|Ghana is involved in a number of interconnection projects to support its position as a net power exporter
credit: World Bank
Like many other African countries, Ghana has depended for decades on hydropower for producing its electricity. But, unlike many African nations, Ghana is moving fast to reduce this reliance by phasing in thermal, renewables and even nuclear power.
Bordered by Ivory Coast, Burkina Faso, Togo and the Gulf of Guinea, Ghana is the 82th largest country in the world with a population of about 25 million people. In 2011, its GDP was $38.6 billion and the figure is expected to reach $64 billion by 2016.
|Projected power mix in 2020 (source: GlobalData, Power eTrack, Capacity and Generation Database)|
In recent years, economic and population growth has propelled rapid urbanisation and industrialisation. More than half of its people now live in urban rather than rural areas. This in turn has raised pressure on the country’s electricity system. Ghana’s installed capacity totalled 2526 MW in 2011 but is predicted to rise to 4027 MW by 2020. In 2010, the country’s industrial sector accounted for 46 per cent of power consumption, with 40 per cent classed as residential and 14 per cent as non- residential.
With hydropower already affected by droughts, the government has been forced to initiate a series of measures to ensure a stable electricity supply, and the winner in this drive has been thermal power.
Nearly all of this is oil fired. Ghana has minimal gas-fired generation and no coal plants, due to the lack of coal reserves. Nonetheless, thermal power is poised to gradually outpace hydropower during this decade, with the 2020 energy mix predicted to be 47.4 per cent hydro, 30.2 per cent thermal gas and 22.3 per cent thermal oil.
Prior to 2010, all thermal power came from oil. But the rising oil price over the past couple of years, combined with rising official concern over emissions, has seen gas plants become operational. The most notable being the 200 MW Sunon Asogli and the 50 MW VRA Tema. This year the 220 MW Kpone power station is due to come online. In 2015, an expanded Sunon Asogli with a capacity of 360 MW is set to start operating.
Ghana currently has no renewable power generation, although this will certainly change. Last year the government passed a renewable energy bill which, among other things, will oblige utilities to use power from renewable resources, such as biomass, solar and wind, all of which are potentially plentiful.
Perhaps most interestingly, Ghana last year announced it is to build its first nuclear power station. A team from the International Atomic Energy Agency visited the country to advise on the best sites. The builder of the plant has yet to be decided, but the deal is currently expected to go to a Russian company. The facility is due to be completed by 2018 and operational by 2020.
Not that the government has turned its back on hydropower. This year will see the completion of the 400 MW Bui project, a $622 million plant built in co-operation with China. The plant was funded with $263.5 million from the Chinese government, $298.5 million from China EXIM Bank and $60 million from the government of Ghana. The project is due online next year.
The development of Bui is expected to greatly bolster Ghana’s status as an electricity exporting nation. The country already has export deals with Togo and Ivory Coast, and an agreement is expected to be closed with Nigeria, with this power being transferred via the Ghana-Togo-Benin 330 kV interconnector.
Another interconnection project is being built between Ghana and Burkino Faso. The $122 million, 210 km high-voltage line is due to be operational by 2014 and has been jointly funded by the African Development Bank, the European Investment Bank and the French Development Agency.
Encouraging the private sector
These developments across the hydro, thermal, renewables and nuclear sectors have opened the doors to private investment – in fact, they are largely reliant on it. Traditionally, most power sector investment in Ghana has came from the public sector, but the government has had to shift its focus as electricity demand in Ghana is growing at a rate of 10 per cent per annum.
As a result, independent power producers (IPPs) have been allowed to set up facilities in the country, and are now running two thermal power plants, Takoradi 2-TICO and Sunon Asogli. These IPPs account for 18.2 per cent of the power generation market, while the remaining 81.8 per cent is dominated by the government-owned Volta River Authority, which, until it was unbundled in 2000, also ran all transmission and distribution in the country.
Takoradi International, which owns and operates the Takoradi 2-TICO, has a 90 per cent holding by TAQA Generation, of which 51 per cent is owned by Abu Dhabi Water and Electricity Authority. The other 10 per cent ownership of Takoradi International is vested in the Volta River Authority.
Sunon Asogli was set up as a co-operation between Asogli state in the Volta region, China’s Shenzhen Energy Group and the China-Africa Development Fund.
