in a way, the companywill know instantly that something is wrong.

Many surveys have been done to find out what effort Ghanaians were makingat conserving energy. One such survey was the 1999 vehicle ownership survey.This survey determined that 76% of vehicles in Ghana were private cars as

compared to about 2% buses. If you are running an economy in which a lot ofvehicles are private and there is a subsidy on petrol it means that you are rathersubsidizing the individuals with the private cars. Some of the other surveys whichwere done in the bid to promote energy conservation are as follows:

- 1998/1999 Appliance Ownership Study- 1999 Electric Motor Efficiency Improvement Study- 1999 Vehicle Ownership/Transport Sector Study- 2000 RAC Penetration & Efficiency Studies- 2000 CFL Penetration Study


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- 2000 Industrial Energy Intensity Survey- 2001 Energy, Poverty & Sustainable Livelihoods Study- 2002 Mini hydro potential study- 2003 Household Energy Consumption Profile Study- 2003 CFL Penetration Study

The industrial intensity survey in the year 2000 showed that Ghana used807kWh to produce a tonne of steel in an electric arc furnace (EAF). India wasthen using 550kWh; US 450kWh; Germany and Japan were using 350kWh. Whenit came to beer brewing, we realized the power usage was quite similar to thedeveloped countries. This does not mean Ghanaian breweries were doing better in

any way, the management of these companies get instructions from theirprincipals and it force them to perform as their mother companies abroad

There are many measures that can be taken to ensure that energyefficiency is adopted by the whole population. Public education is one of thesemeasures and price signal is perhaps the most effective. If electricity is verycheap, people dont care how much they use because they end up paying cheapprices anyway. If someone else pays your electricity bills like it happens in thegovernment institutions, you dont care because you may not even see the bill, asthe Ministry of Finance collects the bills and pays on your behalf.

The other measure which has proved very effective is to introduce

regulatory measures and that is introducing standards and labels. Energyefficiency standards, like any standard sets a minimum threshold below whichwhatever appliance is considered to be non-permissible is not allowed. We havedefined energy efficiency standards for some equipment and have started with airconditioners. The 2001 air-conditioners energy consumption study and the resultsare presented in Figures 3.7, 3.8 and Table 3.


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Figure 3.7: Purchase Price vs Efficiency for air-conditioners in Ghana, 2001

On the x-axis in Figure 3.6 is the energy efficiency ratio which is the input

energy divided by the cooling that is given by the equipment. It is measured inwatts of energy input per watt of cooling. Interestingly, the circled unit is the mostpopular air-conditioner in Ghana. It is still the most popular. In 2001 it accountedfor 32% of the market and I believe it is still so. Meanwhile the unit with thesquare box around it just appeared in the market, it was not very well known andit was being sold at that time at a very reasonably low price and was very efficientas well. Yet its market penetration was very insignificant. Between 2001 and now,the price of air conditioners have dramatically fallen and they are now about halfor less what they used to be in 2001. A lot of people can now afford airconditioners and they are buying them without any idea of how much it is goingto cost them to operate. Based on this information, we tried to find out how much

it will save Ghana if we adopted legislation to guide the importation and sale ofair conditioners. We found out that if we did nothing, and the economy grew at6% - being the high benefit - as compared to maybe 4% as we were growing atthat time, then one air conditioner in its lifetime of 15 years would consume US$4,213 worth of electricity. However if we adopted energy efficiency standard, say2.8 energy efficiency ratio, you will realize that the amount of energy we usecomes down. In order not to push too high, we adopted a 2.8 EER and by 2020,this is supposed to save 8,522GWh.

