Energy Crisis in Ghana: Drought, Technology or Policy?

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

¦ ¦ ¦ ¦ ¦ ¦ ¦ ¦ ¦ ¦ ¦ ¦ ¦ ¦ ¦ ¦ ¦

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

© 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 of Publishing Studies, KNUST, Kumasi

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Foreword The College of Engineering at Kwame Nkrumah University of Science and Technology (KNUST) has been at the forefront of energy technology and policy research in Ghana for several decades. The decision to organise a seminar series on “Energy Crisis in Ghana” marked the beginning of a new wave to engage the university community and experts from the outside the university in a results-oriented dialogue aimed at finding solutions to the country’s critical problems. This book is living testimony to the practical issues discussed during the seminar series on “Energy Crisis in Ghana”. Experts drawn from the public and private sectors, and their colleagues in the university, found a common agenda in the search for practical solutions to our energy problems. As Provost of the College of Engineering, KNUST, I must say that I was particularly pleased to hear one of the experts, an economist from Ghana’s civil society, pay tribute to the calibre of engineers (mostly trained at KNUST) working in the utilities. Our College of Engineering is seeking to institutionalise such positive interactions 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 years should therefore see at least one concrete joint venture undertaken to provide sustainable energy here on campus within the framework of a public-private partnership 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 who have toiled over the years to build a solid foundation in energy research. I wish also to 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 wishing The 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 contribution of time and knowledge towards the energy seminar series which has resulted in this book. The authors’ agreement to bear all financial expenses related to their travel to Kumasi for the seminars is also gratefully acknowledged. Raymond Asamoah-Barnieh and other teaching assistants and staff of the Department of 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...........................................................................1 Abeeku Brew-Hammond and Francis Kemausuor 2. Why the Power Shortage?....................................................................................6 Theo Sackey 3. Potential for Energy Savings .............................................................................16 Alfred Kwabena Ofosu-Ahenkorah 4. Planning for Implementation .............................................................................34 Rudith King and Imoro Braimah 5. Role of Renewables ...........................................................................................45 Fred Ohene Akuffo 6. Private Sector Participation................................................................................53 Ebow Essandoh and Selom Akaba 7. Tariffs and the Poor ...........................................................................................59 Ishmael Edjekumhene 8. Energy and Gender ............................................................................................71 Rose Mensah-Kutin About the Authors and Other Contributors.................................................................82

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Acronyms Term Description AU African Union bbl Barrel BST Bulk Supply Tariff CEB Communauté Electricité du Bénin CFL Compact Fluorescent Lamp CMS CMS Energy Corporation (USA) DANIDA Danish International Development Agency DCS Distributors Control System DSC Distribution Service Charge EAF electric arc furnace ECG Electricity Company of Ghana ECOWAS Economic Community of West African States EUT End User Tariffs GDP Gross Domestic Product GE General Electric GECAD GECAD Ghana Limited (Authorized Distributor/Sales Representative of

GE Power Systems) GLSS Ghana Living Standards Survey GPRS Ghana Poverty Reduction Strategy GSB Ghana Standard Board GT1 Gas Turbine 1 GT2 Gas Turbine 2 GWCL Ghana Water Company Limited H2S Hydrogen Sulphide HIV/AIDS

Human Immuno-Deficiency Virus/Acquired Immune Deficiency Syndrome

HRSG Heat Recovery Steam Generator JICA Japanese International Co-operation Agency KMA Kumasi Metropolitan Assembly KNUST Kwame Nkrumah University of Science and Technology LCO Light Crude Oil LPG Liquefied petroleum gas MDGs Millennium Development Goals NED Northern Electricity Department PfA Platform for Action PRSPs Poverty Reduction Strategy Processes

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PURC Public Utility Regulatory Commission R&M Regulating & Metering Station SLT Special Load Tariff SNEP Strategic National Energy plan SONABEL Société Nationale d'électricité du Burkina SUSTRAN-Africa Sustainable Transport Action Network for Africa T1 Takoradi Thermal Power Station 1 T2 Takoradi Thermal Power Station 2 TTPS Takoradi Thermal Power Station UNCED United Nations Conference on Environment and Development VALCO Volta Aluminium Company Limited VRA Volta River Authority WAGPCo West African Gas Pipeline Company WHO World Health Organisation Units Description MW Megawatts KV Kilovolts Km Kilometre kWh Kilowatt hours TOE Tonnes of Oil Equivalent kgOE/ca Kilograms of Oil Equivalent per capita kWh/ca Kilowatt hours per capita kcal Kilocalories GWh Gigawatt hours DC Direct Current Kg/Nm3 Kilogram per Newton metre cube Nm3/h Newton metre cube per hour °C 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 in recent memory. The first in 1984 was caused by an unprecedented drought whose impacts were felt throughout the West African sub-region. The second and third power crisis, which occurred in 1998 and 2002, were also attributed to low rainfall in the Volta basin. The current crisis, following so closely in the heels of the last one, has been subject to much public debate and most critical observers now 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)

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operation of the Akosombo power plant. The frequency of these crises raises a serious question about our ability to learn from previous mishaps. The actual inflows into the Volta Lake over the longer term period from 1965 to 2006 are presented in Figure 1.2. Leaving aside the near-zero inflows recorded in the drought years of 1983/84, inflows for the recent and current power crises years (1998, 2002 and 2006) are indeed some of the lowest recorded over the last decade. However, these crisis year inflows are significantly higher than some of those recorded in preceding years (1990 and 1992) which did not see any major load-shedding programmes, underscoring the urgency of getting to the bottom 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 August 2006, the College of Engineering of the Kwame Nkrumah University of Science and Technology (KNUST) organized a series of seminars during which experts in

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the energy industry and others who were engaged in policy making were invited to deliver lectures on various technical and policy issues necessary to address the recurrent 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 the seminar series and these are presented in seven chapters, from Chapter 2 to Chapter 8.

