MINISTRY OF ENERGY

Republic of Ghana

NATIONAL ENERGY POLICY

(REVISED)

JUNE, 2009

TABLE OF CONTENTS Preface EXECUTIVE SUMMARY... 1.0. 2.0. 3.0. 4.0. 5.0. 6.0. 7.0. INTRODUCTION.... POWER SUB-SECTOR POLICY.. PETROLEUM SUB-SECTOR POLICY... 6 9 11 15

RENEWABLE AND WASTE ENERGY POLICY 20 ENERGY EFFICIENCY AND CONSERVATION POLICY. ENERGY AND ENVIRONMENT POLICY.. 22 23

MANAGING THE FUTURE.. 24

Abbreviations & Acronyms BOST BSP BSPD EC ECG EF EPA FC GDP GNPC GoG GOIL GPRS GWh km km2 kms ktoe kV kW kWh LV m MJ m/s m2 MDGs MV MW NED NEF NGO No. NPA O&M OMCs PSP PURC R&D REP RETs RFCC SBM SHEP SNEP TOR TICO UNDP Bulk Oil Storage and Transport Company Bulk Supply Point Barrels Per Stream Day Energy Commission Electricity Company of Ghana Limited Energy Foundation Environmental Protection Agency Forestry Commission Gross Domestic Product Ghana National Petroleum Company Government of Ghana Ghana Oil Company Ltd Ghana Poverty Reduction Strategy Giga Watt hours kilometer square kilometers kilometers kilo ton oil equivalent kilovolt kilowatt kilowatt hours Low Voltage Meter Mega joules meter per second square meter Millennium Development Goals Medium Voltage Mega Watt Northern Electricity Department National Electrification Fund Non- Governmental Organization Number National Petroleum Authority Operation and Maintenance Oil Marketing Companies Private Sector Participation Public Utilities Regulatory Commission Research and Development Rural Electrification Programme Renewable Energy Technologies Residue Fuel Catalytic Cracker Single Buoy Mooring Self Help Electrification Program Strategic National Energy Plan Tema Oil Refinery Takoradi International Company United Nations Development Program

USD VALCO VLTC VRA WAGPP WAPP

United States Dollar Volta Aluminum Company Limited Volta Lake Transport Company Limited Volta River Authority West African Gas Pipe Project West African Power Pool

Preface
In 2001, the Ministry of Energy prepared an Energy Sector Policy Framework document that served as the platform for policies and programmes towards the development of the Energy Sector. Following a review of the energy policy environment in 2006 by key stakeholders, the Energy Policy was revised taken into account the goals and objectives expressed in the Growth and Poverty Reduction Strategy II (GPRS II) and other prevailing energy sector developments. Since then important changes have occurred in the domestic as well as the external energy scene to necessitate the review of the policy. Notable amount these developments are the power crisis in 2006/7, the operationalisation of the Ghana Grid Company (GRIDCO), the establishment of the National Petroleum Authority (NPA), as well as the recent oil and gas discovery in offshore Ghana. On the external scene, the high prices of crude oil and petroleum products on the world market created some difficulties for oil importing developing countries, including Ghana. These developments have come with their peculiar challenges which require definitive policy responses. This National Energy Policy outlines Governments policy direction regarding the current challenges facing the energy sector. By providing a concise outline of policy directions, this document aims to contribute to a better understanding of Ghanas Energy Policy framework. It is hoped that better understanding leads to better management and development of the energy sector: The document is therefore intended to serve as: a decision-making platform for effective management and development of the energy sector of Ghana; guidance to key stakeholders and institutions in the energy sector regarding the definition and implementation of specific activities in respect of their mandates; a guide for coordinating the implementation and monitoring of energy sector policies; and a platform for dialogue on investment opportunities with Ghanas development partners and private sector.