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

2 2.25 2.5 2.75 3 3.25EER

US$ RAC Units


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Table 3.2: Energy savings from standard setting

Standard High Benefits Low Benefits

2.8 EER up to 2010 1,453 GWh 1,200 GWh

up to 2020 8,522 GWh 6,764 GWh

up to 2030 19,497 GWh 15,109 GWh

3.0 EER up to 2010 2,555 GWh 2,121 GWh

up to 2020 15,430 GWh 12,222 GWh

up to 2030 38,296 GWh 29,554 GWh

3.2 EER up to 2010 3,520 GWh 2,931 GWh

up to 2020 21,174 GWh 16,713 GWh

up to 2030 53,841 GWh 41,292 GWh

Cost and Saving of New Room Air Conditioners

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Per-Capita2001Dollars

2030202520202015201020052000

Energy Saving

Price Change

Net Saving

Figure 3.7: Cost and saving of new room air conditioners


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The hydro power plants at Akosombo and Kpong in a year produces6,000MWh and comparing this to the energy savings in 2020, we are going to besaving a great deal of energy. The graph in Figure 3.7 shows the savings and percapita if we adopted those standards. That standard was supposed to have comeinto effect in 2002; unfortunately we couldnt do that until 2005 when the law waspassed. Effective 30th November 2006, every air conditioner that is coming toGhana must meet 2.8 EER and it must be labelled.

The standard is a market push instrument. It will Eliminate inefficient products from the market Push manufacturers to produce more efficient appliances and lighting

and Ensure that importers bring efficient air-conditioners into the country

The label which we consider as a market pulling instrument will Stimulate consumer demand for energy efficient products Help manufacturers of appliance and lighting products to overcome

investment and market barriers.

While the standard will raise the floor, the label will raise the ceiling so thatyou have a higher efficiency band to play within. The label which will be affixedto all the air conditioners is shown in Figure 3.8.

The more stars the label has, the more efficient the air conditioner is. Whoeveris selling must tell you what type of air conditioner it is, the cooling capacity, themanufacturer, the model, the type of refrigerant inside and the efficiency ratio.Gradually we will get the importers and manufacturers to move away from theless efficient air conditioners. What weve realized is that the same companiesproduce different types of air conditioner units. They export the grade A tocountries where there are standards and labels and export the low grade ones tocountries like Ghana where there are no standards and labels. In reality it wontcost the companies extra but it will save Ghana extra money.


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Figure 3.8:Ghana Air Conditioner Label

There is a similar label for lighting. In lighting the measure for efficiency is calledefficacy and that tells you how many lumens of light you get for a watt of energyor power that is demanded by the light. The Ghana standard is that it should notbe less than 33. So for every watt of electricity, you should get the equivalent of33 candles of lighting. It should tell you how much electricity you are going touse in a year assuming you use it for five hours a day. In terms of the industry,measures have been taken to check energy usage and to advise the industriesaccordingly.

Addendum: Discussion Arising out of LectureTo be able to install the power factor for KNUST, we need to measure the load oneach of the present transformers and their power factors. The equipments to carryout these activities are quite sophisticated and expensive, about 9,000 euros each.We have realized that most of the transformer stations in KNUST have brokendoors and there are no roofs on them. Meanwhile the equipments must beinstalled for a minimum period of a week and installing them in a ramshackle


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building is quite dangerous as the equipments will be exposed to the weather andthieves. The university may need to provide 24 hours security service until theend of the seventh day or to repair the buildings which house the transformers.The KNUST security section is not able to provide the human resources to guardthe equipments. The repair of the buildings will also cost 40 million and KNUSTis still not been able to raise the money for that purpose. As soon as the necessarymeasures can be put in place, the power factor correction programme can becarried out on KNUST.

In order to ensure that traders are using the correct labels on air-conditioners, the

Ghana Standard Board (GSB) and the Energy Commission have been empoweredby parliament to pick appliances from various stores at random and to send theseto laboratories for testing. If the labels are found to have been wrongly used, theimporter will be taken to task. A test facility is being built at the Ghana standardsboard which will be used for these testing purposes.

The requirement for labels is not only for new air-conditioners but for second-hand appliances as well. Second hand air-conditioners will have to meet thestandard and labels must be placed on them as such. The label is supposed to bepasted in front of the appliance so that the consumer can easily see for himself theinformation on it. The label is colourful and attractive and was designed in this

way so that it will attract consumers. The label system is currently for air-conditioners and CFLs but other appliances such as refrigerators will be factoredin as time goes on. GSB is been empowered to return all air-conditioners cominginto the country at the ports that do not meet the efficiency standards.

