ec energypolicy final june 2009 final

7/29/2019 EC Energypolicy Final June 2009 FINAL

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MINISTRY OF ENERGY

Republic of Ghana

NATIONAL ENERGY POLICY

(REVISED)

JUNE, 2009


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TABLE OF CONTENTS

Preface

EXECUTIVE SUMMARY... 6

1.0. INTRODUCTION.... 9

2.0. POWER SUB-SECTOR POLICY.. 11

3.0. PETROLEUM SUB-SECTOR POLICY... 15

4.0. RENEWABLE AND WASTE ENERGY POLICY 20

5.0. ENERGY EFFICIENCY AND CONSERVATION POLICY. 22

6.0. ENERGY AND ENVIRONMENT POLICY.. 23

7.0. MANAGING THE FUTURE.. 24

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Abbreviations & Acronyms

BOSTBSPBSPD

ECECGEFEPAFCGDPGNPCGoGGOILGPRSGWhkm

km2

kmsktoekVkWkWhLVmMJm/sm2

MDGs

MVMWNEDNEFNGONo.NPAO&MOMCsPSPPURCR&D

REPRETsRFCCSBMSHEPSNEPTORTICOUNDP

Bulk Oil Storage and Transport CompanyBulk Supply PointBarrels Per Stream Day

Energy CommissionElectricity Company of Ghana LimitedEnergy FoundationEnvironmental Protection AgencyForestry CommissionGross Domestic ProductGhana National Petroleum CompanyGovernment of GhanaGhana Oil Company LtdGhana Poverty Reduction StrategyGiga Watt hourskilometer

square kilometerskilometerskilo ton oil equivalentkilovoltkilowattkilowatt hoursLow VoltageMeterMega joulesmeter per secondsquare meterMillennium Development Goals

Medium VoltageMega WattNorthern Electricity DepartmentNational Electrification FundNon- Governmental OrganizationNumberNational Petroleum AuthorityOperation and MaintenanceOil Marketing CompaniesPrivate Sector ParticipationPublic Utilities Regulatory CommissionResearch and Development

Rural Electrification ProgrammeRenewable Energy TechnologiesResidue Fuel Catalytic CrackerSingle Buoy MooringSelf Help Electrification ProgramStrategic National Energy PlanTema Oil RefineryTakoradi International CompanyUnited Nations Development Program

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USDVALCOVLTCVRAWAGPPWAPP

United States DollarVolta Aluminum Company LimitedVolta Lake Transport Company LimitedVolta River AuthorityWest African Gas Pipe ProjectWest African Power Pool

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Preface

In 2001, the Ministry of Energy prepared an Energy Sector Policy Framework document that served asthe platform for policies and programmes towards the development of the Energy Sector. Following areview of the energy policy environment in 2006 by key stakeholders, the Energy Policy was revisedtaken into account the goals and objectives expressed in the Growth and Poverty Reduction Strategy II(GPRS II) and other prevailing energy sector developments.

Since then important changes have occurred in the domestic as well as the external energy scene tonecessitate the review of the policy. Notable amount these developments are the power crisis in 2006/7,the operationalisation of the Ghana Grid Company (GRIDCO), the establishment of the NationalPetroleum Authority (NPA), as well as the recent oil and gas discovery in offshore Ghana. On theexternal scene, the high prices of crude oil and petroleum products on the world market created somedifficulties for oil importing developing countries, including Ghana. These developments have comewith their peculiar challenges which require definitive policy responses.

This National Energy Policy outlines Governments policy direction regarding the current challengesfacing the energy sector. By providing a concise outline of policy directions, this document aims tocontribute to a better understanding of Ghanas Energy Policy framework. It is hoped that betterunderstanding leads to better management and development of the energy sector: The document istherefore intended to serve as:

- a decision-making platform for effective management and development of the energysector of Ghana;

- guidance to key stakeholders and institutions in the energy sector regarding thedefinition and implementation of specific activities in respect of their mandates;

- a guide for coordinating the implementation and monitoring of energy sector policies;and

- a platform for dialogue on investment opportunities with Ghanas development partnersand private sector.

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Executive Summary

Ghanas Development Challenge

Ghana has a huge potential to grow and modernize the economy and also reduce the high incidence ofpoverty to acceptable levels. The fundamental goal of the Government of Ghanas development agendaas enshrined in the Growth and Poverty Reduction Strategy (GPRS II) is to grow the economy to amiddle income status of US$1,000 per capita by 2015 and also to reduce poverty amongst Ghanaians.Meeting this development target requires an annual economic growth rate of about 10% from thecurrent level of 6.7%.