Chapter 2 is based on the presentation by Mr. Theo Sackey of the Volta River Authority (VRA) who led the discussion on Planning for Adequate and Reliable Power Supply: Issues and Challenges. This chapter addresses the current and future projected electricity demand and supply including critical generation and transmission requirements. Technical issues affecting VRA’s ability to maintain supply adequacy and reliability, financial issues, challenges and the way forward for Ghana’s energy industry are critically addressed.

Chapter 3 is dedicated to the potential for energy savings based on a presentation by Dr. A. K. Ofosu-Ahenkora of the Energy Commission, on Energy Efficiency and Conservation. In his presentation Dr. Ofosu-Ahenkora recounted how far Ghanaians have come abreast with issues of energy conservation and what tough measures the Commission is currently taking to encourage energy conservation in Ghana. He also gave some good advice for the public on what to look out for when they go to the market in search of electronic appliances.

Chapter 4 tackles issues in Planning for Implementation. This chapter is based on a presentation by Dr. Rudith King and Dr. Imoro Braimah of the College of Architecture and Planning at KNUST. The two authors agree that planning in Ghana is often done without factoring in financing, and monitoring and evaluation measures. This chapter addresses planning not only in energy issues but in every project that one may undertake, making it a good reference material for everybody.

Chapter 5 shifts our focus to Role of Renewables in Ghana’s energy sector development, based on an address by Prof. F. O. Akuffo of KNUST’s Department of Mechanical Engineering. Prof. Akuffo is of the view that the technical aspects of renewable energy exploration in Ghana are well in place and what is left now is for government to come out with the right policy frameworks to enable the private industry begin to explore the market.

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Chapter 6 is based on the presentation by Mssrs. Ebow Essandoh and

Selom Akaba of GECAD who took seminar participants through a discussion on The Role of the Private Sector in Energy Supply in Ghana. The Chapter argues that mankind’s energy problems have political, economic and environmental issues at stake and that resources such as capital, manpower, access to technology and good government policy initiatives are needed to address these issues. The authors are of the view that there are huge prospects for the private sector in Ghana’s energy supply industry which includes the need for new power plants, alternate and renewable sources of energy such as solar, wind turbines and bio fuels exploration

Chapter 7 discusses a very sensitive issue, Tariffs and the Poor. Mr. Ishmael Edjekumhene of KITE, a local energy and environment NGO, thinks that ‘like every good or service, the price of electricity should reflect or cover the full-cost of production and supply.’ He however acknowledges that differential income levels among households means that some households will not be able to procure electricity if asked to pay the full-cost of production and supply, and for such 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 where the female population is more than 50%. The Chapter is based on a presentation by Dr. Rose Mensah-Kutin of ABANTU for Development, the local section of a regional NGO involved in gender advocacy. Dr. Rose Mensah-Kutin stresses the need for governments to accept and understand the inequalities that gender systems generate between women and men, and the need to promote policies for addressing them, and she hits hard on the fact that women’s concerns and rights have to be factored into policies of energy resource mobilisation and utilisation.

An important feature in some of the chapters is the Addendum. This feature is found in those chapters based on presentations which were following by lively discussions. It is important to stress that the views expressed in the Addendum represent the main points raised in participants’ contributions and they do not necessarily reflect views of the authors.

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

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

· There is considerable potential for energy savings particularly in the residential sector where simple measures like the use of energy efficient lighting can result in a significant reduction in the country’s demand for electric power;

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

· Renewable energy in general and solar energy in particular can make an important contribution to electricity supply in rural areas which do not currently have access to the national grid if we gear ourselves up to overcome the challenge of policy implementation;

· Given a favourable policy environment the private sector should be able to help address the need for new power plants, natural gas distribution systems to make full use of the West African Gas Pipeline, and renewable energy systems including solar PV, wind and biofuels;

· Cost-reflective tariffs are a critical component of a favourable policy environment and it is important that subsidy schemes respect this in addition to being well targeted to support the poor; and

· Women constitute the bulk of poor people with poor access to modern energy services in Ghana and this makes it imperative for linkages between energy and gender to be factored into poverty reduction schemes across all sectors of the economy.

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2. Why the Power Shortage?

Theo Sackey Background and description of existing facilities There have been three major power system planning studies in Ghana beginning in 1971 when we carried out what was known as the “Ghana Power Study: Engineering and Economic Evaluation of Alternative Means of Meeting VRA Electricity Demands to 1985”. This was followed in 1985 with the “Ghana Generation Planning Study” and then the “Generation and Transmission System Master Plan Study” in 2001. Each of these studies established generation and transmission facilities required by the country over a 15-20 year period. Ghana’s 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 d’Ivoire • Togo

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

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Current situation and projected electricity demand and supply Ghana’s 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 VRA’s 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 VRA’s transmission network

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Table 2.1: Ghana’s energy demand in GWh from 2004 to 2006

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

– 5,862 GWh from Hydro – 1,997 GWh from T1 – 859 GWh from T2 – 800 GWh Imports from Cote d’Ivoire

The minimum reservoir elevation to meet this provision was projected to be 239 feet based on planned average hydro draft rate of 16 GWh/day and expectation 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 from which we had some hope. Significantly there was

– Reduced T1 availability • Loss of about 150 MW from T1 in April from generator

rotor winding insulation failure

Domestic CustomersActual

2004 Actual 2005

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 1,240 Supply to CEB (Togo/Benin) 662 635 700 CEB - Wheeled 371 394 313 System Usage 333 292 378 Total Demand 7,380 7,996 9,831 Note: ** NED Supply includes supply to SONABEL