Legislation in Ghana takes a long time. If the Energy Foundation had not takentime to find out that bad air conditioners were dominating the market (controlling32% of the market), parliament would have thrown the labelling law out. TheEnergy Foundation had to carry out a socio-economic analysis to determine whatsort of efficiency level would not hurt the economy. If the level were too high,people may not be able to afford the appliances at all and that is also not a very

good situation.

We have called gatherings to inform them of our findings on energy efficiency.The Energy Foundation has started educational campaigns on the labellingprogramme and we are hoping that the public will come abreast with the issues.Information is also available on the website of the Energy Foundation:www.ghanaef.org. A copy of the law is available on the website. Information onenergy savings and conservation are also available from the Energy Foundation.


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Projections have shown that if we could use a million CFLs in thecountry, it will bring energy demand down by 41MW. A project has been initiatedwith the ministry of finance to stop incandescent lamps from coming into thecountry and to get CFLs sold at the price of incandescent lamps. The countryhope to be able to change all the incandescent lamps to CFLs within one year andhopefully things will improve for the better.


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4. Planning for Implementation

Rudith King and Imoro Braimah

We will begin this discussion with the rational for planning. First of all we need toask ourselves why we need to plan. We live in a changing world and the only wayto ensure that the dynamism in human society is well managed is to plan. It isimportant that careful decisions are taken about the general directions in whichchange should occur. The careful decisions we need to make can be achievedthrough planning. For example we take it for granted that the wind and the sun arearound us and abundant and so we misuse and abuse them anyhow. But becausewe live in a very dynamic society, we need to take cognisance of the fact thateven these seemingly abundant things are not just there for the sake of it becausethey can positively or negatively affect our well being if we do not plan how touse and manage them.

Planning is seen both as a tool for resource allocation and a procedural method fordecision making about the development of the economy irrespective of the scaleof planning and the subject matter. We all plan in our homes on daily basis butthen we do this unconsciously. We begin planning from somewhere and at the endof the day we either commit time or money to implement our plans though wemay do that unconsciously.

Planning is a process that goes with procedures. But one may ask: what right dowe have to plan as human beings? If the world is free for all, why dont we enjoyit and then when we deplete everything that we have, we just say thank you God,die one day and vanish from the surface of the earth. But it doesnt happen thatway and there are several other questions that people would always want to ask.What moral right do we have to make decisions that will affect the future orposterity? Are we knowledgeable enough to make decisions that affect the future,because planning is about decisions and whatever decisions we make can affect uspositively or negatively? We need to make sure that we take decisions that aregoing to benefit us and not affect us negatively. Perhaps we have to revisit the


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decision to build the Akosombo dam, a decision that was taken 50 years ago. Didthe leaders think about 50 years after? Did they factor in what would happen tothe electricity sector 100 years after the construction of the dam? The planningcould have taken cognisance of what would happen after fifty or maybe hundredyears.

How can we ensure that we are making the right decisions?

This is something that planners do: they have the tools and the techniques that canhelp them analyse and diagnose in order to make the right decisions. What

happens if they make the wrong decisions? When we make wrong decisions ortake things for granted we suffer the consequences. We are using a generatortoday for this seminar and paying so much because we either made the wrongdecisions or took electricity from Akosombo for granted. Most of these genuineworries today could have been taken care of by the way planning was done i.e.using the right processes and procedures. Whether the planning process is forsettlement planning, energy planning or even agricultural planning, the methodsand procedures are all the same. The bottom line is that decisions have to be takenabout how best resources can be used. The planning process basically comprisesof three main phases which could be subdivided into several stages as indicated inFigure 4.1 below. These include the Analysis/Diagnosis Phase, the Design or

Planning Phase and the Implementation (including Monitoring and Evaluation)Phase. .

Phase 1: Analysis/Diagnosis

Before any planning is done we need to go through what is called the analysisphase. The analysis phase is to understand the environment within which thedevelopment problem is situated; it goes with what is termed the problemanalysis. Tools such as problem tree analysis, the problem matrix and the problem

mapping could be used to understand the nature of the problem. We need tounderstand where we are before we can think of where to go. If it is an energyproblem such as we are facing now, we need to understand the energy situation inthe country in its entirety to be able to diagnose the energy problem. This meansthat we are not just going to look at one area like electricity and assume that, thatis where the problem is and therefore that is enough. Impliedly the solution of theproblem does not rest with the Ministry of Energy alone! Planning must be verycomprehensive and this means bringing in many other components. Thesituational analysis is a tool that helps us to go through the process of analyzing


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the causes and effects of the problem. This definitely involves human beings,institutions, natural resources and processes for the utilisation of resources.