The Energy Challenge

To achieve the projected GDP of US$1,000 per capita, Ghanas total energy supply is expected to growsignificantly. The challenge is how to increase the energy supplies and also expand the energyinfrastructure in order to achieve the development targets.

The Energy Resources and Vision

Ghana is well endowed with a variety of energy resources including biomass, hydrocarbons,hydropower, solar and wind as well as the capacity to produce bio-fuels and nuclear energy.

In response to the priority developmental objectives of Government, the vision for the energy sector isto develop an Energy Economy that would ensure secure and reliable supply of high quality

energy services for all (both urban and rural) Ghanaian homes, businesses, industries and the

transport sector while making significant contribution to the export earnings of the country.

Energy Policy Platform

The National Energy Policy outlines energy sector goals, challenges and policies. These policies coverthe broad spectrum of issues and challenges with respect to the following energy sub-sectors:

(i) Power Sub-sector;(ii) Petroleum Sub-sector;(iii) ;(iv) Renewable Energy Sub-sector;(v) Energy Efficiency and Conservation;(vi) Energy and Environment; and(vii) Managing the future of the sector.

A summary of the sub-sector policy framework is provided below.

Power Sub-sector Policy

The target is to achieve installed power generation capacity of 4,000 MW and also universal access toaffordable electricity by 2015. This is to be achieved through Private Public Partnership in thedevelopment of new power plants as well as ensuring cost-recovery for the production, transmission anddistribution of electricity.

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The policy also focuses on institutional and regulatory reforms intended to create competitive electricitymarkets.Petroleum Sub-sector Policy

The policy goal is to ensure the sustainable exploitation of the countrys oil and gas endowment and thejudicious management of the oil and gas revenue for the overall benefit and welfare of all Ghanaians as

well as a commitment to indigenization of knowledge, expertise and technology.

The major challenge regarding the Upstream petroleum sub-sector is how to develop oil and gasindustry and also manage the potential revenue from oil and gas exploitation.

In view of the goal and challenges, the policy focuses on regulation of the petroleum industry withrespect to licensing and operation of the oil and gas companies, improving institutional capacity,enhancement of local content, and fiscal incentives that will ensure maximum benefits to people ofGhana as well as transparency in the use and distribution of the oil revenue. The National Oil and GasRegulatory Authority is being established to play a lead role in the regulation of the industry particularlythe upstream activities.

Renewable Energy Sub-sector Policy

The Renewable Energy sub-sector covers biomass, solar and wind resources.

The major challenge in biomass energy supply is how to reverse the decline in the fuelwood resourcebase of the country and further sustain its production and use by improving the efficiency of productionand use.

The biomass policy focuses on improved production and efficient use of biomass in the short term whileincreasing regeneration and fuel substitution in the medium to longer term as well as shifting from theuse of biomass to alternative sources of energy.

Amajor challenge in the development of solar and wind is the high cost of these energy sourcesowing to the current state of their technology.

The key policy focus, therefore, is to engage Ghanaian engineers and scientist to cooperate withother experts to bring down the cost of renewable energy technologies in order to make themcompetitive as well as creation of fiscal and pricing incentives to enhance the development and use ofrenewable energy. The renewable energy technologies that are competitive will be promoted.

Energy Efficiency and Conservation Policy

Energy production, transportation and use result in losses and wastage. Reducing these losses and

wastage will lead to significant benefits for the national economy. The challenge therefore is how toreduce the wastage in all aspects of the energy sector.

The policy outlines efforts towards removing the obstacles that have constrained the promotion andimplementation of energy efficiency and conservation programme. The policy focuses on theapplication of fiscal incentives, awareness creation, institutional and financial intermediation, andregulation to promote energy efficiency and conservation.

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Managing the future

.The policy also addresses issues regarding the management of the sector with the view to ensuring asmooth transition in the medium to long term. Policies to address mobilisation of investments for thesector, human capacity and research and development and implementation are also contained in thepolicy document. A key policy direction is to strengthen the regulatory agencies to be able to monitor

and enforce rules and regulations governing the operations of the energy sector with a focus on buildingcapacity through training and financial support.

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1.0 Introduction

1.1 Energy Consumption and supply profile

For the year 2007, biomass energy consumption was 11.7 million tonnes while petroleum products andelectricity consumption were 1.955 million tonnes and 6,269 GWh respectively. In terms of total energyequivalence, biomass (fuelwood and charcoal) constituted 59% with petroleum products and electricityaccounting for 32.3% and 8.7% respectively.