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– Reduced imports from Cote d’Ivoire

• Unscheduled outages at the Vridi Thermal plant • Disruptions in natural gas supply which affected thermal

plant supply • Retrofit of the Buyo hydro plant (55 MW)

These unexpected trends greatly affected power supply to the country and that brought about the load shedding in August 2006. The 2006 Volta Lake depletion curve 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 CurveJanuary -- August

Planned Hydro Draft Rate -- 16.1 GWh

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Figure 2.4: Volta Lake depletion curve

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As at August 1, 2006, the Akosombo reservoir elevation was 236.99 feet and inflow projections indicated that below average inflows could occur. Continued hydro draft at the current rate could result in the reservoir attaining an elevation of less than 236 feet at which level generation the Akosombo dam may have to be limited to two units only and this could result in the loss of about 520 MW of generation. Critical generation and transmission requirements Demand-side and short-term supply options to meet deficits are:

– Intensive energy conservation measures nation-wide of which the major focus is the replacement of incandescent lamps. 50,000 energy saving 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 of the year.

– Upgrade of the Tema Diesel Power Station by installing 70 – 100 MW new 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 total electricity 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 new mining loads and increased domestic consumption. The main domestic customers are 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)

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

Technical Issues Affecting Supply Reliability There is a tight demand/supply situation requiring draw down of the Volta Reservoir below the minimum recommended level of 240 feet; power generation from T1 is lower than expected due to an outage of one combustion turbine unit; there is inadequate transmission capacity in the western sector resulting in stability problems during maintenance outages. Also aged transmission lines and substation equipment and reduction in scheduled imports are some of the technical issues that have all contributed towards the present predicament we find ourselves in.

Ongoing system enhancement activities are the T1 Performance Enhancement Project including conversion to natural gas operation, development of additional thermal 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 years include:

- 2007: 70-100 MW Tema Diesel Upgrade 126 MW Tema Thermal 1 Project 125 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 is projected to continue with expected economic growth and improved access to electricity. This means that if additional generation is not implemented, all the system reserves would be eroded which would result in severe deterioration of supply adequacy and reliability. Financial Issues and challenges Tariffs have not been adjusted to reflect the increased cost of supply with the introduction of thermal generation which has significantly increased the cost of power 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 generation mix with 2006 mix projected to be 62% hydro and 38% thermal. Meanwhile draw down of the Volta Reservoir to minimum level brings aboard the issue for a significant investment into higher thermal power generation than exists at the moment. This increase in thermal energy production will further increase the cost of energy in the country. Unfortunately there has not been any tariff adjustment to reflect the higher fuel cost and current generation mix.

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History of Bulk Supply Tariff and Average Cost of Supply

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

Currently, the total Monthly billed receipts are about US$28.0 million while Monthly cash requirement for the purchase of Light Crude Oil (LCO) fuel alone is US$31.5 million, based on cargo size of 450,000 bbl and delivered price of $70/bbl. We can therefore safely conclude that the current total monthly revenue cannot meet even the monthly fuel purchases alone. Strategic actions to be taken to curb the energy crisis and its associated low tariffs include the following.

- Implementation of planned power projects should be carried out without delay

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

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

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

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Funding of required infrastructure for power generation will be a challenge if pricing policies are not reformed to ensure that power utilities are financially viable. Significant capital requirements imply that both public and private sector financing is needed to be able to curtail the situation. VRA’s experience with CMS and WAGPCo in energy infrastructure projects indicates that Rates of Return would be in order of 15% with upward pressure on tariffs.

The sector should progress into a regime such that legitimate costs are passed on in a sustainable manner. Attaining and sustaining cost reflective prices will ensure effective development of required infrastructure and efficient operations. There is also the need to clarify roles as well as responsibilities for the different players in the sector. Conclusions Major thermal based infrastructural developments are needed and the WAGP and current thermal plants are the backbone for future production facilities. Future operation and development of the power sector will increasingly involve the private sector. The major challenge however is how to sustain the operational and capital requirements to ensure reliable electricity supply into the future. Meeting this challenge successfully will ensure that ample production facilities are developed 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 the moment we are growing at a GDP of 5-6%. To become wealthy, we need to be growing at between 8-10% and these growth rates require significant amount of electricity. We have significant numbers of people who come in with the intention to 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 the residential customers but this is not supposed to be so; it does not happen like that in the industrialised countries. When some of these structures are changed, it will encourage investors to come into the country to invest and hopefully the power crisis 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 when the Arab oil suppliers decided to use oil as a weapon and therefore stop production knowing the effect it will have on the non-oil producing western economies. Prices shot up and there was a general shortage and panic, prompting countries such as Ghana to start learning some lessons. Before 1975 energy was in abundance in Ghana. Electricity was in abundance and people were encouraged to freely use electricity, to the point that they were even advised not to switch lights off. The utilities, deliberately as expected at the time, promoted the use of electric boilers, 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 not caught pace with the growth. In the case of wood fuel the supply base has dwindled below sustainable levels as a result of deforestation. The total electricity consumption in Ghana increased from 782 GWh in 1970 to about 1,328 GWh in 1980 at an average annual growth rate of 5.50%. The average annual GDP growth rate for this period was 0.2%. As a result of a drought in 1983, electricity consumption decreased from 1,361 GWh in 1981 to 1,007 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, total electricity consumption increased from 1,251 GWh in 1985 to 5,286 GWh in 2004 at a steady average annual growth rate of 8.86% compared to an average annual GDP growth rate of 4.46%. Figure 3.1 shows the shares of final energy consumption in 1970 and 2004 whilst figure 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% of the total residential sector final energy consumption. Transport in Ghana is mostly petroleum based and that accounted for 16% of total energy consumed. Agriculture took some firewood and petroleum, whilst energy consumed in industry is made up of electricity, petroleum and wood fuel. These have been the trend since the year 2000. In 2004 the total energy consumption was 6.16 million tonnes 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 to energy in this country. Taking 2004 alone and breaking it into actual figures, electricity constituted only 7% 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 the 70’s and 80’s, wood fuel was about 79% but things are now changing and very fast 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 2004 VALCO was not in operation and the whole industrial sector took only 39% of electricity.