While Ghanaian laws prevent power transmission being privately owned, private investors can participate as equity partners in establishing a national transmission company.
|Ghana, like many African nations, is largely reliant on hydropower for its electricity
credit: World Bank
The Volta River Authority also owns hydro and thermal plants, including the country’s biggest hydropower station, the 1020 MW Akosombo on the Volta River.
The rise of thermal power in Ghana has seen some of the power industry’s major players gain a foothold in the country. Most notable is GE, which has supplied Takoradi 1 and 2 and Sunon Asogli. GE has also supplied power generation equipment, lighting technology and water purification systems to Ghana as part of its Developing Health Globally initiative.
Siemens has supplied turbines and generators and has also delivered protection equipment for a high-voltage substation for the Volta River Authority through the French integrator company Forclum. The German OEM is currently in talks with the Electricity Company of Ghana over the supply of equipment for medium-voltage substations.
Other international power generation companies active in Ghana include Brush, Pratt & Whitney, Thomassen Stewart & Stevenson and Andritz Hydro.
Renewables set to be the big winner
|The Klipheuwel wind farm was the first wind project undertaken as a research venture by Eskom
credit: Warren Rohner
Although coal will remain ‘king’ in fueling South Africa’s growing electricity demand, renewable energy resources, particularly wind and solar, are expected to enjoy the biggest growth to 2020.
The Republic of South Africa remains the largest economy on the African continent, and its economy has seen an impressive pace of growth over the last five to six years. Its GDP stood at $247 billion in 2005, rising to $422 billion last year, and is forecast to reach $535.6 billion in 2020.
In 2005, South Africa’s total population stood at 46.9 million and rose to 50.6 million in 2011. It is expected to increase further to close to 54 million in 2016.
Thus, with its growing economy and population, coupled with its rapid industrialisation, there will be an upward pressure on consumption, which will require the government to increase electricity supply in the coming years.
In 2005, electricity consumption in South Africa was 223,257 GWh. It increased to over 240,500 GWh last year, although a decline was seen in 2009, which has be attributed to factors such as the use of load shedding to save electricity and falling off of industrial activity in response to the global economic meltdown. However, between 2012 and 2016, consumption is expected to continue to increase, to top 277,800 GWh.
Eskom, which is ranked amongst the top ten utilities in the world, is a vertically integrated company that holds almost the entire market share of South Africa’s installed capacity. In 2011, its total installed capacity was 41,194 MW and it owns and operates the country’s major coal, gas and hydro fleet, as well as two nuclear power stations. The state-owned utility has a monopoly in transmission sector.
Eskom contributes approximately 95 per cent of the total electricity generated in the country. The remaining share is provided by independent power producers, including Sasol and IPSA Group plc. Eskom supplies electricity directly to approximately 45 per cent of end consumers, with the remaining 55 per cent resold by redistributors, including municipalities.
Over the past ten years, the country has tried to restructure its electricity sector and transform it from a monopoly into a competitive market. However, so far it has been relatively unsuccessful in attracting private investment in its electricity sector. This is partly due to the lack of a cost reflective electricity tariff and a well defined regulatory framework.
In 2011, the South Africa’s total installed capacity stood at 47,063 MW, out of which 91 per cent was contributed by thermal power sources (both coal and gas). Hydropower and nuclear energy contributed a 4.8 per cent and 4 per cent share, while the remaining 0.2 per cent came from renewable energy sources.
Between 2012 and 2020, its total installed capacity is expected to top 66,818 MW, with thermal continuing to dominant, albeit with a smaller share, i.e. contributing 81 per cent to the total installed capacity. The share of hydropower is expected to increase slightly to 5.5 per cent, but nuclear power’s will fall to 2.7 per cent, primarily because of a significant increase in renewable energy’s share. By 2020, renewable energy is expected to be the second largest contributor, with an impressive share of 10.8 per cent.
Renewables gain traction
Up to 2020, a number of new thermal power plants are due to come online to help meet the country’s rising demand.
Kusile power plant in the state of Mpumalanga is one of the biggest power plants expected to come online between 2014 and 2017. The Medupi power station in the state of Limpopo is also expected to come online in phases between 2012 and 2015. Both of these plants are expected to add close to 9600 MW of capacity to the total thermal installed capacity.
|Evolving power mix, 2005 & 2020
(source: Globaldata, Power eTrack, Capacity and Generation Database)
The new plants are supplemented by three power stations that were removed from active service a couple of decades ago but have been brought back into service. This includes the Camden power plant. Thus, coal-fired power plants will continue to dominate the upcoming power projects.