1.2 The Energy Sector Vision

In response to the priority developmental objectives of Government, the vision for the energy sector isto ensure availability and access of energy services for all and for export.

1.3 The Energy Sector Goals

Within the context of this vision, the goals of the energy sector are:

(i) To ensure that Energy services are readily available to meet all demand at anyparticular time far into the future;

(ii) To make Energy services accessible through the development of an extensivesupply infrastructure;

(iii) To ensure that Energy is produced and supplied in a form that conforms toacceptable international practice with regards to their health and environmentalimpact;

(iv) To ensure that Energy is used in the most efficient manner; and(v) To ensure energy is produced and supplied at competitive prices (affordable

tariffs)

1.4 Energy Sector Objectives

The medium term policy objectives for the achievement of the above goals are:

(i) Augment generation capacity to ensure adequate and reliable power supply;(ii) Provide support to modernize and expand energy infrastructure to meet growing

demand;(iii) Increase access to modern forms of energy;(iv) Improve the overall management, regulatory environment and operation of the

energy sector;(v) Secure long term source of fuel for the thermal plants;(vi) Minimise environmental impacts of energy supply and consumption through

increased renewable energy and efficient energy delivery;(vii) Ensure full cost recovery for energy supply and delivery;

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(viii) Ensure productive and efficient use of energy;(ix) Promote and encourage private sector participation in the Energy Sector;(x) Diversify the national energy mix by implementing programmes to support

development and use of renewable energy sources; and(xi) Reduce technical and commercial losses in power supply.

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2.0 Power Sub-sector Policy

2.1 Power Generation Resources

Ghanas hydro power potential consisting of hydropower sites along the Volta River Basin and severalsmall hydro sites on some rivers scattered over the country. Although a larger proportion of the nationsknown hydro power potential, including the Aksomsbo and Kpong, have already been developed, thereare some undeveloped sites. These consist of medium and small hydropower sites with a total capacityof about 843 MW and the Bui Hydropower Project (400 MW) which is under construction

The recent domestic oil and natural gas discovery also provides a viable source of power generation inGhana in the near future.

Ghana has no known commercial endowment of uranium and coal even though interest in electricitygeneration from these sources has grown in recent times.

Currently power generation is mainly from hydro and thermal power sources operated on light crude oiland natural gas supply from Nigeria.

2.3 Policy Goal

Government is committed to providing adequate, reliable and cost effective electricity supply throughtimely power generation capacity additions and modernization of transmission and distributioninfrastructure as well as ensuring universal access to electricity by 2020.

2.4 Challenges

The first challenge is the expansion of power generation capacity and rehabilitation and reinforcementof transmission and distribution infrastructure to meet the projected growth in power demand of 10%per year in the medium term1which requires about 200 MW new capacity additions annually.

The second challenge is how to secure long term reliable and cheaper fuel for the operation of thethermal power plants.

The third challenge is to increase access of electricity to consumers and especially the rural dwellers. .

Government is committed to addressing these challenges and in that respect, seeks to pursue the

following policy actions.

2.5 Expansion of Power Supply Infrastructure

Policy Direction

1 The medium term refers to a period of 5 years up to 2015.

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The strategic policy focus for the sector is to attract investments to improve and expand on the capacityof the existing infrastructure to deliver reliable power supply services in the short to long term and to benet-exporter of electricity in the West African sub-region

Generation Capacity

The policy objective is to increase installed generation capacity from the current21,986 MW to5,000 MW by 2020. To achieve this objective, Government will pursue the following policy actions:

Seek financing for the rehabilitation expansion of existing electricity

generation plants

Encourage private sector investments in the construction and ownership of

additional power supply capacity

Hydro Power Resources Development:

Complete the development of the Bui Hydropower Project on the Black Volta

Support the development of small3 and medium4 scale hydro power projects on

other rivers including the Western Rivers (Ankobra, Tano and Pra), River Oti

as well as the White Volta.