Share of Final Energy Consumption (1970)

Woodfuel67%

Fossil fuels23%

Electricity10%

Share of Final Energy Consumption (2004)

Fossil fuels30%

Electricity8%

Woodfuel62%

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Sectoral Shares of Total Energy Consumed in 2004

Residential59%

Commercial11%

Industrial10%

Agriculture4%

Transport16%

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

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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)

Household51%

Industrial39%

Commercial10%

Distribution of Total Electricity (2000)

Household34%

Commercial

7%

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Industrial23%

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It is trite knowledge that any economy where households are taking a

bigger percentage of the energy than the industries is in for trouble, because households don’t produce anything from the electricity they consume. They use energy only for their comfort and convenience. Therefore if the household consumption is greater that the industrial consumption, then there is something fundamentally wrong with the economy. For the sake of comparison, South Africa has 80% industrial energy consumption and 20% household consumption.

A striking observation that has been made in the electricity sector is the rapid expansion in the power demand of the residential sector by 23% in 5 years from 1,585GWh (26%) in 2000 to 1,957GWh (37%) in 2005. In contrast the share of power consumption in the industrial sector, which includes agriculture reduced 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 to 1,418GWh in 2005. This trend is worrying especially since the residential sector whose contribution to GDP is minimal is subsidized by the other sectors which have 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% of electricity from Cote d’Ivoire. Ghana’s energy consumption for 2005 was slightly less than 2004 but it hovers around the same 6 million tonnes and each time, electricity and petroleum are the most commercially consumed energy sources. Wood fuel is taken out because it is difficult to commercially quantify firewood and charcoal, as many people 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 does not look so huge if compared to countries like the United States. Our electricity consumption is 174kWh per person while it is 1000kWh per person in other countries. These consumption rates do not only consider residential electricity consumption but takes the whole economy into consideration. The energy consumption indices of the Ghanaian economy are presented in Table 3.1. The percentage of commercial energy is very low. Table 3.1: Energy Consumption indices of the Ghanaian economy

Item Unit of Measure 2000 2001 2002 2003 2004 Total 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 Commercial energy

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

Percent Commercial Energy

% 18 20 21 20 19

Energy-Development Nexus There is a direct link between energy supply and development and yet a complex relationship with economic growth indicators. In order to develop, every country requires adequate, reliable and efficient energy supply. The per capita energy consumption in Africa is 25,000-30,000kcal per day, less than the average per capita 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 usual” scenario. It has been projected that Ghana will need more than 7 times its present electric power capacity by 2020 if we are to succeed in developing Ghana’s economy into a middle income economy. Development by the “old path” will require massive injection of energy with its implications on climate change, supply resources and cost.

Adequate Energy Supply is necessary but not a sufficient condition for economic growth. Increased energy use must go with improved end-use efficiency, 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 energy also has its environmental implications. There is evidence that end-use energy efficiency is highly possible and it has been used in many countries such as Japan, Germany, USA and UK. Energy Productivity Measure There is an index that measures energy productivity in an economy and this is generally referred to as the energy intensity ratio. It is the energy that is used to produce 1000 dollars of GDP. This figure is critical because it gives an indication of how the economy is structured. Unfortunately many African countries have high energy intensity ratios with the reason being that most of our industries are extractive. We use a lot of energy and produce semi-finished products which have very little commercial values. In Ghana as in many other developing countries, this measurement is high primarily due to the fact that these countries produce mainly primary products with high energy input but low value added. We export these and they are reprocessed abroad where very little energy is used but the value added is very high.

In the year 2000, Ghana’s energy intensity ratio was 668kg of oil equivalent per 1000 dollars of GDP and this rose to 962 in 2004. It has been rising and 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, the technology that was being used was not as efficient as it is today which means that these countries could be doing better today. If we compare these figures with Ghana’s own in 2004, it means if we are buying energy with these countries on the same market, then we are out of the competition. If we use 668kg to produce 1000 dollars of GDP, then if the price of energy goes up such that 668kg of oil equivalent of energy is going to be 1000 dollars, then we are really not doing anything. Fortunately for us we use lots of charcoal and firewood which is not purchased and some of which we don’t consider commercial, but the trend is not good enough. Energy efficiency Energy efficiency is the use of the minimum amount of energy to produce the largest 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 means ‘to save some of what you have today for future use’. Conserve does not mean do not use but to use in such a way as to save a part for the next day. Energy efficiency measures cut operating costs and makes available money for companies to be more competitive and institutions to reach their goals. In other words, energy efficiency reduces cost and improves a company’s environmental performance.

In the 70s when the energy efficiency and conservation was introduced people dissected this word to mean so many things. Some people even referred to conservation as non-usage. But the English word ‘conserve’ means to keep some for 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 reference is made to a Residential Energy Profile survey that was undertaken in 2003 by the Energy Foundation in collaboration with KNUST. The survey captured a cross section of households in Ghana and found out that 54% of all lighting is incandescent lamps; florescent lamps are 32% and the Compact Fluorescent Lamps (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% CFL’s 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 the lighting, the 32% of fluorescent lamps which consumed 32% of the electricity produced 52% of the lights whiles the 15% of CFL which consumed only 4% of electricity gave 10% of the lighting. Power factor improvements This is a measure of the electricity demand to the use. KNUST was selected as one 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 equipment for KNUST yet even though that for the University of Ghana is in operation. I will present the results of the equipments performance in the University of Ghana as we carry on.