The first phase which is termed analysis involves carrying out a very intensivebackground study. Such studies must include the political framework because itinfluences the decisions that will be made for implementation. The politicalsituation could lead to either a total rejection of the plan or limited commitment tothe implementation of the Plan. In view of these circumstances we cannot assumethat the politics of the country or organization/institution does not matter.

Therefore we need to analyse the political environment carefully. This should beextended to include a very intensive socio-economic analysis of all projectssituations within the plan. If we are considering energy for domestic use thenobviously we would have to know what is happening in peoples homes and itwill take a study to find that out. What are their preferences or choices? Why dothey opt for A and not B etc? These are all issues that we need to understand fromthe perspective of the society because at the end of the day we are planning forpeople and therefore we must understand their way of life and how they useenergy. We can conclude from here that there are socio-economic conditionswithin which to work.

In trying to understand social and political issues we must look at the culture andthe religion of the people. Some people may question what culture has to do withenergy. But let us take a look at one example. Can we propose the use of cowdung to provide energy in cultures that use cow dung as painting material forhousing or cultures where the cow is almost worshipped? If it is these animals thatare going to provide the dung we need to generate the energy, then it becomes areligious matter and it has to be dealt with as such. We need to understand theculture and the religious environment within which we are going to work. Thus intrying to understand the problem several issues have to be considered before wecan move on to the design or prescription of what is to be done to solve the

problem and the implementation of those prescriptions.

As part of the analysis we need to do what is called the needs assessment becausewe are planning for the satisfaction of the needs of the people. Its not just amatter of assuming that they will need A, B or C. The right procedures andtechniques should be employed in order to determine the actual needs of thepeople.


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Diagnosis/Analysis Problem Diagnosis/Analysis

Situation Analysis

Needs Assessment

Problem Matrix

Problem Map

Basic Development Potentials

and Constraints

Derived Potentials

Potential Map

Policy FormulationDefine Goals and ObjectivesState Formal positions in support of the Goal(s)State Means (Strategies) to implement the Policyand accomplish the Goal(s)

Planning Projections

Prioritization

Selection of Projects /Phasing

Intervention Scenario

Ranking and Evaluation

Logical Framework (PPM)

ImplementationPlan of Operation

Monitoring and Evaluation

Re-planning Strategy

Gantt chart

M & E Working Scheme

Programme Results

Evaluation

Results & Impact

Evaluation

Flowchart

Fi ure 4.1: Plannin Process in Phases

PHASES TASKS TOOLS

Potential Analysis


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As part of the analysis there is the need to carry out what is called a stakeholderanalysis or interest group analysis. The interest groups to be analysed shouldinclude even those who benefit from the existence of the problem. This isnecessary in order to determine both allies and enemies. We need to know whattheir interests are and the effects that our decisions are going to have on theirlives.

Each step, tool or technique used in the analysis should ideally generate outputswhich can be used to guide the actions to be undertaken to solve the developmentproblems. The outputs in this phase will be fed into the next phase. They feeddirectly into the Policy formulation stage which actually links the first phase to

the main theme of the second phase i.e. the Plan Design Phase.

Phase 2: Plan Design

This begins with Policy Formulation. Policy here does not mean national policyalone; it is actually institutional/organizational policies that reflect the goal orobjectives. In this case or phase also there is the need for some analyses. Goalsand objectives that will lead to the solution of the problems have to be formulatedand they must not conflict with the regional, national, local and institutional goals.