Transmission Infrastructure

The key policy objective is to invest in the development of a reliable electricity transmission network.To achieve this, Government will:

Support mobilization of commercial and domestic capital sources to

supplement external funding for transmission infrastructure development

Distribution Infrastructure

Inadequate investment, in the past, has led to deterioration in the electricity distribution system resulting

in high system losses and poor quality of electricity supply. In meeting the challenge, Governmentwill

Increase financial support to the distribution utilities to modernize

infrastructure in the short term by re-capitalisation

Encourage the injection of investment capital from commercial sources and

the domestic capital market in the medium to long term

2 The refers to installed capacity in 2009 and includes the Emergency Power Units of 136 MW.3 Small scale hydro power projects refers to hydropower projects with generating capacity between 1 MW and 10(MW)4 Medium scale hydropower projects refer to hydropower projects those with generating capacity between 10 MWand 100 MW

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Support management in the restructuring of the distribution companies

operations towards achieving improved operational performance

2.6 Securing Fuel Supply for power generation

Policy Direction

In order to secure future fuel supplies the following policy actions will be pursued:

Infrastructure for new fuel supply sources:

Support development of infrastructure for the exploitation of domestic natural

gas discoveries through fiscal incentives, financial support and creation of

favourable and effective regulatory environment

Encourage private sector financing of natural gas infrastructure in partnership

with the public sector

.

Nuclear Power Development:

Include nuclear power in the options of energy sources to generate electricity

in the medium to long term and plan towards the development of basic nuclear

infrastructure in the medium to long term

Coal Power Development

Explore the use of coal as an option for electricity generation in the long term

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Regional Integration of Energy Resources:

Support regional initiatives for integrating energy infrastructure resources to

expand and accelerate cross-border energy trade and investments in gas

pipelines and electricity inter-connections such as the West African Gas

Pipeline Project and the West African Power Pool Project.

Harmonise the legal, regulatory and institutional regimes in conformity with

the ECOWAS Energy Protocols.

2.7 Increasing Access to Electricity Supply

Policy Direction

5 The long term refers to the period from 5 to 10 years.

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The strategic focus for achieving universal access to electricity will be to extend the reach of electricityto all households by 2020. To meet the above objective, Government will pursue the following policyactions:

Increase funding from Government sources for the Rural Electrification

Programme

Support private sector co-financing with Government for grid-extension to

designated franchised zones

Institute a sustainable funding mechanism for rural electrification

Continue to subsidise new service connections for electricity in rural areas

Support implementation of productive uses of electricity as an integral part of

the Rural Electrification Programme.

Address institutional and market constraints that hamper increasing access ofelectricity to the poor such as the Rural Electrification Agency

Street Lighting Access and Infrastructure

Every Ghanaian community must have access to adequate street lighting

infrastructure by 2020

Provision of street lighting infrastcruture and the cost of operation and

maintenance as well as electricity shall be the responsibility of Local

Government

Local Governments shall develop sustainable mechanisms to finance the streetlighting infrastructure and other related costs. These may be achieved throughstreet lighting levies, local fiscal instruments, grants, concessional loans

secured by Government, etc.

Electricity Pricing

The key objective is to make electricity tariffs affordable. Government will pursues thefollowing measures with respect to pricing of electricity:

Secure supplies of cheaper fuels such as natural gas from the West Africa

Gas Pipeline Project and Ghanas domestic natural gas resources for powergeneration

Support implementation of full- cost recovery pricing of energy services with

selective subsidy and transparent packages to address specific national

development objectives

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Continue to provide for special rates for the vulnerable in society (lifeline

tariffs) and also protection of productive activities that have the potential to

generate significant indirect economic benefits (employment generation, etc)

Wholesale procurement of electricity will be based on economic merit order

dispatch principles reflecting efficient economic costs of generation,

transmission and distribution

Windfall revenues from Akosombo and Kpong Hydro Generating stations

will be applied for subsidies to targeted consumers with the purpose of

achieving equity and national development goals

Pricing of transmission and distribution services will continue to be

regulated to achieve financial sustainability of the utility companies as well

as ensuring consumer protection

Electricity tariffs will be uniform through out the country

Power Sector Reforms

Promote competition in the generation of electricity through the Wholesale

Electricity Market (WEM)

Facilitate the entry into the power sector of Independent Power Producers

(IPPs) in addition to ensuring improved performance of electricity utility

companies.

Create the environment for retailing of electricity with the aim of facilitating

price and service competition in low-income communities.

Facilitate competitive entry and service expansion by local electricity

distributors

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3.0 Petroleum Sub-sector Policy

3.1 Hydrocarbons Resources

In 2007/8 Ghana made discoveries in two blocks, Deepwater Cape Three Points and Deepwater Tano

under two separate Petroleum Agreements operated by Kosmos and Tullow respectively. The appraisalso far conducted indicates that the field contains an expected recoverable reserves of about 800 million

barrels of light crude oil, with an upside potential of about 3 billion barrels. The recent discovery ofcommercial quantity of oil and gas provides Ghana with an opportunity to effectively reducethe impact of the rising oil bill as well as increase the countrys export earnings.