Ghanaians have the habit of buying high capacity electrical motors for corn mills and other milling machines and wastes energy in the process. When these 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. These cause the motor to consume even more energy. An unpublished survey results show 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 compare this to what happens in Europe and the US, the average is less than 2kWh a day and their refrigerators are even much bigger than ours. The reason for this is the use of inefficient refrigerators with worn out seals, and wrong placement of refrigerators in our homes. We push them in corners where they do not get ventilation and therefore draw more electricity than necessary. Many people start life with battery operated radios, progress gradually and end 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 an air-conditioner each with a standby power of 10W, that makes 40W standby power for a single house. That is equivalent to a 40W bulb burning in the house for a whole year. Standby power is an issue that must be tackled seriously in Ghana. Many countries have already enacted legislation limiting standby power to about 2W. The power factor correction case study for the University of Ghana is presented in Figure 3.6. The period from October 2004 to November 2005 was the period when the old system was in place and was monitored. A decision was taken 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 the intervention. On the Y-axis is the cost of electricity to the university. The cost fell from over 1.2 billion to 600 million within a month of implementation. It went further down when students were on vacation. Data up to October 2006 reveals that the university has reduced its electricity consumption by 50%. Power factor in Legon was 0.8 before the installation was done and after the installation, it moved up to 1 which is the ideal power factor. Bottlenecks to Efficient Energy Utilisation Lack of information on efficient methods and technologies in energy conservation is a handicap to decision makers who often lack the knowledge and access to energy efficiency information.

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Electricity Cost, Legon

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200,000,000

400,000,000

600,000,000

800,000,000

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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

Co

st, G

HC 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 efficiency In every country there are institutional arrangements to promote energy efficiency. The United States have what they call the Demand Side Management which they charge the utilities themselves to do. Unfortunately they have found out that the utilities use the money but do not do exactly what they are supposed to do. The utilities are more interested in selling more kWh of energy and are not happy to

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reduce sales but they are forced by the regulatory bodies. This ensures that there is some reserve energy to use when energy demand is high or when fresh energy productions are not able to meet existing demands. Demand Side Management as pertains in the United States was not taken as the way forward in Ghana because of the state of the utilities. The consciousness of efficiency grew in Ghana right from 1973 to 1979 during the Nigerian oil embargo on Ghana. There are several energy efficiency projects which have been initiated and are currently 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 of energy you use. Some companies measure this daily or weekly and therefore keep track of what they are doing. If the specific energy consumption (energy used to produce a unit of a product) changes, it will help to detect whether or not something is going wrong. If for example a company uses 100 kWh to produce 10 units of a particular product and this proportion changes in a way, the company will know instantly that something is wrong.

Many surveys have been done to find out what effort Ghanaians were making at 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 of vehicles are private and there is a subsidy on petrol it means that you are rather subsidizing the individuals with the private cars. Some of the other surveys which were 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 used

807kWh to produce a tonne of steel in an electric arc furnace (EAF). India was then using 550kWh; US 450kWh; Germany and Japan were using 350kWh. When it came to beer brewing, we realized the power usage was quite similar to the developed countries. This does not mean Ghanaian breweries were doing better in any way, the management of these companies get instructions from their principals and it force them to perform as their mother companies abroad There are many measures that can be taken to ensure that energy efficiency is adopted by the whole population. Public education is one of these measures and price signal is perhaps the most effective. If electricity is very cheap, people don’t care how much they use because they end up paying cheap prices anyway. If someone else pays your electricity bills like it happens in the government institutions, you don’t care because you may not even see the bill, as the 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. Energy efficiency standards, like any standard sets a minimum threshold below which whatever appliance is considered to be non-permissible is not allowed. We have defined energy efficiency standards for some equipment and have started with air conditioners. The 2001 air-conditioners energy consumption study and the results are 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 in watts of energy input per watt of cooling. Interestingly, the circled unit is the most popular air-conditioner in Ghana. It is still the most popular. In 2001 it accounted for 32% of the market and I believe it is still so. Meanwhile the unit with the square box around it just appeared in the market, it was not very well known and it was being sold at that time at a very reasonably low price and was very efficient as 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 half or less what they used to be in 2001. A lot of people can now afford air conditioners and they are buying them without any idea of how much it is going to 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 of air conditioners. We found out that if we did nothing, and the economy grew at 6% - being the high benefit - as compared to maybe 4% as we were growing at that 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, say 2.8 energy efficiency ratio, you will realize that the amount of energy we use comes 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

-Cap

ita 2

001

Dol

lars

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 produces 6,000MWh and comparing this to the energy savings in 2020, we are going to be saving a great deal of energy. The graph in Figure 3.7 shows the savings and per capita if we adopted those standards. That standard was supposed to have come into effect in 2002; unfortunately we couldn’t do that until 2005 when the law was passed. Effective 30th November 2006, every air conditioner that is coming to Ghana 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 that you have a higher efficiency band to play within. The label which will be affixed to all the air conditioners is shown in Figure 3.8.