Executive Summary
Ghanas Development Challenge
Ghana has a huge potential to grow and modernize the economy and also reduce the high incidence of poverty to acceptable levels. The fundamental goal of the Government of Ghanas development agenda as enshrined in the Growth and Poverty Reduction Strategy (GPRS II) is to grow the economy to a middle income status of US$1,000 per capita by 2015 and also to reduce poverty amongst Ghanaians. Meeting this development target requires an annual economic growth rate of about 10% from the current level of 6.7%. The Energy Challenge To achieve the projected GDP of US$1,000 per capita, Ghanas total energy supply is expected to grow significantly. The challenge is how to increase the energy supplies and also expand the energy infrastructure in order to achieve the development targets. The Energy Resources and Vision

Ghana is well endowed with a variety of energy resources including biomass, hydrocarbons, hydropower, solar and wind as well as the capacity to produce bio-fuels and nuclear energy.
In response to the priority developmental objectives of Government, the vision for the energy sector is to develop an Energy Economy that would ensure secure and reliable supply of high quality energy services for all (both urban and rural) Ghanaian homes, businesses, industries and the transport sector while making significant contribution to the export earnings of the country. Energy Policy Platform The National Energy Policy outlines energy sector goals, challenges and policies. These policies cover the broad spectrum of issues and challenges with respect to the following energy sub-sectors: (i) (ii) (iii) (iv) (v) (vi) (vii) Power Sub-sector; Petroleum Sub-sector; ; Renewable Energy Sub-sector; Energy Efficiency and Conservation; Energy and Environment; and Managing the future of the sector.

A summary of the sub-sector policy framework is provided below. Power Sub-sector Policy The target is to achieve installed power generation capacity of 4,000 MW and also universal access to affordable electricity by 2015. This is to be achieved through Private Public Partnership in the development of new power plants as well as ensuring cost-recovery for the production, transmission and distribution of electricity.

The policy also focuses on institutional and regulatory reforms intended to create competitive electricity markets. Petroleum Sub-sector Policy The policy goal is to ensure the sustainable exploitation of the countrys oil and gas endowment and the judicious management of the oil and gas revenue for the overall benefit and welfare of all Ghanaians as well as a commitment to indigenization of knowledge, expertise and technology. The major challenge regarding the Upstream petroleum sub-sector is how to develop oil and gas industry and also manage the potential revenue from oil and gas exploitation. In view of the goal and challenges, the policy focuses on regulation of the petroleum industry with respect to licensing and operation of the oil and gas companies, improving institutional capacity, enhancement of local content, and fiscal incentives that will ensure maximum benefits to people of Ghana as well as transparency in the use and distribution of the oil revenue. The National Oil and Gas Regulatory Authority is being established to play a lead role in the regulation of the industry particularly the upstream activities. Renewable Energy Sub-sector Policy The Renewable Energy sub-sector covers biomass, solar and wind resources. The major challenge in biomass energy supply is how to reverse the decline in the fuelwood resource base of the country and further sustain its production and use by improving the efficiency of production and use. The biomass policy focuses on improved production and efficient use of biomass in the short term while increasing regeneration and fuel substitution in the medium to longer term as well as shifting from the use of biomass to alternative sources of energy.

Amajor challenge in the development of solar and wind is the high cost of these energy sources owing to the current state of their technology. The key policy focus, therefore, is to engage Ghanaian engineers and scientist to cooperate with
other experts to bring down the cost of renewable energy technologies in order to make them competitive as well as creation of fiscal and pricing incentives to enhance the development and use of renewable energy. The renewable energy technologies that are competitive will be promoted. Energy Efficiency and Conservation Policy Energy production, transportation and use result in losses and wastage. Reducing these losses and wastage will lead to significant benefits for the national economy. The challenge therefore is how to reduce the wastage in all aspects of the energy sector. The policy outlines efforts towards removing the obstacles that have constrained the promotion and implementation of energy efficiency and conservation programme. The policy focuses on the application of fiscal incentives, awareness creation, institutional and financial intermediation, and regulation to promote energy efficiency and conservation.

Managing the future . The policy also addresses issues regarding the management of the sector with the view to ensuring a smooth transition in the medium to long term. Policies to address mobilisation of investments for the sector, human capacity and research and development and implementation are also contained in the policy document. A key policy direction is to strengthen the regulatory agencies to be able to monitor and enforce rules and regulations governing the operations of the energy sector with a focus on building capacity through training and financial support.

1.0
1.1

Introduction
Energy Consumption and supply profile

For the year 2007, biomass energy consumption was 11.7 million tonnes while petroleum products and electricity consumption were 1.955 million tonnes and 6,269 GWh respectively. In terms of total energy equivalence, biomass (fuelwood and charcoal) constituted 59% with petroleum products and electricity accounting for 32.3% and 8.7% respectively.

1.2

The Energy Sector Vision

In response to the priority developmental objectives of Government, the vision for the energy sector is to ensure availability and access of energy services for all and for export.