3.2 Policy Goal

Government is committed to the sustainable exploitation of the countrys oil and gas endowment andthe judicious management of the oil and gas revenue for the overall benefit and welfare of allGhanaians, present and future, as well as a commitment to attracting increased investments in the oiland gas sector and indigenization of knowledge, expertise, technology and local value-added

production.

Upstream Sub-sector

3.3 Challenges

The major challenge regarding the Upstream petroleum sub-sector is how to develop oil and gasindustry with optimal local content and participation and also manage the potential revenue fromoil and gas exploitation as well as ensuring security for the oil and gas installations and the industry as awhole.

3.4 Policy Direction

In addressing the challenges that confront the energy sector Government seeks to pursue the following:

Hydrocarbon Resources Development and Management:

Manage Ghanas oil and gas resource endowment to ensure sustainability in

reserves and the environment through judicious exploitation and intensive

exploration

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Set up National Petroleum Regulatory Authority to be responsible for the

regulation of all activities related to upstream and midstream oil and gas

industry in Ghana

GNPC (National Oil Company) will focus on the role of being the

Governments entity regarding oil and gas exploration and development

operational activities.

GNPC (National Oil Company) will assume the full responsibilities for the

development of the domestic natural gas find

Oil Revenue Management

Manage oil and gas revenues transparently and equitably for the benefit of the

present and future generation of Ghanaians. This will be achieved through

institutional reforms and transparent regulation by the establishment of an

entity to manage the oil revenue through legislative guidelines for oil and gas

revenue management and the creation of a Future Generation Fund.

Investments Framework

Encourage investments in the oil and gas industry value chain through fiscal

incentives and even- handed regulation

Periodically review and revision of the terms and conditions in the Petroleum

Exploration and Production Law/Agreement and the Petroleum Income Tax

Law and other relevant regulations to maintain a fair and attractive investmentenvironment for oil and gas companies for mutual benefit

Local Content

Maximise the benefits of oil and gas wealth generation on local content

platform by maximising the use of local goods and services, people, businesses

and financing in all aspects of the oil and gas industry value chain and

retention of the benefits within Ghana.

Develop local capability development through education, transfer of

technology and know-how

Achieve at least 50 percent local content in all aspects of oil and gas industry

value chain within a decade

Security

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Ensure security for oil and gas industry and operations by the development of

dedicated institutional arrangement for national oil and gas security matters

and legislation of oil and gas safety requirements

National Security Agencies such as the navy and the Army will be supported to

assist in the provision security for the oil and gas industry.

Natural Gas Utilisation and Commercialisation

Natural gas resources to serve as new growth pole for the national economy

through its use for the development of a viable domestic petrochemical and

petroleum industries. The development of Industrial Estates based on natural

gas will be promoted

Maximise the utilization of natural gas reserves by prohibiting the flaring or

venting of natural gas produced within Ghana.

Any natural gas produced by a contractor in association with crude oil which

is not used in petroleum operations and all other natural gas produced in the

country shall be the property of GNPC (National Oil Company).

GNPC (National Oil Company) shall be empowered to secure the required

financing to develop infrastructure for the exploitation of all natural gas

produced in the country

GNPC (National Oil Company) may develop upstream and midstream the

natural gas infrastructure in partnership with private sector or any other entity

as may be necessary

Improve the institutional framework for the natural gas industry by

establishing separate companies for (i) gas processing and (ii) secondary

transportation of natural gas

Human Resource Development and Technology Transfer

Support capacity building for middle level personnel artisanal skills in

the technical and vocational institutions as well as high level personnelin areas such as Petroleum Engineering and Economics/Management

programmes in the tertiary institutions.

Downstream Sub-sector

3.5 Policy Goal

Government is committed to providing adequate, reliable and cost effective supply of petroleum productto ensure universal access to petroleum products by 2020.

3.6 Petroleum Sector Reforms

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The Petroleum Sector Reform Programme is intended to deregulate and liberalise the operations in thepetroleum downstream sub-sector with the view to encouraging increased private sector participation inall aspects of the petroleum downstream activities. Certain aspects of the Petroleum Sector ReformProgarmme instituted by Government are yet to be implemented.

