Buah: We will prioritise cheaper energy generation
The Minister of Energy and Petroleum, Mr Emmanuel Armah-Kofi Buah, has stated that the government has decided to prioritise cheaper energy generation in the country.
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For this reason, he said, the Ghana National Gas Company (Ghana Gas) had been tasked to set up a $500-million liquified natural gas (LNG) plant which would reduce the country’s present reliance on light crude oil (LCO), which is very expensive.
Mr Buah said without a cheaper energy source such as the LNG, it would be difficult to operate the thermal plants to generate cheap electricity for domestic and industrial use.
Speaking to the Daily Graphic, the minister said, “We are particularly interested in the use of floating storage and regasification technology, an LNG floating storage and regasification unit (FSRU), which would remove the immediate fuel constraints on optimum expansion of the power generation capacity in the country in the medium to long-term.”
“Even using the spot prices of LNG could mean a 20 per cent reduction in fuel cost to the power industry or make savings of $2 billion over a 10-year period. For the industry as a whole this is enough to fund an additional 400MW power plant every other year,” Mr Buah explained.
The ministry, he said, was also working with Quantum Power, a private company, to develop an LNG terminal in Tema.
Expanded capacity
The minister emphasised that “we have set for ourselves a very aggressive agenda to increase generation capacity to 5,000MW“ and indicated that the government had formulated strategies, such as providing short to medium-term annual generation road maps with specific planned projects to ensure that the VRA effectively delivered its mandate of ensuring generation sufficiency and reliability.
He said other strategies included removing the bottlenecks affecting the enabling environment for the participation of more independent power producers (IPPs) in generation.
He said steps would also be taken to address the challenges of fuel availability for thermal plants, prioritise and speedily convert simple cycle thermal plants to combined cycle.
“We will also pursue various renewable projects, particularly solar, mini hydro, biomass and wind, to augment generation; plan for alternative energy options such as nuclear and coal; leverage funding for planned projects and ensure that planned projects are completed on time,” Mr Buah said.
LNG critical
The thermal power industry, he said, continued to rely on expensive LCO and, in some cases, diesel, in this era of record oil and gas price hikes.
“This poses a dilemma for the sector. We cannot attract additional investment in thermal power generation (whether public or private) without guaranteeing minimum returns on investment associated with these investments,” he said.
“On the other hand, there is a limit to how quickly the electricity market can grow in a high tariff regime that has a drastic impact on industries and communities. Obviously, therefore, the solution is to search aggressively for cheaper fuels,” Mr Buah said.
The ministry, he said, would continue to explore increased supplies from Nigeria, although it was clear that domestic gas demand in Nigeria was growing rapidly in competition with the markets outside.
“The choices before us as a government are plain. ‘Do we wait and hope for sufficient natural gas to come on stream in Ghana or down the pipeline from Nigeria before resuming the expansion of electrical power generation, during which time we may lose our power sector competitive advantage to others willing to take the lead in developing alternative fuel sources?
“As a ministry, our clear preference is to encourage the development of an LNG importation and regasification business in Ghana,” he said.
Ongoing projects
Mr Buah said last year the government added a total of 534MW to Ghana’s installed generation capacity, mainly coming from Bui, the T3 Plant and the 2MW solar plant in Navrongo.
He said the target this year was to add another 342MW with the completion of the 220MW Kpone thermal power plant, the 110MW Takoradi II expansion project and another 12MW solar plant.
Another 1,060MW was expected from four planned projects in 2015 and 1,711MW in 2016, he added.
Mr Buah advised that “while the government makes efforts to increase energy supply infrastructure, it is the responsibility of consumers to use the energy available in an efficient manner. This can be achieved through a change in attitude and the use of efficient technologies”.
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