On the flip-side, the renewable capacity in South Africa was only 105 MW in 2011. However, the country has highly ambitious plans to build its renewable power capacity. A large number of wind, solar and biomass power projects are expected to come online in the country up to 2020.
Consequently, South Africa’s renewable installed capacity is expected to increase by over 30 per cent between 2012 and 2020, to reach 7187 MW. Up to 2020, 300 MW of wind power capacity is planned for commissioning at De Aar and KAroo. A 450 MW solar photovoltaic (PV) installation is also due to be commissioned in this period.
Wind power is the major renewable energy resource currently being utilised in South Africa, with a cumulative active installed capacity of 26 MW in 2011. The Klipheuwel wind farm was the first wind project undertaken as a research venture by Eskom to explore the feasibility of the country’s wind power potential. The first and second units began generating in 2002 and 2003.
In order to promote renewable energy’s share in the generation mix, the Department of Energy in 2009 set the target of generating 10,000 GWh of renewable electricity by 2013.
In 2009, the Renewable Energy Feed-In Tariff (REFIT) was introduced to promote investment in clean energy. The REFIT, which is reviewed on an annual basis, offers special tariffs for wind, small hydropower, landfill gas, concentrating solar thermal and solar PV.
However, a lack of power purchase deals in the market and a recent cut in proposed subsidies may make it difficult for South Africa to achieve its 10,000 GWh target by 2013.
Wind dominate role is expected to continue, with it representing 58 per cent or 1459 MW of the upcoming renewable power plants. However, solar PV projects are also expected to contribute 750 MW to the upcoming renewable energy plants. Interestingly, South Africa’s solar resources are amongst the highest in the world, with an annual average 24-hour solar radiation of 220 W/m2. A major solar thermal plant is planned and expected to add 300 MW to capacity in the near future. Overall, renewable power projects are expected to add 2509 MW of capacity to the country by 2020.
In December 2011, Scatec Solar, Standard Bank, Old Mutual Life Assurance Company and Simacel announced an investment of more than $268 million for the construction of a ground mounted solar PV project in North Cape region. The total installed capacity of the project is 75 MW and is expected to produce 145 million KWh of electricity, which is sufficient to power about 35,000 households. The electricity generated will be fed into local grid network and sold to a local utility company under a 20-year power purchase agreement. The solar PV plant is due to become operational by August 2013.
While in November last year, Astrum Energy (Pty) Limited announced it was to construct of a $151.5 million onshore wind power project on farmland north east of Empangeni, in northern KwaZulu-Natal. The total installed capacity of the wind farm is 80 MW, comprising 23-30 turbines, and the electricity generated will power around 1800 households. The construction of the wind project is expected to take 18 months.
The majority of electricity in South Africa is still generated through thermal power, with a small share contributed by renewable energy, and this will not change significantly in the coming years. However, wind and solar have a huge development potential, both grid-linked and non-grid to serve the country’s remote rural areas. To help achieve this and to meet electricity demand the active participation of private sector is an essential requirement.
Getting to grips with the rural challenge
|Uganda has set the ambitious target of achieving ‘universal access to electricity by 2035’
credit: Mountain Partnership
Uganda’s power sector challenges mirror those of many of its sub-Saharan neighbours: namely it lacks the means to meet the demands of a growing population that is primarily located in the county’s rural areas.
Like many of its neighbours, Uganda also places a heavy reliance on hydropower, now threatened by the falling water level of Lake Victoria. Attempts to incorporate more thermal power and renewables into its energy mix are moving at a sluggish pace – and too slow for a country very much back on its feet after decades of civil war.
Landlocked by the Democratic Republic of Congo and Kenya, Uganda suffered civil unrest from 1972 to 1986. This took its toll on its population, economy and infrastructure, but since hostilities ended the country has embarked on one of Africa’s most extensive power market reforms.
These reforms include the unbundling of the state-owned Uganda Electricity Board into three new companies – Uganda Electricity Generation Company, Uganda Electricty Transmission Company and Uganda Electricity Distribution Company – and the passing in 1999 of the Electricity Act, which established the Electricity Regulatory Authority and opened up the power industry to the private sector.
Last year, Uganda’s population was estimated to be 35.2 million, while its GDP was put at $16 billion, and more importantly predicted to hit $22 million by 2016.This strong growth, driven by a democratic government and an open market economy, makes Uganda ripe for foreign investment, which is hindered by the shortcomings of the power sector, such as load shedding, power outages and high production costs. Electricity consumption totalled 2720 GWh in 2011 and is set to reach 3991 GWh by 2016 and 5007 GWh in 2020. Yet the electrification rate is currently only 12 per cent – with more than 80 per cent of the population in rural areas beyond the grid.