The energy policies of say KNUST as an institution should fit well within thecontext of the national energy policy and the national energy policy should bederived from the regional (ECOWAS or AU) energy policies. For instance,policies on energy of the sub-region will have to be looked at to ensure that thepolicies we are formulating as a nation fit into the sub-regional one before we cantalk of a gas pipeline for the sub-region. Now we have the MillenniumDevelopment Goals (MDGs). They are much bigger regional goals and all that wedo as UN member countries will have to fit into the MDGs. A question that mustbe answered by a country for example Ghana when formulating developmentplans will be: do they fit into the Millennium Development Goals? If they dontfit, then it means that we cant even work to achieve what we have in our Ghana

Poverty Reduction Strategy (GPRS) now called Growth and Poverty ReductionStrategy. All our policies should be derived from the national document and thosein the national document should conform to the MDGs or the sub-regional goals.We always carry out a test called the compatibility analysis to find out whetherthese goals are compatible or whether there are conflicts because these must beresolved right at the onset before moving ahead.


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Strategies and actions based on standards are then designed, phased andprogrammed in terms detailed activities. Several of these are normally designedand prioritised to facilitate the allocation of resources.

Phase 3: Implementation, Monitoring and Evaluation

A useful plan is the one that has been implemented. If a plan is very beautiful but

has not been implemented, it is of no use to anybody including the plannersthemselves. Since we are much interested in the implementation of the plan as thevery last and most important phase of the planning process, it is necessary toworry about the tools and the tasks that are employed to come out with a plan thatcan be implemented. No matter what level of planning, the tools and processesoutlined are telling us that if we follow these tasks and use the necessary tools, theplan that will ultimately come out will be feasible enough and can beimplemented to meet the goals and objectives that were set.

The whole planning process is a cycle; it is not just an activity to be executed andterminated afterwards. It is a self perpetuating process of actions and one bigchunk of this process is the implementation. There have been instances where wehave very nice plans, plans that if they were to be implemented, all the problemsthat we have now would have been history and maybe we would be thinking offresh and new problems and not the very same problems that the plans sought tosolve in the initial stages. But why does it happen like that especially with regardto the energy problem that we have been discussing in these series of seminars? Isit that the plans were not good enough, thoughtful enough or they were not correctin their technical feasibility? These are the questions that we want to answer in theimplementation design and it is worth emphasising again that if the

implementation design is wrong, no matter the product of the first two phases, thewhole process will be wrong because the implementation aspect will not be welldone if at all and the problem will remain.

It is like the process of the development of a human being from conception tomaturity as an adult. If good care is ensured in the initial phases of conception,delivery and child care then the probability that the adult person will be a


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successful adult is greater. However if the conception and delivery were excellentbut the child care faulted the excellence in the first two phases would be in vein.That is why managing the implementation is very critical but we planners togetherwith other stakeholders often make a very big mistake. We tend to think thatbecause we are technical people, our concern is to come out with a plan that meetsall the technical standards and we are satisfied that we have a plan that isexcellent by our technical judgment that can meet all the criteria in the stages andthe processes that we have stated. But we forget that the implementation aspect is

the most important technical aspect. If that technical aspect is faulty, then thewhole process from the beginning to the implementation is going to fail.

What do we mean by the implementation design? Whatever plans have beendrawn, there are certain activities that must be undertaken and there are somepeople who should undertake those activities. Carrying out these activities costsome money as well. In the implementation design, we have to make sure that forevery activity that has been outlined; there are responsible people who will beassigned to execute them. The activities that have been planned must haverealistic time frames that can be implemented. If we assign timeframes that are

unrealistic for particular activities, then we shouldnt be surprised when theimplementation is derailed or stalled. The implementation phase does not endwith the implementation design. It should continue through to the implementationof the activities through monitoring to the evaluation of the completed activitiesfor information to be fed into the process of re-planning. Monitoring is to cater forour human weaknesses in deciding exactly what the future should be, so that aswe carry out the activities one after the other, we monitor things closely in orderto determine the need for redesigns as things become clearer and more obvious.This is done so that if we forgot to do something at the time of the planning, wecan quickly make room for it. If there were certain things that we thought wouldtake a certain direction and they didnt take that direction, in the course of the

implementation, we can realise that aspect and then make sure that theimplementation is not swayed to an unintended direction. This is where themonitoring and evaluation puts an important component into the implementationdesign.