Policy Direction

Governments policy actions will focus on:

Completing the full cycle of deregulation programme by implementing

administrative and regulatory changes that will enable Oil Companies and

private sector investors to build and own refineries and also ensure their full

involvement in the importation of crude oil into the country for refining into

finished products for sale directly to consumers in competition with the state-

owned Tema Oil Refinery.

3.7 Expansion of Petroleum Products Supply Infrastructure

The existing refining infrastructure constitutes a major constraint to the supply of petroleum productsand poses problems of assuring reliability of supply of petroleum products as a result. The currentproduction capacity of the refinery is able meet about 70% of national petroleum products requirements.Furthermore infrastructure for the transportation, storage and distribution of petroleum products are notadequate and inefficient

Policy Direction

The strategic policy focus for the petroleum downstream sub-sector is to attract investments in order to

expand the capacity of the existing infrastructure in the medium to long term. To meet the short tomedium term objective, Government will pursue the following:

Expand the national crude oil refining capacity through both public and

private sector

Secure increased private sector investment in partnership with the public

sector for the expansion of supply infrastructure for petroleum product .

Allocate adequate resources to meet national strategic petroleum stocks

requirement

Support mobilization of domestic capital market s for energy sectorinfrastructure and operations

3.8 Increasing Access to Petroleum products

About 82% of households in rural areas depend on kerosene for lighting and other needs and 22% ofhouseholds in the urban areas. Ten percent (10%) of urban households use Liquefied Petroleum Gas

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(LPG) for cooking while penetration of LPG in the rural areas is 0.6%. Increased access to petroleumproducts will enable the people to improve their economic status and general well-being.

Policy Direction

The strategic focus is to extend the reach of petroleum products to all Ghanaians. To meet the above

objective, Government will pursue the following policy actions:

Expand petroleum product storage capacity and petroleum product bulkdistribution infrastructure

Support expansion of the supply and reach of Liquefied Petroleum Gas (LPG) to

homes and small businesses.

Address institutional and market constraints that hamper increasing access of

petroleum products .

Petroleum Pricing

Pricing of petroleum products will continue to be aimed at full-cost recovery as well as easing fiscalburden on products except for achieving specific national and institutional objectives. In that regard,

Ex-refinery prices of petroleum products will continue to be based on import

parity prices of petroleum products

Transportation and distribution charges for petroleum products will be

regulated to ensure reasonable profit margins for transporters and

distributors

Cross-subsidies between petroleum products will be applied, as necessary, to

achieve specific national development objectives

Uniform national prices for petroleum products would be maintained.

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4.0 Renewable6 and Waste7 Energy Policy

4.1 Biomass Resources and Use

Biomass is Ghanas dominant energy resource in terms of endowment and consumption.Biomass resources cover about 20.8 million hectares of the land mass of Ghana (23.8 millionhectares) and is the source of supply of about 60% of total energy used in the country. The vastarable and degraded land mass of Ghana has the potential for the cultivation of crops and plantswhich can be converted into a wide range of solid and liquid biofuels.

The excessive use of woody biomass, however, has led to pockets of deforestation in thecountry.

4.2 Policy Goal

The policy goal is to sustain the supply of woodfuels while ensuring that their exploitation does not leadto deforestation.

4.3 Challenges

The major challenge in biomass energy supply is how to reverse the decline in the fuelwood resourcebase of the country and further sustain its production and use by improving the efficiency of productionand use.


6 Renewable Energy are energy forms produced from natural processes that are replenished constantly and includesolar, wind, tide, wave, ocean and geothermal.7 Waste Energy sources include industrial waste, municipal solid waste, biogas and liquid biofuels.

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In addressing the challenges, Government will:

Support sustained regeneration of woody biomass resources through

legislation and fiscal incentives.

Promote the establishment of dedicated woodlots for woodfuell production .

Promote the production and use of improved and more efficient biomass

utiltisation technologies.

Promote the use of alternative fuels such as LPG as substitute for fuelwood and

charcoal by addressing the institutional and market constraints that hamper

increasing access of LPG in Ghana

Promote the use of modern biomass energy resources through creation

of favorable regulatory and fiscal regimes and attractive pricing

incentives.