1.3

The Energy Sector Goals

Within the context of this vision, the goals of the energy sector are: (i) (ii) (iii) (iv) (v) 1.4 To ensure that Energy services are readily available to meet all demand at any particular time far into the future; To make Energy services accessible through the development of an extensive supply infrastructure; To ensure that Energy is produced and supplied in a form that conforms to acceptable international practice with regards to their health and environmental impact; To ensure that Energy is used in the most efficient manner; and To ensure energy is produced and supplied at competitive prices (affordable tariffs)

Energy Sector Objectives

The medium term policy objectives for the achievement of the above goals are: (i) (ii) (iii) (iv) (v) (vi) (vii) Augment generation capacity to ensure adequate and reliable power supply; Provide support to modernize and expand energy infrastructure to meet growing demand; Increase access to modern forms of energy; Improve the overall management, regulatory environment and operation of the energy sector; Secure long term source of fuel for the thermal plants; Minimise environmental impacts of energy supply and consumption through increased renewable energy and efficient energy delivery; Ensure full cost recovery for energy supply and delivery; 10

(viii) (ix) (x) (xi)

Ensure productive and efficient use of energy; Promote and encourage private sector participation in the Energy Sector; Diversify the national energy mix by implementing programmes to support development and use of renewable energy sources; and Reduce technical and commercial losses in power supply.

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2.0 Power Sub-sector Policy

2.1 Power Generation Resources Ghanas hydro power potential consisting of hydropower sites along the Volta River Basin and several small hydro sites on some rivers scattered over the country. Although a larger proportion of the nations known hydro power potential, including the Aksomsbo and Kpong, have already been developed, there are some undeveloped sites. These consist of medium and small hydropower sites with a total capacity of about 843 MW and the Bui Hydropower Project (400 MW) which is under construction The recent domestic oil and natural gas discovery also provides a viable source of power generation in Ghana in the near future. Ghana has no known commercial endowment of uranium and coal even though interest in electricity generation from these sources has grown in recent times. Currently power generation is mainly from hydro and thermal power sources operated on light crude oil and natural gas supply from Nigeria. 2.3 Policy Goal

Government is committed to providing adequate, reliable and cost effective electricity supply through timely power generation capacity additions and modernization of transmission and distribution infrastructure as well as ensuring universal access to electricity by 2020. 2.4 Challenges

The first challenge is the expansion of power generation capacity and rehabilitation and reinforcement of transmission and distribution infrastructure to meet the projected growth in power demand of 10 % per year in the medium term1 which requires about 200 MW new capacity additions annually. The second challenge is how to secure long term reliable and cheaper fuel for the operation of the thermal power plants. The third challenge is to increase access of electricity to consumers and especially the rural dwellers. . Government is committed to addressing these challenges and in that respect, seeks to pursue the following policy actions. 2.5 Expansion of Power Supply Infrastructure

Policy Direction

The medium term refers to a period of 5 years up to 2015.

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The strategic policy focus for the sector is to attract investments to improve and expand on the capacity of the existing infrastructure to deliver reliable power supply services in the short to long term and to be net-exporter of electricity in the West African sub-region

Generation Capacity The policy objective is to increase installed generation capacity from the current2 1,986 MW to 5,000 MW by 2020. To achieve this objective, Government will pursue the following policy actions:
Seek financing for the rehabilitation expansion generation plants of existing electricity

Encourage private sector investments in the construction and ownership of additional power supply capacity

Hydro Power Resources Development: Complete the development of the Bui Hydropower Project on the Black Volta Support the development of small3 and medium4 scale hydro power projects on other rivers including the Western Rivers (Ankobra, Tano and Pra), River Oti as well as the White Volta.

Transmission Infrastructure The key policy objective is to invest in the development of a reliable electricity transmission network. To achieve this, Government will: Support mobilization of commercial and domestic capital sources to supplement external funding for transmission infrastructure development

Distribution Infrastructure
Inadequate investment, in the past, has led to deterioration in the electricity distribution system resulting in high system losses and poor quality of electricity supply. In meeting the challenge, Government

will
Increase financial support to the distribution utilities to modernize infrastructure in the short term by re-capitalisation Encourage the injection of investment capital from commercial sources and the domestic capital market in the medium to long term

2 3

The refers to installed capacity in 2009 and includes the Emergency Power Units of 136 MW. Small scale hydro power projects refers to hydropower projects with generating capacity between 1 MW and 10 (MW) 4 Medium scale hydropower projects refer to hydropower projects those with generating capacity between 10 MW and 100 MW