The more stars the label has, the more efficient the air conditioner is. Whoever is selling must tell you what type of air conditioner it is, the cooling capacity, the manufacturer, the model, the type of refrigerant inside and the efficiency ratio. Gradually we will get the importers and manufacturers to move away from the less efficient air conditioners. What we’ve realized is that the same companies produce different types of air conditioner units. They export the grade A to countries where there are standards and labels and export the low grade ones to countries like Ghana where there are no standards and labels. In reality it won’t cost 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 called efficacy and that tells you how many lumens of light you get for a watt of energy or power that is demanded by the light. The Ghana standard is that it should not be less than 33. So for every watt of electricity, you should get the equivalent of 33 candles of lighting. It should tell you how much electricity you are going to use 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 industries accordingly. Addendum: Discussion Arising out of Lecture To be able to install the power factor for KNUST, we need to measure the load on each of the present transformers and their power factors. The equipments to carry out these activities are quite sophisticated and expensive, about 9,000 euros each. We have realized that most of the transformer stations in KNUST have broken doors and there are no roofs on them. Meanwhile the equipments must be installed 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 and thieves. The university may need to provide 24 hours security service until the end 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 guard the equipments. The repair of the buildings will also cost ¢40 million and KNUST is still not been able to raise the money for that purpose. As soon as the necessary measures can be put in place, the power factor correction programme can be carried 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 empowered by parliament to pick appliances from various stores at random and to send these to laboratories for testing. If the labels are found to have been wrongly used, the importer will be taken to task. A test facility is being built at the Ghana standards board 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 the standard and labels must be placed on them as such. The label is supposed to be pasted in front of the appliance so that the consumer can easily see for himself the information 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 factored in as time goes on. GSB is been empowered to return all air-conditioners coming into 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 taken time to find out that bad air conditioners were dominating the market (controlling 32% of the market), parliament would have thrown the labelling law out. The Energy Foundation had to carry out a socio-economic analysis to determine what sort 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 labelling programme 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 on energy savings and conservation are also available from the Energy Foundation.

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Projections have shown that if we could use a million CFL’s in the country, it will bring energy demand down by 41MW. A project has been initiated with the ministry of finance to stop incandescent lamps from coming into the country and to get CFL’s sold at the price of incandescent lamps. The country hope to be able to change all the incandescent lamps to CFL’s within one year and hopefully 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 to ask ourselves why we need to plan. We live in a changing world and the only way to ensure that the dynamism in human society is well managed is to plan. It is important that careful decisions are taken about the general directions in which change should occur. The careful decisions we need to make can be achieved through planning. For example we take it for granted that the wind and the sun are around us and abundant and so we misuse and abuse them anyhow. But because we live in a very dynamic society, we need to take cognisance of the fact that even these seemingly abundant things are not just there for the sake of it because they can positively or negatively affect our well being if we do not plan how to use and manage them. Planning is seen both as a tool for resource allocation and a procedural method for decision making about the development of the economy irrespective of the scale of planning and the subject matter. We all plan in our homes on daily basis but then we do this unconsciously. We begin planning from somewhere and at the end of the day we either commit time or money to implement our plans though we may do that unconsciously. Planning is a process that goes with procedures. But one may ask: what right do we have to plan as human beings? If the world is free for all, why don’t we enjoy it 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 doesn’t happen that way 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 or posterity? Are we knowledgeable enough to make decisions that affect the future, because planning is about decisions and whatever decisions we make can affect us positively or negatively? We need to make sure that we take decisions that are going 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. Did the leaders think about 50 years after? Did they factor in what would happen to the electricity sector 100 years after the construction of the dam? The planning could have taken cognisance of what would happen after fifty or maybe hundred years. 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 can help them analyse and diagnose in order to make the right decisions. What happens if they make the wrong decisions? When we make wrong decisions or take things for granted we suffer the consequences. We are using a generator today for this seminar and paying so much because we either made the wrong decisions or took electricity from Akosombo for granted. Most of these genuine worries 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 for settlement planning, energy planning or even agricultural planning, the methods and procedures are all the same. The bottom line is that decisions have to be taken about how best resources can be used. The planning process basically comprises of three main phases which could be subdivided into several stages as indicated in Figure 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 analysis phase. The analysis phase is to understand the environment within which the development problem is situated; it goes with what is termed the problem analysis. 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 to understand where we are before we can think of where to go. If it is an energy problem such as we are facing now, we need to understand the energy situation in the country in its entirety to be able to diagnose the energy problem. This means that we are not just going to look at one area like electricity and assume that, that is where the problem is and therefore that is enough. Impliedly the solution of the problem does not rest with the Ministry of Energy alone! Planning must be very comprehensive and this means bringing in many other components. The situational 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 intensive background study. Such studies must include the political framework because it influences the decisions that will be made for implementation. The political situation could lead to either a total rejection of the plan or limited commitment to the implementation of the Plan. In view of these circumstances we cannot assume that the politics of the country or organization/institution does not matter. Therefore we need to analyse the political environment carefully. This should be extended to include a very intensive socio-economic analysis of all projects situations within the plan. If we are considering energy for domestic use then obviously we would have to know what is happening in people’s homes and it will take a study to find that out. What are their preferences or choices? Why do they opt for A and not B etc? These are all issues that we need to understand from the perspective of the society because at the end of the day we are planning for people and therefore we must understand their way of life and how they use energy. We can conclude from here that there are socio-economic conditions within which to work. In trying to understand social and political issues we must look at the culture and the religion of the people. Some people may question what culture has to do with energy. But let us take a look at one example. Can we propose the use of cow dung to provide energy in cultures that use cow dung as painting material for housing or cultures where the cow is almost worshipped? If it is these animals that are going to provide the dung we need to generate the energy, then it becomes a religious matter and it has to be dealt with as such. We need to understand the culture and the religious environment within which we are going to work. Thus in trying to understand the problem several issues have to be considered before we can 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 because we are planning for the satisfaction of the needs of the people. It’s not just a matter of assuming that they will need A, B or C. The right procedures and techniques should be employed in order to determine the actual needs of the people.