Biomass Pricing

Woodfuel production, transportation, sale and pricing, are all private sector driven except fortaxes and levies which are regulated by local Government authorities. The woodfuel businesswill continue to be operated and managed by the private sector. In that regard,

Woodfuel prices will continue to be set by market forces

Taxes and levies on woodfuels will be regulated by the appropriate national

agencies or local authorities as may be necessary

Alternative Fuels:

The development of alternative transportation fuels such as gasohol and other biofuels can providesubstitute fuels for the transportation sector and help diversify and secure future energy supplies ofGhana. In that respect, the policy is to:

Support development of indigenous alternative transportation fuel industry

based on bio-energy resources (Biofuels) to replace petroleum- based fuels

.

Balance biofuel development against food security

Enact legislation that will create demand for Biofuels including appropriate

pricing of Biofuels.

Support private sector investments in cultivation of Biofuel feedstock,

extraction of the bio-oil and refining of bio-oil into secondary products by

creating appropriate financial and tax incentives.

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4.5 Solar and wind

Ghana is well endowed with renewable energy resources particularly solar and wind energy resources.Solar radiation levels are estimated at about 4-6 kWh/m2 and average wind speed along the coastal areas

estimated at 5 8m/s. Wind speeds of 9 m/s have been recorded on the mountains along south easterncorner of the country. The wind speed regime along the coast suggests that wind can be harnessed alongthe coastline of the country for power generation as well as mechanical applications. The developmentand use of renewable and wastes energy resources have the potential to ensure Ghanas energy securityand also mitigate the negative climate change impact of energy supply and also solving nationalsanitation problems.

4.6 Policy Goal

Government is committed to the exploitation of renewable and waste energy to enhance energy suppliesas well as improving sanitation in the country.

4.7 Challenges

A major challenge facing renewable energy development is the high cost of these energysources owing to the current state of their technology.


Solar and Wind

Government is committed to improving the cost-effectiveness of renewable energy technologies byaddressing the technological difficulties, institutional barriers as well as market constraints that hamperthe deployment of solar and wind technologies. In that respect, Government seeks to:

Promote the exploitation and use of solar and wind energy resources through

creation of favorable regulatory and fiscal regimes and attractive pricing

incentives for solar and wind energy technologies

Engage Ghanaian engineers and scientists to cooperate with other experts to

undertake research and development aimed at reducing the cost of renewable

energy technologies

Provide tax incentives for the importation of all equipment used in the

development of renewable and waste energy projects

Support the use of decentralized off-grid alternative technologies (such as solar

PV and wind ) where they are competitive

Mini Hydro

8 Measurement at a height of 12 meters.

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About twenty one (21) potential mini9 hydro sites, with generating capacities ranging between4kW and 325kW, have been identified in the country which could be developed for powergeneration. The policy actions will focus on the following:

Promote the development of the potential min hydro sites for the generation of

electricity to meet the needs of the surrounding communities.

Institute appropriate fiscal and regulatory framework and attractive pricing

incentives for mini hydropower projects

5.0 Energy Efficiency and Conservation Policy

5.1 High Energy Consumption and Energy Efficiency and Conservation

The annual growth in the demand for fuelwood and charcoal is estimated at 3%. . Electricityconsumption, on the other hand, is growing between 6% -7% annually while consumption of petroleumproducts is estimated at about 5% per annum. These growth rates are high. The losses in the production,transportation and use of energy are also high. System losses in electricity distribution is about 25%

with wastage in the end-use of electricity also estimated at about 30%. Losses in energy supply andinefficient use of energy contribute to the high levels of energy consumption.

5.2 Policy Goal

Government is committed to ensuring efficient production, transportation and use of energy.

5.3 Energy Efficiency and Conservation Challenge

The challenge is how to promote and finance energy conservation and efficiency programmes.


The following policy directions will be pursued by Government to conserve and use energy efficiently:

General

Establish appropriate pricing regime for energy services that would

encourage (provide incentive) domestic and industrial consumers to

voluntarily manage their energy consumption

9 Mini hydro refers to hydropower projects with generating capacity of less than 1 MW

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Develop and implement programmes and measures to help consumers

optimize their energy use.

Support a sustained and comprehensive public education and awareness

building campaign on the methods and benefits of energy efficiency

conservation.

Electricity

Discontinue, through legislation on standardisation and labelling, the local

production, importation and use of inefficient electricity consuming

equipment and appliances.