Sometimes we get so carried away about the beauty of our plans that we forgetthat there are some people that have been assigned to monitor whatever activitiesare being implemented. We sometimes assume that the technical persons that we


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assign responsibility to undertake certain activities can at the same time monitorwhatever is going on. But we all know that when you are over excited aboutcarrying out a certain activity, you dont think about the need for your activities tobe monitored. There is the need for somebody to monitor our progress. That isone aspect of the implementation design that we normally have to emphasise andif we dont emphasise it then no matter how beautiful our plan has been designed,it is going to stagger or fail in the course of the implementation.

Budgeting and FinanceThe activities that we have planned to do cost time and money but we tend tothink that the implementation will come as a matter of course because we havebuilt in mechanisms technically feasible to be carried out and we think about onlythe cost of the equipment. If it is just a dam, we think of the cost of building it butwhat about the cost of operating and maintaining it. We must plan for those whowill implement and make sure that you get power in your house and pay your billsso that money can be earned and re-cycled for the energy production to besustainable. If we dont think about them in terms of the fact that they will costmoney, then we are going to put a system in place and when the system starts

working and the mechanisms are not there, we would now have to find money toensure that sustainable generation and distribution of power. If we have to gosomewhere to find the money for implementation after the plan has been designedthen what will happen when the money is delayed or when it does not come at all.

Most planners assume that implementation will come as a matter of course andtherefore we do not even count the cost of monitoring the implementation,restricting the cost of implementation to other components. It does not take broadcognisance of what can happen in the course of the implementation and so weleave out the financial plans. Normally the financing of a plan is the most critical

in implementation design because that is where we mainly falter. If the financingof the plan is not forth coming then the beautiful plans will simply remain stashedin the drawers and shelves.

How can we design a plan without thinking about the financing aspect of theplan? There are several reasons why people plan; we often plan so that we canmake the decision very rational. Secondly, planning is a tool of resourceallocation. If we understand that planning is a resource allocation tool or


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mechanism, then we should start thinking about financing of the plan right fromthe day we took the decision to plan for whatever project we want to engageourselves in. The financial aspect should be number one. Where are we going toget the money to support the decisions that we are coming out with? We shouldthink about where to get the money to implement the decisions. If we dont findout where we are going to get money to implement these decisions then we shouldnot think about the decisions. It is useless to take a decision and only to asksomebody else how much the implementation of the decision will cost and to findthe finance implementation.

Most of the plans that achieve results start with the financing aspect. Howeverbecause most often we dont have the money ready at hand for theimplementation of the planned activities we must take serious considerationsregarding the financing right from the beginning of the decision to plan. Mostoften planners are told not to think about the money but to go ahead and developthe plan. You will often hear phrases like: when it comes to implementation wewill find the money. When we are faced with situations like these we deal withthe technical aspects alone just to make sure that whatever we are deciding willmeet the objectives and aspirations of the people. All that is good, but then theplanning process is incomplete until we come up with a feasible implementation

designs that can be implemented and part of that implementation design is thecosting of the plan and costing of the implementation as well. As part of thecosting, we need to find out categorically where we are getting the funding for theimplementation of the project. If we cannot do this, then the whole planningprocess should not even start. If you postpone the decision in the beginning, whenit comes to implementation, you will be forced to revisit it because that is whereyou have to assign not only responsibility to people but also the finance to carryout the responsibilities. If you tell somebody to monitor something without givinghim the resources to do the monitoring, there is no way that activity will beachieved.

ConclusionIt is the financial aspect that we want to emphasise here; that implementationdesign is about assigning responsibilities, coming out with clear and realisticresponsibilities, and realistic resource mobilisation or flows in terms of time andfinance. In the beginning we said that planning was a resource allocation tool, ifwe dont think of the resources, there is no way we can think of how to allocatethem. If we decide to postpone the decision about the resources to a later stage,


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when it comes to implementation, we will have to revisit that issue again andcome out clearly with how we are going to get those resources to fund theimplementation of the plan.

Addendum: Discussion Arising out of Lecture

The technical aspect of a project is different from the planning aspect. Then alsothe planning and implementation are different issues. All these are process

activities that come in at various stages of the project. If such stages are assignedto different people and these people are not able to effectively coordinate, thewhole project is likely to collapse. Take for example large-scale national projects,the technical aspect of the plans are usually done very well. But it is thepoliticians who take decision about resource allocation so that if they are notcommitted early enough to make decisions about financing, the project may failas the technical aspect of the plan alone cannot be built. This is quite common inour part of the world.