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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 Formulation Define Goals and Objectives State Formal positions in support of the Goal(s) State Means (Strategies) to implement the Policy and accomplish the Goal(s)

Planning Projections

Prioritization

Selection of Projects /Phasing

Intervention Scenario

Ranking and Evaluation

Logical Framework (PPM)

Implementation Plan of Operation

Monitoring and Evaluation

Re-planning Strategy

Gantt chart

M & E Working Scheme

Programme Results Evaluation

Results & Impact Evaluation

Flowchart

Figure 4.1: Planning 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 stakeholder analysis or interest group analysis. The interest groups to be analysed should include even those who benefit from the existence of the problem. This is necessary in order to determine both allies and enemies. We need to know what their interests are and the effects that our decisions are going to have on their lives. Each step, tool or technique used in the analysis should ideally generate outputs which can be used to guide the actions to be undertaken to solve the development problems. The outputs in this phase will be fed into the next phase. They feed directly 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 policy alone; it is actually institutional/organizational policies that reflect the goal or objectives. In this case or phase also there is the need for some analyses. Goals and objectives that will lead to the solution of the problems have to be formulated and 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 the context of the national energy policy and the national energy policy should be derived 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 the policies we are formulating as a nation fit into the sub-regional one before we can talk of a gas pipeline for the sub-region. Now we have the Millennium Development Goals (MDGs). They are much bigger regional goals and all that we do as UN member countries will have to fit into the MDGs. A question that must be answered by a country – for example Ghana – when formulating development plans will be: do they fit into the Millennium Development Goals? If they don’t fit, then it means that we can’t even work to achieve what we have in our Ghana Poverty Reduction Strategy (GPRS) now called Growth and Poverty Reduction Strategy. All our policies should be derived from the national document and those in 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 whether these goals are compatible or whether there are conflicts because these must be resolved right at the onset before moving ahead.

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Strategies and actions based on standards are then designed, phased and programmed in terms detailed activities. Several of these are normally designed and 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 planners themselves. Since we are much interested in the implementation of the plan as the very last and most important phase of the planning process, it is necessary to worry about the tools and the tasks that are employed to come out with a plan that can be implemented. No matter what level of planning, the tools and processes outlined are telling us that if we follow these tasks and use the necessary tools, the plan that will ultimately come out will be feasible enough and can be implemented 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 and terminated afterwards. It is a self perpetuating process of actions and one big chunk of this process is the implementation. There have been instances where we have very nice plans, plans that if they were to be implemented, all the problems that we have now would have been history and maybe we would be thinking of fresh and new problems and not the very same problems that the plans sought to solve in the initial stages. But why does it happen like that especially with regard to the energy problem that we have been discussing in these series of seminars? Is it that the plans were not good enough, thoughtful enough or they were not correct in their technical feasibility? These are the questions that we want to answer in the implementation design and it is worth emphasising again that if the implementation design is wrong, no matter the product of the first two phases, the whole process will be wrong because the implementation aspect will not be well done if at all and the problem will remain. It is like the process of the development of a human being from conception to maturity 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 excellent but 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 together with other stakeholders often make a very big mistake. We tend to think that because we are technical people, our concern is to come out with a plan that meets all the technical standards and we are satisfied that we have a plan that is excellent by our technical judgment that can meet all the criteria in the stages and the 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 the whole process from the beginning to the implementation is going to fail. What do we mean by the implementation design? Whatever plans have been drawn, there are certain activities that must be undertaken and there are some people who should undertake those activities. Carrying out these activities cost some money as well. In the implementation design, we have to make sure that for every activity that has been outlined; there are responsible people who will be assigned to execute them. The activities that have been planned must have realistic time frames that can be implemented. If we assign timeframes that are unrealistic for particular activities, then we shouldn’t be surprised when the implementation is derailed or stalled. The implementation phase does not end with the implementation design. It should continue through to the implementation of the activities through monitoring to the evaluation of the completed activities for information to be fed into the process of re-planning. Monitoring is to cater for our human weaknesses in deciding exactly what the future should be, so that as we carry out the activities one after the other, we monitor things closely in order to 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, we can quickly make room for it. If there were certain things that we thought would take a certain direction and they didn’t take that direction, in the course of the implementation, we can realise that aspect and then make sure that the implementation is not swayed to an unintended direction. This is where the monitoring and evaluation puts an important component into the implementation design. Sometimes we get so carried away about the beauty of our plans that we forget that there are some people that have been assigned to monitor whatever activities are 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 monitor whatever is going on. But we all know that when you are over excited about carrying out a certain activity, you don’t think about the need for your activities to be monitored. There is the need for somebody to monitor our progress. That is one aspect of the implementation design that we normally have to emphasise and if we don’t 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 Finance The activities that we have planned to do cost time and money but we tend to think that the implementation will come as a matter of course because we have built in mechanisms technically feasible to be carried out and we think about only the cost of the equipment. If it is just a dam, we think of the cost of building it but what about the cost of operating and maintaining it. We must plan for those who will implement and make sure that you get power in your house and pay your bills so that money can be earned and re-cycled for the energy production to be sustainable. If we don’t think about them in terms of the fact that they will cost money, 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 to ensure that sustainable generation and distribution of power. If we have to go somewhere to find the money for implementation after the plan has been designed then 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 and therefore we do not even count the cost of monitoring the implementation, restricting the cost of implementation to other components. It does not take broad cognisance of what can happen in the course of the implementation and so we leave 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 financing of the plan is not forth coming then the beautiful plans will simply remain stashed in the drawers and shelves. How can we design a plan without thinking about the financing aspect of the plan? There are several reasons why people plan; we often plan so that we can make the decision very rational. Secondly, planning is a tool of resource allocation. 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 from the day we took the decision to plan for whatever project we want to engage ourselves in. The financial aspect should be number one. Where are we going to get the money to support the decisions that we are coming out with? We should think about where to get the money to implement the decisions. If we don’t find out where we are going to get money to implement these decisions then we should not think about the decisions. It is useless to take a decision and only to ask somebody else how much the implementation of the decision will cost and to find the finance implementation. Most of the plans that achieve results start with the financing aspect. However because most often we don’t have the money ready at hand for the implementation of the planned activities we must take serious considerations regarding the financing right from the beginning of the decision to plan. Most often planners are told not to think about the money but to go ahead and develop the plan. You will often hear phrases like: ‘when it comes to implementation we will find the money’. When we are faced with situations like these we deal with the technical aspects alone just to make sure that whatever we are deciding will meet the objectives and aspirations of the people. All that is good, but then the planning process is incomplete until we come up with a feasible implementation designs that can be implemented and part of that implementation design is the costing of the plan and costing of the implementation as well. As part of the costing, we need to find out categorically where we are getting the funding for the implementation of the project. If we cannot do this, then the whole planning process should not even start. If you postpone the decision in the beginning, when it comes to implementation, you will be forced to revisit it because that is where you have to assign not only responsibility to people but also the finance to carry out the responsibilities. If you tell somebody to monitor something without giving him the resources to do the monitoring, there is no way that activity will be achieved. Conclusion It is the financial aspect that we want to emphasise here; that implementation design is about assigning responsibilities, coming out with clear and realistic responsibilities, and realistic resource mobilisation or flows in terms of time and finance. In the beginning we said that planning was a resource allocation tool, if we don’t think of the resources, there is no way we can think of how to allocate them. 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 and come out clearly with how we are going to get those resources to fund the implementation of the plan. Addendum: Discussion Arising out of Lecture The technical aspect of a project is different from the planning aspect. Then also the planning and implementation are different issues. All these are process activities that come in at various stages of the project. If such stages are assigned to different people and these people are not able to effectively coordinate, the whole 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 the politicians who take decision about resource allocation so that if they are not committed early enough to make decisions about financing, the project may fail as the technical aspect of the plan alone cannot be built. This is quite common in our part of the world. Private enterprises are more successful with plan implementation because they use planning as resource allocation tool. Either they acquire the resources before planning or immediately they start planning, they start thinking about the funding issues as well. They do not plan in isolation. The approval of a plan in the private industry goes with approval of funds. However in the public sectors, plans are used for other purposes including implementation. Some Plans are referred to as shopping lists because they are often used to “beg” for money from external and internal donors. Countries such as Ghana often make the mistake of planning when they know they have no funds for the plans and these happen because of our status on the development ladder. Most of our donors would like to see that we have concrete plans 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 bags just so they can flash them to the next available donor on the shortest notice. If it happens that they get a sponsor, they implement the plans and if there is no sponsor, the plan goes back into the bag and continues being a shopping list. But then we need to develop our plans with different scenarios and be ready to explore various alternatives for funding. A plan with a single funding plan is likely to fail if 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 that we develop our financial resource mobilisation skills very well, so that we know where to go at what time. If you go to a group interested in poverty reduction to seek funds for a road construction project, it may be difficult to obtain these funds. You may have to convince the donor that constructing the road will enable you 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 revenue earning 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. They usually want to put resources where people can see physical structures. When resources have to be spread across board, people are usually happy but when resources are limited to very few projects, people begin to grumble. During the preparation of the University’s Strategic Plan for example, they thought they were going to get money from somewhere to implement the plan but then forgot to look for funds to take care of daily recurrent activities. Once the recurrent demands become 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 in the preparation of the strategic plan in the first place. The recurrent problems – such as cost of managing the institution, cost of electricity, etc. – should have been taken as part of the whole plan and not left aside as problems to be solved by somebody else. We tend to think that the strategic plan is limited to physical structures and that it should not include the recurrent problems that we face everyday. As such sitting allowances for meetings and other recurrent activities are often not well projected and considered as a component of the plan. The danger here is that when these are due for payment, we are most likely to resort to divert resources allocated for some activities for these purposes whilst those activities are put on hold.

