Energy market in Ghana

Ghana's main power producer is the state-owned Volta River Authority, which operates approximately 2500 MW of the country's totaled installed capacity of around 5500 MW. Over 50% of the country's electricity comes from independent power producers (IPPs).

The Government is attempting to renegotiate its take-or-pay power purchase agreements with independent power producers, many of which were signed during the power supply crisis of 2012-2018.

The country's power production mix as of 2021 consisted of approximately 68% thermal (mostly natural gas), 29% hydroelectric, and less than 3% renewables. However, the country has ambitious plans to achieve 10% of its power generation from renewables by 2030, to meet its Paris Agreement commitments and to support the Environment, Social and Governance (ESG) goals of the major international mining companies invested in the country. New non-hydro renewable energy installations will include 520 MW of solar, and 325 MW of wind.

Ghana faces challenges in electricity distribution - annual outages are now averaging around 60 hours. Additionally, theft and illegal connection, are leading to losses that can average around 25% of power production.

The modern era of Ghana's oil & gas industry was launched in 2007. In 2022, Ghana produced just over 50 million barrels of crude oil, almost all of which was exported, as very little domestic refining capacity currently exists. The upstream sector is dominated by international oil companies (IOCs), including Tullow Oil, ENI and Kosmos Energy. State-owned Ghana National Petroleum Corporation (GNPC) is a required partner in all Petroleum Agreements, at a minimum 15% initial participating interest.

Total production from Ghana's three main offshore oil fields has been declining since peak production in 2019. However, the country expects that new investments by Tullow Oil will modestly boost production levels in the short run, while longer term prospects for the sector will hinge on development of deep-water reserves and possibly the onshore Voltaian basin.

The Ghana Natural Gas Company ("Ghana Gas") is responsible for processing, transporting and marketing of the country's natural gas production. Approximately 90-95% of natural gas produced by Ghana goes toward domestic power generation. Ghana Gas has announced plans for a US$700 million project to construct a second natural gas processing plant, to support more capacity for gas thermal power generation, production of natural gas liquids (propane, butane and pentane), as well as well as to produce other downstream by-products such as fertilizer.

As part of the country's efforts to develop value-added supply chains for its natural resources, the Government has introduced the Petroleum Hub Development Project, with a goal of achieving US $60 billion of mostly private investment in the oil & gas downstream sector. This includes refineries, petrochemical plants, storage and port facilities.

Ghana's energy transition framework calls for significant investment in compressed natural gas infrastructure for transport by 2030, and in carbon capture, utilization and storage (CCUS) for both electricity generation and oil & gas production by 2040.

Key opportunities for Canadian Energy companies in Ghana

• Technical and managerial education and skills training to support Ghana's local content goals.
• Carbon and methane emissions management technologies (for IOCs in particular).
• Upstream specialized equipment and services, through partnerships with local services companies.
• Engineering consulting and EPC services related to renewables and oil & gas projects.
• Grid network and metering systems for electricity transmission and distribution.

Notable challenges for Canadian Energy companies in Ghana

• Strong international competition and lack of knowledge of Canadian sector capabilities in Ghana.
• Current constraints on state financing for sector projects.
• Current moratorium on new Power Purchase Agreements, which hinders opportunities for renewable energy development.
• Major cuts by IOCs in their oil and gas project plans for the country.
• A slow transition to renewables.
• A lack of transparency in the investment environment.

Summary

• Ghana's energy sector offers many potential trade and investment opportunities, as the country seeks to develop domestic value chains around its significant natural resource endowments. Ghana is already a world-leader in the production of gold and cocoa, and possesses deposits of lithium, bauxite and manganese.
• Ghana will seek to leverage its oil & gas deposits to capitalize on Africa's growing energy consumption, driven by the continent's industrialization and increased economic activity under the African Continental Free Trade Agreement.
• Ghana's energy transition framework provides many opportunities in areas of Canadian capabilities.
• Lack of investment in oil & gas exploration and upstream production threatens the long-term viability of the country's energy sector.