Private enterprises are more successful with plan implementation because theyuse planning as resource allocation tool. Either they acquire the resources before

planning or immediately they start planning, they start thinking about the fundingissues as well. They do not plan in isolation. The approval of a plan in the privateindustry goes with approval of funds. However in the public sectors, plans areused for other purposes including implementation. Some Plans are referred to asshopping lists because they are often used to beg for money from external andinternal donors.

Countries such as Ghana often make the mistake of planning when they knowthey have no funds for the plans and these happen because of our status on thedevelopment ladder. Most of our donors would like to see that we have concreteplans and that we are not going to spend the money on something else. Because of

this, most people are in the habit of making plans and keeping them in their bagsjust so they can flash them to the next available donor on the shortest notice. If ithappens that they get a sponsor, they implement the plans and if there is nosponsor, the plan goes back into the bag and continues being a shopping list. Butthen we need to develop our plans with different scenarios and be ready to explorevarious alternatives for funding. A plan with a single funding plan is likely to failif that option of funding is not available.


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It is good to know stakeholders interests when seeking for funds. It is wise thatwe develop our financial resource mobilisation skills very well, so that we knowwhere to go at what time. If you go to a group interested in poverty reduction toseek funds for a road construction project, it may be difficult to obtain thesefunds. You may have to convince the donor that constructing the road will enableyou implement poverty reduction projects.

There are several plans in the Colleges that have failed to go into implementation.

Institutions such as universities have ways of earning revenues but these revenueearning areas are not matched with the activities that they want to implement.Because resources are limited, the decision makers usually one or two people decide in their own wisdom where the available resources should go. Theyusually want to put resources where people can see physical structures. Whenresources have to be spread across board, people are usually happy but whenresources are limited to very few projects, people begin to grumble. During thepreparation of the Universitys Strategic Plan for example, they thought they weregoing to get money from somewhere to implement the plan but then forgot to lookfor funds to take care of daily recurrent activities. Once the recurrent demandsbecome greater, they tend to take money from the strategic plan to solve the

recurrent problems which are deemed more important. That was a wrong step inthe preparation of the strategic plan in the first place. The recurrent problems such as cost of managing the institution, cost of electricity, etc. should havebeen taken as part of the whole plan and not left aside as problems to be solved bysomebody else. We tend to think that the strategic plan is limited to physicalstructures and that it should not include the recurrent problems that we faceeveryday. As such sitting allowances for meetings and other recurrent activitiesare often not well projected and considered as a component of the plan. Thedanger here is that when these are due for payment, we are most likely to resort todivert resources allocated for some activities for these purposes whilst thoseactivities are put on hold.


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5. Role of Renewables

Fred Ohene Akuffo

Energy and DevelopmentThe Ghana Growth and Poverty Reduction Strategy (GPRS II) is the frameworkguiding Ghanas overall development. It aims at bringing the country into middleincome status by the year 2015. In other words, hopefully average income perperson will be 1000 US dollars per annum by this target date. From the non-economists point of view, I will say we are currently earning on the averageabout half this amount. The economic experts have predicted that we have togrow anywhere between 7-10% per annum over the next eight years in order toachieve this aim.

Energy is a very critical factor in the development process of any countryand if the economy is to grow, people will consume more energy. We will have toproduce energy for industries to increase the output of goods and services whichis what economic growth is all about. We have to work harder and it does notmatter how many people we may put out there in the field, we shall need moremachines electrical machines to achieve this dream. We need to reallyincrease the energy use and therefore this development process hinges criticallyon the availability of adequate energy provided in a timely fashion. Not justenergy at any time but it should be available at the right time and it should bereliable. Modern energy electricity is what we are all talking about mostlyand then we are also talking about transportation and about fuels since all theseare necessary for the economy to grow. The economists describe this relationshipin terms of elasticity: if the economy has to grow 1%, the energy consumptionmay have to grow about 2% or more and so if we are asking for a growth of 7 to10%, then the energy demand especially electricity will be very high. That is thechallenge that we face in terms of our energy generation and I will not go

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Energy Crisis in Ghana