Kirk Koffi, CEO, Volta River Authority (VRA): Interview

Interview: Kirk Koffi

What role will coal play in Ghana’s energy mix?

KIRK KOFFI: Worldwide, coal generation’s share of the energy supply is 40%, and although in some countries coal use is being reduced, the overall figure will not decrease soon. Ghana is looking at importing coal to diversify its power-generation capabilities. Ghana is a lower-middle-income country, and so electricity should be affordable and reliable. Ghanaians cannot rely on one source of energy. In the case of relying on hydropower, for example, a nationwide drought would do major damage to supply. Ghana requires other sources of energy, including gas supply from Nigeria, nuclear energy and solar power, as well as a relatively cheap source of fuel in coal. Today, there is clean coal technology, and Ghana is willing to adhere to stringent regulations to mitigate coal’s negative effect on the environment. Over the next two decades, pursuant to the Paris Accord of 2015, VRA is scaling up its renewable energy penetration by 10% via its energy efficiency, renewable energy development and reforestation (carbon sink) programmes.

How is Ghana meeting its electricity generation capacity needs, and how will it continue to do so?

KOFFI: As of today, because of the political stability and influx of investors in Ghana’s energy and power sectors, the country has far more independent power producers (IPPs) than planned. The challenge now is to determine which IPPs should be given tenders. To address power supply challenges, the government, along with several agencies, including VRA, Electricity Company of Ghana and Ghana Grid Company, have constructed emergency generation facilities, and a few IPPs have also entered the market, so the country currently has enough generation capacity. Additionally, nationwide consumption has been less than 40% of what was projected for the first two months of 2016 because of electricity tariffs, load shedding and power-saving measures. A proper assessment has yet to be completed, and it remains to be seen if this trend will continue. Alongside the arrival of Ghana National Petroleum Corporation’s $100m Karpowership, VRA has just built a 200-MW simple cycle plant at Kpone and expanded the Tema Thermal Power Complex by 38 MW. Sunon Asogli, an independent power producer, is also in the process of expanding their 180-MW plant to 360 MW and later to 540 MW. With this additional generation, Ghana has a more than adequate supply for the coming years. Soon, there will be an excess and the opportunity to export. The only challenge is moving the natural gas supply from Eni’s Sankofa gas field and the $850m Atuabo gas processing plant to these facilities, including the Africa and Middle East Resource Investment power plants and Aboadze power enclaves. The VRA and the government are working on this, aided by the resumption of gas supply from Atuabo in mid-June 2016.

How established is the regulatory framework for IPPs to make investments in Ghana?

KOFFI: The framework is firmly in place. The Ministry of Finance and Economic Planning is working alongside the IMF and the state to ensure the right mechanism is in place to regulate IPPs so that they function properly and proliferate. Most IPPs want a guarantee and protection for a solid investment return.

In what ways has the Ghana Power Compact (GPC) helped increase efficiency in distribution?

KOFFI: Currently, 30% of electricity generated is wasted. The GPC is targeted at the distribution end of the spectrum. If Ghana can generate power efficiently, it might also distribute it reliably. Today, an increase in generation comes at a higher cost, which demands that the power distribution component along the value chain be well managed. Restructuring the distribution channels and accounting for power losses is where the GPC will really make a difference.