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Support management in the restructuring of the distribution companies operations towards achieving improved operational performance

2.6

Securing Fuel Supply for power generation

Policy Direction In order to secure future fuel supplies the following policy actions will be pursued: Infrastructure for new fuel supply sources: Support development of infrastructure for the exploitation of domestic natural gas discoveries through fiscal incentives, financial support and creation of favourable and effective regulatory environment Encourage private sector financing of natural gas infrastructure in partnership with the public sector

. Nuclear Power Development: Include nuclear power in the options of energy sources to generate electricity in the medium to long term and plan towards the development of basic nuclear infrastructure in the medium to long term

Coal Power Development Explore the use of coal as an option for electricity generation in the long term 5 Regional Integration of Energy Resources: Support regional initiatives for integrating energy infrastructure resources to expand and accelerate cross-border energy trade and investments in gas pipelines and electricity inter-connections such as the West African Gas Pipeline Project and the West African Power Pool Project. Harmonise the legal, regulatory and institutional regimes in conformity with the ECOWAS Energy Protocols.

2.7

Increasing Access to Electricity Supply

Policy Direction

The long term refers to the period from 5 to 10 years.

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The strategic focus for achieving universal access to electricity will be to extend the reach of electricity to all households by 2020. To meet the above objective, Government will pursue the following policy actions: Increase funding from Government sources for the Rural Electrification Programme Support private sector co-financing with Government for grid-extension to designated franchised zones Institute a sustainable funding mechanism for rural electrification Continue to subsidise new service connections for electricity in rural areas Support implementation of productive uses of electricity as an integral part of the Rural Electrification Programme. Address institutional and market constraints that hamper increasing access of electricity to the poor such as the Rural Electrification Agency

Street Lighting Access and Infrastructure Every Ghanaian community must have access to adequate street lighting infrastructure by 2020 Provision of street lighting infrastcruture and the cost of operation and maintenance as well as electricity shall be the responsibility of Local Government Local Governments shall develop sustainable mechanisms to finance the street lighting infrastructure and other related costs. These may be achieved through street lighting levies, local fiscal instruments, grants, concessional loans secured by Government, etc.

Electricity Pricing

The key objective is to make electricity tariffs affordable. Government will pursues the following measures with respect to pricing of electricity:
Secure supplies of cheaper fuels such as natural gas from the West Africa Gas Pipeline Project and Ghanas domestic natural gas resources for power generation Support implementation of full- cost recovery pricing of energy services with selective subsidy and transparent packages to address specific national development objectives

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Continue to provide for special rates for the vulnerable in society (lifeline tariffs) and also protection of productive activities that have the potential to generate significant indirect economic benefits (employment generation, etc) Wholesale procurement of electricity will be based on economic merit order dispatch principles reflecting efficient economic costs of generation, transmission and distribution Windfall revenues from Akosombo and Kpong Hydro Generating stations will be applied for subsidies to targeted consumers with the purpose of achieving equity and national development goals Pricing of transmission and distribution services will continue to be regulated to achieve financial sustainability of the utility companies as well as ensuring consumer protection Electricity tariffs will be uniform through out the country

Power Sector Reforms

Promote competition in the generation of electricity through the Wholesale Electricity Market (WEM) Facilitate the entry into the power sector of Independent Power Producers (IPPs) in addition to ensuring improved performance of electricity utility companies. Create the environment for retailing of electricity with the aim of facilitating price and service competition in low-income communities. Facilitate competitive entry and service expansion by local electricity distributors

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3.0 Petroleum Sub-sector Policy

3.1 Hydrocarbons Resources In 2007/8 Ghana made discoveries in two blocks, Deepwater Cape Three Points and Deepwater Tano under two separate Petroleum Agreements operated by Kosmos and Tullow respectively. The appraisal so far conducted indicates that the field contains an expected recoverable reserves of about 800 million barrels of light crude oil, with an upside potential of about 3 billion barrels. The recent discovery of

commercial quantity of oil and gas provides Ghana with an opportunity to effectively reduce the impact of the rising oil bill as well as increase the countrys export earnings.
3.2 Policy Goal