In 2011, Uganda’s total installed capacity was 544 MW, of which 353 MW – or 64.9 per cent – was from hydropower. Thermal sources contributed 31.3 per cent while renewables accounted for just 3.9 per cent.
This dominance of hydro comes largely from two power plants – Kiira and Nalubale – both operated by Eskom Uganda. The share of hydropower in the country’s energy mix is set to increase, from 353 MW last year to 1205 MW in 2020. Five major hydroelectric plants with a total capacity of 1454 MW are currently in the planning stage. Also under construction is the Bujagali plant, operated by Bujagali Energy, which is due to come online later this year, with a capacity of 250 MW.
|Evolving power mix, 2005 & 2020
(source: GlobalData, Power e track, Capacity and Generation database)
But there is a potential spanner in these expansion works: namely the falling water level of Lake Victoria, of which 42 per cent is within Uganda’s borders and from which the country draws most of its water for hydroelectricity. The rest of the lake – Africa’s largest inland lake – is in Tanzania and Kenya, two countries with which Uganda has export contract obligations for 9 MW and 30 MW during off-peak hours. It also has a contract to supply 5 MW to Rwanda.
The past seven years have seen a surge in the country’s thermal power resources, which are all oil fired. In 2005, Jinja power station – operated by Invespro Uganda – provided 3 MW of power, which was deemed too low by the government, which introduced a bidding process for another plant. This was won by Aggreko, which subsequently set up the 50 MW Kiira diesel-fired plant, and later in 2008 also built the Mutundwe thermal plant, which also has a 50 MW capacity.
Jinja, Kiira and Mutundwe are three of the country’s five major thermal power plants, the others being Namanve and Tororo, run by Wartsila and Electro-Maxx respectively.
This rise in diesel power resulted in thermal accounting for 170 MW last year, a significant rise from the 3 MW in 2005, and this increase is set to continue, with capacity predicted to reach 375 MW by 2020. Currently under construction and due to come online next year is the Nzizi power station, a gas fired plant operated by Jaconsen Elektro, which will have a capacity of 50 MW.
Uganda’s renewables mix is no mix at all – 100 per cent of renewable power comes from biomass. This takes the form of two cogeneration projects run by two sugar companies, Kakira and Kinyara, which contributed 17 MW in 2011, accounting for 3.9 per cent of the overall energy mix.
In 2007, Uganda drew up a renewable energy policy that is intended to drive a rise in geothermal energy in rural areas, and it is hoped that by 2017 100 MW of electricity will come from renewable sources. The country has an estimated geothermal potential of 450 MW, with most of it concentrated in the western branch of the East African Rift Valley.
Transmission and distribution
Uganda has more than 1000 km of 132 kV transmission lines and 53 km of 66 kV lines. The distribution network comprises 3258 km at 33 kV, 3443 km at 11 kV and 6496 km of low-voltage lines. All of these lines serve only 33 of the country’s 117 districts.
As mentioned earlier, Uganda has export agreements with Kenya, Rwanda and Tanzania. These are currently the only countries with which Uganda has interconnections, although a link with the Democratic Republic of Congo is planned.
The transmission lines are managed by Uganda Electricity Transmission Company, which was incorporated in 2001 following the unbundling of the state-owned Uganda Electricity Board.
Uganda’s open market structure, good economic growth and availability of natural resources increase the scope for investors. It is particularly open for foreign investment and has already attracted interest and action from the Middle East and Asia, with licences granted to investors from the UAE, India, the UK and China in 2010, as well as nearer-to-home Kenya and South Africa. So far, India has been the largest investor, with 47 proposed projects worth $173 million, followed by the UK with 13 projects worth $76 million. Future investment opportunities are expected to focus on four areas:
- Design, construction and support for biomass plants;
- Assembly and marketing of solar units;
- Manufacturing and marketing of charcoal briquettes; and
- Acquisition, installation and services of micro hydro dams.
Manufacturers that have to date supplied equipment to Uganda’s hydroelectric power sector include GE Canada, Kvaerner Turbine and Mavel.
PennWell Corporation is, for the first time, holding a POWER-GEN event on the African continent. POWER-GEN Africa Conference & Exhibition is taking place in Johannesburg, South Africa, between 6-8 November 2012.