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5. Role of Renewables Fred Ohene Akuffo

Energy and Development The Ghana Growth and Poverty Reduction Strategy (GPRS II) is the framework guiding Ghana’s overall development. It aims at bringing the country into middle income status by the year 2015. In other words, hopefully average income per person will be 1000 US dollars per annum by this target date. From the non-economist’s point of view, I will say we are currently earning on the average about half this amount. The economic experts have predicted that we have to grow anywhere between 7-10% per annum over the next eight years in order to achieve this aim.

Energy is a very critical factor in the development process of any country

and if the economy is to grow, people will consume more energy. We will have to produce energy for industries to increase the output of goods and services which is what economic growth is all about. We have to work harder and it does not matter how many people we may put out there in the field, we shall need more machines – electrical machines – to achieve this dream. We need to really increase the energy use and therefore this development process hinges critically on the availability of adequate energy provided in a timely fashion. Not just energy at any time but it should be available at the right time and it should be reliable. Modern energy – electricity – is what we are all talking about mostly and then we are also talking about transportation and about fuels since all these are necessary for the economy to grow. The economists describe this relationship in terms of elasticity: if the economy has to grow 1%, the energy consumption may have to grow about 2% or more and so if we are asking for a growth of 7 to 10%, then the energy demand especially electricity will be very high. That is the challenge that we face in terms of our energy generation and I will not go into details.

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The role of renewable energy in GPRS Renewable energy can be defined as an energy source that can be regenerated within a human life time. If we can generate energy within a lifetime then it is renewable and this is a period of 70 years since humans are known to live to an average of about 70 years. Solar energy is regenerated in 24 hrs and so it is renewable; the wind is quite seasonal and therefore renewable. Petrol is not renewable because it takes a lot of centuries to make crude oil and th