Government is committed to the sustainable exploitation of the countrys oil and gas endowment and the judicious management of the oil and gas revenue for the overall benefit and welfare of all Ghanaians, present and future, as well as a commitment to attracting increased investments in the oil and gas sector and indigenization of knowledge, expertise, technology and local value-added production. Upstream Sub-sector 3.3 Challenges The major challenge regarding the Upstream petroleum sub-sector is how to develop oil and gas industry with optimal local content and participation and also manage the potential revenue from oil and gas exploitation as well as ensuring security for the oil and gas installations and the industry as a whole. 3.4 Policy Direction

In addressing the challenges that confront the energy sector Government seeks to pursue the following: Hydrocarbon Resources Development and Management: Manage Ghanas oil and gas resource endowment to ensure sustainability in reserves and the environment through judicious exploitation and intensive exploration

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Set up National Petroleum Regulatory Authority to be responsible for the regulation of all activities related to upstream and midstream oil and gas industry in Ghana GNPC (National Oil Company) will focus on the role of being the Governments entity regarding oil and gas exploration and development operational activities. GNPC (National Oil Company) will assume the full responsibilities for the development of the domestic natural gas find

Oil Revenue Management Manage oil and gas revenues transparently and equitably for the benefit of the present and future generation of Ghanaians. This will be achieved through institutional reforms and transparent regulation by the establishment of an entity to manage the oil revenue through legislative guidelines for oil and gas revenue management and the creation of a Future Generation Fund.

Investments Framework Encourage investments in the oil and gas industry value chain through fiscal incentives and even- handed regulation Periodically review and revision of the terms and conditions in the Petroleum Exploration and Production Law/Agreement and the Petroleum Income Tax Law and other relevant regulations to maintain a fair and attractive investment environment for oil and gas companies for mutual benefit

Local Content Maximise the benefits of oil and gas wealth generation on local content platform by maximising the use of local goods and services, people, businesses and financing in all aspects of the oil and gas industry value chain and retention of the benefits within Ghana.

Develop local capability development through education, transfer of technology and know-how Achieve at least 50 percent local content in all aspects of oil and gas industry value chain within a decade

Security

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Ensure security for oil and gas industry and operations by the development of dedicated institutional arrangement for national oil and gas security matters and legislation of oil and gas safety requirements National Security Agencies such as the navy and the Army will be supported to assist in the provision security for the oil and gas industry.

Natural Gas Utilisation and Commercialisation Natural gas resources to serve as new growth pole for the national economy through its use for the development of a viable domestic petrochemical and petroleum industries. The development of Industrial Estates based on natural gas will be promoted Maximise the utilization of natural gas reserves by prohibiting the flaring or venting of natural gas produced within Ghana. Any natural gas produced by a contractor in association with crude oil which is not used in petroleum operations and all other natural gas produced in the country shall be the property of GNPC (National Oil Company). GNPC (National Oil Company) shall be empowered to secure the required financing to develop infrastructure for the exploitation of all natural gas produced in the country GNPC (National Oil Company) may develop upstream and midstream the natural gas infrastructure in partnership with private sector or any other entity as may be necessary Improve the institutional framework for the natural gas industry by establishing separate companies for (i) gas processing and (ii) secondary transportation of natural gas

Human Resource Development and Technology Transfer

Support capacity building for middle level personnel artisanal skills in the technical and vocational institutions as well as high level personnel in areas such as Petroleum Engineering and Economics/Management programmes in the tertiary institutions.

Downstream Sub-sector 3.5 Policy Goal

Government is committed to providing adequate, reliable and cost effective supply of petroleum product to ensure universal access to petroleum products by 2020. 3.6 Petroleum Sector Reforms

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The Petroleum Sector Reform Programme is intended to deregulate and liberalise the operations in the petroleum downstream sub-sector with the view to encouraging increased private sector participation in all aspects of the petroleum downstream activities. Certain aspects of the Petroleum Sector Reform Progarmme instituted by Government are yet to be implemented. Policy Direction Governments policy actions will focus on: Completing the full cycle of deregulation programme by implementing administrative and regulatory changes that will enable Oil Companies and private sector investors to build and own refineries and also ensure their full involvement in the importation of crude oil into the country for refining into finished products for sale directly to consumers in competition with the stateowned Tema Oil Refinery.

