Too little power in Nigeria, too much in Ghana

While much of Nigeria’s new gas-fired capacity is unused because of gas supply problems, Ghana has not been able to absorb all of its new installed capacity. Neil Ford reports on national and regional energy transition strategies in West Africa

Nigerian power sector strategy over the past decade had focused on breaking up the national power company and developing gas-to-power projects. The unbundling process seems to have had little impact, while much of the new gas-fired capacity is unused because of gas supply problems. President Muhammadu Buhari has pledged to improve the situation, although similar promises were made by his predecessors without resulting in much progress.

Idris Mohammad, special adviser to the Federal Minister of Power, concedes that government efforts to implement various gas supply strategies have had limited success.

“The major reason why it has failed is the government hasn’t been able to provide irrevocable funding guarantees for gas supplies regarding all gas supply agreements”, he says.

Mohammad says three things were needed to resolve the situation: adequate funding from government to fulfil its side of various contracts; timely payment for gas supplied; and the provision of secure guarantee mechanisms by the government for local and international institutional investors.

Nigeria has thus far failed to attract large-scale renewable energy investment. However, Mohammed said that the government could encourage this by signing PPAs “without delays that can make investors incur huge transaction losses as has been the case recently”. He also called for “well articulated power generation plans that are simple, realistic and attainable”.

Ghana pays the price

Ghana is a case apart, having moved quickly from having too little generating capacity to too much, with huge financial implications. The government embarked on rapid expansion of power generation to overcome regular power shortages, triggered in part by unreliable supply from the Akosombo Dam, on whose drought-affected hydropower the country was over-reliant. The funding for this expansion was underpinned by a then-booming economy and the income – and feedstock supply – from the country’s offshore oil and gas production.

Installed capacity now stands at 5.08 GW, but the country has not been able to absorb it all, partly due to grid failings and high tariffs.

Finance Minister Ken Ofori-Atta is concerned that the debt taken on to finance the new projects, coupled with take-or-pay contracts for gas and power, are destabilising government finances. Some sources suggest that the government is paying $500m a year for unneeded capacity.

Electricity exports could provide a solution, but progress on developing the West African Power Pool (WAPP) has been slow. So Accra is banking on growth in domestic demand and improvement in the power sector’s ability to get electricity to customers.

Côte d’Ivoire would be the most obvious market for surplus Ghanaian power production, particularly as the country has one of the world’s fastest-growing economies. However, although Côte d’Ivoire has a fairly comprehensive transmission grid, the cost of connecting individual homes is expensive, holding the electrification rate down to 62%.

Installed capacity stands at 2.18 GW, with 60% provided by thermal plants and most of the remainder by hydro. Rather than relying entirely on new gas-fired capacity, the government is now trying to attract small, mainly renewable energy IPPs to spread generation capacity around the country. It is also promoting energy efficiency measures, a policy that should be more popular in hard-pressed African power sectors.

Support for renewables

Other, smaller economies in the region are starting to focus on renewables. For instance, in April, the government of Mali announced that it would lift all import duties and taxes on renewable energy components, such as solar pumps, wind turbine blades and solar panels.

Several solar PV projects in the 25-50 MW range are planned, mainly via foreign investors. The government hopes these will help boost national capacity to 1.42 GW by 2030, up from about 170 MW at present. The strategy also includes a target of achieving 600 MW of off-grid capacity by the same date.

The Democratic Republic of Congo has long-held ambition to develop more of its huge untapped hydro potential to improve the country’s dire power supply situation. However, regulatory and security uncertainty, in conjunction with the sheer scale of the projects such as Inga III, has seen them repeatedly postponed, delayed or cancelled. Kinshasa’s reliance on a single project means that the national electrification rate is still one of the lowest in the world at 9%.

Case study: Senegal’s star rises

Senegal was an unlikely case study of energy transition in Africa a decade ago. Power cuts, insufficient generating capacity and an all too familiar reliance on inefficient and costly diesel power plants gave cause for concern. But the ambition of President Macky Sall’s government to achieve 100% electrification and overhaul the generation mix as part of plans to turn Senegal into a middle-income country are bearing fruit.

Some of the groundwork had already been laid, with power generation opened up to competition in 2004, forcing state power utility Société nationale d’électricité du Sénégal (Senelec) to compete with IPPs. The government’s Plan for an Emerging Senegal (PES) called for renewables to provide 20% of all power production by 2017, a target that has now been achieved.

Crucially, Senelec set about upgrading national transmission and distribution infrastructure and access to electricity had risen to more than 60% of the population by 2018, compared with less than 40% in 2004, according to World Bank data. National generating capacity has exceeded 1 GW for the first time. In 2018, Senegal experienced just 24 hours of power cuts, 40 times lower than in 2011.

It is hoped that the strategy will achieve both universal access to electricity by 2025 and the government’s target of providing some of the lowest power tariffs in the region, with a target of $0.09-0.12/kWh. Universal access will be difficult to achieve because rural access to electricity has not yet reached 50% and many of those unserved are among the hardest-to-reach communities.

Funding for this new infrastructure is expected to be underpinned by export revenues income from oil and gas production, which is expected to start coming onstream in the next couple of years, the Covid-19 crisis permitting. Hydrocarbon projects, including the BP-led Greater Tortue/Ahmeyim LNG project, will both generate the revenue to invest in new infrastructural projects and, potentially, provide the gas feedstock for new domestic power plants.

Modern diesel and gas-fired plants are being built to replace ageing diesel facilities. MAN Diesel and Turbo finished the second of two diesel-fired facilities in 2016 and, most recently, Lebanese firm Matelec began work on building the 130 MW Malicounda power plant 85km south of Dakar in February.

It is to be supplied with generation sets by Wärtsilä that will run on heavy fuel oil, but which can be converted to run on gas when it becomes available. All power will be sold to Senelec under a 20 year PPA.

But the government’s strategy is not just focused on thermal energy. The long-term economic plan was drawn up before much of the oil and gas was discovered and renewables are regarded as a major part of the energy mix. Senegal is not headed for a Nigerian-style over-reliance on hydrocarbon revenues.

There is already 200 MW of solar generating capacity in the country and more is in the pipeline. This is provided by some of the biggest solar PV projects in West Africa: Senergy (30 MW), Senergy 2 (30 MW), Ten Merina (30 MW), Malicounda (22 MW) and two 20 MW plants developed by a consortium of Engie, Merid­iam and Fonsis. The government has also encouraged the uptake of off-grid solar power by removing all taxes from solar panels and water pumps under its One Roof, One Panel programme.

However, the headline-grabber is the 158.7 MW Taiba N’Diaye wind farm, which is West Africa’s first large wind power project. Developed by Lekela, it is located about 85km from Dakar, with all 46 turbines supplied by Danish firm Vestas. Some of the turbines are already in operation and the rest are scheduled to come on stream by the end of this year, pushing the proportion of renewables in the generation mix up to 30%.

The director-general of Senelec, Papa Mademba Biteye, said that such projects would allow the country to move beyond its dependency on oil. 

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