Ghana Must Consider Coal In Power Generation Mix—Enercom Africa

At the just ended International Growth Center conference in London, Energy became one of the major topics for discussion with much interest from countries, particularly developing countries.

During the session, Prof Michael Greenstone who heads the energy division made a strong case against the use of fossil fuels in power generation citing its environmental impacts. In as much as I agree that coal has such impacts, I believe we still need to face the economic facts. I therefore make a proposition that Coal should still play a significant role in the power generation mix for the African power sector, and particularly Ghana which in spite of recent phenomenal economic growth has seen a power crisis that is hampering economic and social progress.

The current generation sources have posed several impediments, with intermittent gas supplies from the West African Gas Pipeline and low rainfall that has left the hydro generation sources such as Akosombo which holds about half of our generation capacity unreliable. We do not have to look far to learn lessons of how to run coal generation or how it can benefit us as a stable base load. South Africa has over 90% of their power generation from coal.

I assert that Ghana needs more power generation to cover the current shortfalls and to meet potential increases in energy demand as Ghana economy continues to expand and consumption patterns change. There are currently initiatives (including the Power Africa Initiative) that are aimed at bridging the gap between energy demand and supply. A lot of the investments could go into renewable energy sources, and there is no doubt about the immense potential on the African continent for renewable energy (solar, wind, tidal etc). However even though renewable generation sources have a marginal cost of zero and are sustainable, the initial capital costs are huge.

The comparative levelised energy costs for renewable energy is very high compared to that of coal. Levelised costs of renewable plants could reduce over time, but it would surely not be a short term option for Ghana. And investors as we know would always recoup their investments, and as such consumers would face huge energy cost and prices if renewables form a bigger part of our generation mix. Some consumers may be willing to pay as much as possible just to have a consistent power supply and as such energy costs may not be a big issue to them. But I believe whatever strategy or policy that is adopted for the Ghana energy market should address the trilemma of Security of Supply, Affordability and Sustainability.

Many a times they should be managed in that merit order, as there may not be a strong case for having a sustainable energy system that does not provide security of supply or is unaffordable to consumers. From my experience in electricity system balancing and operation, it is evident that having a lot of renewable generation on the system poses serious stability and reliability problems due to their intermittent nature. And what is more to this network issues is the additional generation that is needed, often from conventional plants such as coal to manage reserve, response, downward regulation and voltage issues due to renewable power intermittency.

All that comes at an extra cost which must be passed onto the consumer. In the UK for instance, an average of £2.5m to £3m is spent daily (on top of all other costs) just on balancing the system and managing constraints, with much of these costs attributable to the increasing volume of renewables on the system. On days of high renewable generation intermittency, such costs rise to over £6m daily. This has partly contributed to the rising energy prices for consumers, a situation that has become a central political issue in the UK.

Coal could also become very attractive economically post 2017 when pending regulation leads to phasing out of most coal plants in the UK, EU and other OECD countries, leading to a potential fall in coal demand and prices. This will provide further economic cost advantage for coal, relative to other fuels. Gas fired generation should also play a part in the generation mix, but uncertainties about gas future prices post 2017 could be an issue. This is because gas will be require to ''fill the gap'' between 2017 to early 2020s when coal plants are phased out in UK and other European countries, with the new nuclear power generation that is expected to replace the coal plants not coming on board until around early to mid 2020s.

Also if you consider the history of most industrialised countries, it is evident that coal played a crucial part during the periods of the industrial revolution, and if African countries need to embark on the long overdue industrialisation agenda, then coal should surely play a part. And with the advent of techniques such as Carbon Capture & Storage (CCS) and coal desulfurisation, it could all look quite different for coal in the near future. What is crucial is how we manage this opportunity that coal could turn around the economy of Ghana and the economies of the African continent, as it has done for other countries in the developed world.

We need to plan our systems, facilities, policies and in particular environmental and regulatory frameworks properly.

S. O. Nyarko
Founder & President
Enercom Africa
[email protected]
www.enercomafrica.com