Transportation

Develop and implement measures to reduce petroleum product consumption

in transportation. These measures will include institution of fiscal intruments

such as prohibitive import duties on high fuel-consuming vehicles and use of

alternative transportation fuels

Biomass

Promote the utilization of more efficient charcoal production and end-usetechnologies through research, training, fiscal incentives and regulation

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6.0 Energy and Environment Policy

6.1 Environmental Impact of Energy

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The production and use of energy impact on the environment and global climate in varying degrees.The exploitation of biomass for energy purposes result in deforestation while the use of fossil-basedfuels contribute to climate change. The burning of biomass energy forms in inferior cooking equipmentalso has negative health impacts. The exploitation, transportation of petroleum oil, flaring and ventingof natural gas associated with petroleum production and the production of petroleum products all haveassociated environmental risks.

6.2 Policy Goal

The Government of Ghana is committed to ensuring that energy is produced and used in internationallyaccepted environmental manner in the face of the development agenda of the country

6.3 Energy and Environment Challenge

The challenge is how to mitigate the environmental hazards of energy production, transportation, anduse.


To address the challenge, Government will:

Promote the gradual increase in the use of environmentally friendly energy

supply sources such as renewable energy (solar, wind, waste and small hydro)

in the energy supply mix of the country.

Promote a shift from oil to gas wherever gas is a technically feasible and

sustainable alternative.

Promote the use of improved woodfuel burning equipment for cooking in

households and other commercial activities.

Support and actively participate in international efforts and cooperation that

seek to ensure sustainable delivery of energy to mitigate negative

environmental impacts and climate change.

Encourage and enable all relevant entities engaged in activities in the energy

sector to explore and access international environmental financial mechanisms

and markets to overcome investment, technology and other relevant barriers in

order to support the implementation of energy projects.

Ensure effective disposal of all hazardous substances and materials associated

with the production, transportation, and use of energy

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7.0 Managing the Future

7.1 Strengthening the Regulatory Environment

Government is committed to strengthening the institutional and regulatory capacity in the country inorder to ensure that energy is produced, supplied and delivered to the expectation of consumers.

The regulatory institutions are limited in professional capacity and operational effectiveness leading touncertainty in the economic regulation. Enhancing the regulatory environment will requirestrengthening the regulatory agencies.

In this regard, the strategic development of the regulatory environment will focus on the following:

Strengthen institutionan and human resource capacity of the regulatory

institutions

Ensure the independence of the national regulatory agencies

Implement administrative and regulatory changes that will enhance the financial

independence of regulatory institutions

Improve and strengthen the enforcement of regulations.

7.2 Mobilisation of Investments for Energy Sector Development

The key objective of Governments investment policy for the energy sector is to encourage privatesector investment, both domestic and external, through the provision of appropriate fiscal and financialincentives and creation of conducive legal and regulatory environment. In that respect Government will:

Create an enabling environment for Public Private Partnership in the energy

sector.

Encourage the use of Capital market including the Ghana Stock Exchange to

raise financing for investments in energy sector. To facilitate their listing,

Government will ensure that the energy sector enterprises are financially

viable.

Provide selective sovereign guarantees for energy projects of strategic national

importance.

Improve the fiscal and financial incentives in the Investment Code in order to

attract private sector investors

Establish transparent and non-discriminatory practices in the implementation

of rules and regulations that applies to all private investors in the sector.

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7.3 Building Human Resource Capacity and R&D

A strategic focus of energy policy is to build adequate human resource capacity in the management ofthe sector and Resaecrh and Development (R&D). To this end, Government will give priority attentionto the following:

Support the training of Ghanaians in all fields of energy development and

management and build capacity in indigenous manufacture of energy

technologies.

Increase the allocation of resources for energy Research & Development

activities.

Give priority to adaptive R&D in energy technology while promoting basic

research.

Support the transformation of Ghanaian energy research institutions into

Centres of Excellence for energy research and development.

7.4 Implementing the Energy Policy

To make the necessary impact on the national economy will require that the management, operationsand monitoring of the energy sector receive adequate attention. Team work and total commitment of allstakeholders should be the primary driving principle to ensure smooth implementation of the NationalEnergy Policy.

The requisite human resource capacity and logistical support for the implementation and monitoring of

the Energy Policy will be developed by strengthening the Planning, Implementation and MonitoringDivisions of the Ministries, Department and Agencies responsible for Energy, Finance andEnvironment.

Implementation will involve regular interaction between the Ministry of Energy and its Departmentsand Agencies on one hand and all relevant Ministries, Departments and Agencieson the other hand todiscuss issues relating to the National Energy Policy and further refine strategies and programmes toachieve the policy goals.

Government will further support the implementation of a comprehensive programme to createawareness among policy makers and the general public on the National Energy Policy, Strategies,Programmes and Projects.

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ec energypolicy final june 2009 final

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