3.7

Expansion of Petroleum Products Supply Infrastructure

The existing refining infrastructure constitutes a major constraint to the supply of petroleum products and poses problems of assuring reliability of supply of petroleum products as a result. The current production capacity of the refinery is able meet about 70% of national petroleum products requirements. Furthermore infrastructure for the transportation, storage and distribution of petroleum products are not adequate and inefficient Policy Direction The strategic policy focus for the petroleum downstream sub-sector is to attract investments in order to expand the capacity of the existing infrastructure in the medium to long term. To meet the short to medium term objective, Government will pursue the following: Expand the national crude oil refining capacity through both public and private sector Secure increased private sector investment in partnership with the public sector for the expansion of supply infrastructure for petroleum product . Allocate adequate resources to meet requirement national strategic petroleum stocks

3.8

Support mobilization of domestic capital market s for energy sector infrastructure and operations

Increasing Access to Petroleum products

About 82% of households in rural areas depend on kerosene for lighting and other needs and 22% of households in the urban areas. Ten percent (10%) of urban households use Liquefied Petroleum Gas

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(LPG) for cooking while penetration of LPG in the rural areas is 0.6%. Increased access to petroleum products will enable the people to improve their economic status and general well-being. Policy Direction The strategic focus is to extend the reach of petroleum products to all Ghanaians. To meet the above objective, Government will pursue the following policy actions: Expand petroleum product storage capacity and petroleum product bulk distribution infrastructure Support expansion of the supply and reach of Liquefied Petroleum Gas (LPG) to homes and small businesses. Address institutional and market constraints that hamper increasing access of petroleum products .

Petroleum Pricing Pricing of petroleum products will continue to be aimed at full-cost recovery as well as easing fiscal burden on products except for achieving specific national and institutional objectives. In that regard, Ex-refinery prices of petroleum products will continue to be based on import parity prices of petroleum products Transportation and distribution charges for petroleum products will be regulated to ensure reasonable profit margins for transporters and distributors Cross-subsidies between petroleum products will be applied, as necessary, to achieve specific national development objectives Uniform national prices for petroleum products would be maintained.

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4.0 Renewable6 and Waste7 Energy Policy

4.1 Biomass Resources and Use Biomass is Ghanas dominant energy resource in terms of endowment and consumption. Biomass resources cover about 20.8 million hectares of the land mass of Ghana (23.8 million hectares) and is the source of supply of about 60% of total energy used in the country. The vast arable and degraded land mass of Ghana has the potential for the cultivation of crops and plants which can be converted into a wide range of solid and liquid biofuels. The excessive use of woody biomass, however, has led to pockets of deforestation in the country.
4.2 Policy Goal

The policy goal is to sustain the supply of woodfuels while ensuring that their exploitation does not lead to deforestation. 4.3 Challenges

The major challenge in biomass energy supply is how to reverse the decline in the fuelwood resource base of the country and further sustain its production and use by improving the efficiency of production and use. 4.4
6

Policy Direction

Renewable Energy are energy forms produced from natural processes that are replenished constantly and include solar, wind, tide, wave, ocean and geothermal. 7 Waste Energy sources include industrial waste, municipal solid waste, biogas and liquid biofuels.

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In addressing the challenges, Government will: Support sustained regeneration of woody biomass resources through legislation and fiscal incentives. Promote the establishment of dedicated woodlots for woodfuell production . Promote the production and use of improved and more efficient biomass utiltisation technologies.

Promote the use of alternative fuels such as LPG as substitute for fuelwood and charcoal by addressing the institutional and market constraints that hamper increasing access of LPG in Ghana

Promote the use of modern biomass energy resources through creation of favorable regulatory and fiscal regimes and attractive pricing incentives.

Biomass Pricing

Woodfuel production, transportation, sale and pricing, are all private sector driven except for taxes and levies which are regulated by local Government authorities. The woodfuel business will continue to be operated and managed by the private sector. In that regard,
Alternative Fuels: The development of alternative transportation fuels such as gasohol and other biofuels can provide substitute fuels for the transportation sector and help diversify and secure future energy supplies of Ghana. In that respect, the policy is to: . Support development of indigenous alternative transportation fuel industry based on bio-energy resources (Biofuels) to replace petroleum- based fuels Balance biofuel development against food security Enact legislation that will create demand for Biofuels including appropriate pricing of Biofuels. Support private sector investments in cultivation of Biofuel feedstock, extraction of the bio-oil and refining of bio-oil into secondary products by creating appropriate financial and tax incentives. Woodfuel prices will continue to be set by market forces Taxes and levies on woodfuels will be regulated by the appropriate national agencies or local authorities as may be necessary

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4.5

Solar and wind

Ghana is well endowed with renewable energy resources particularly solar and wind energy resources. Solar radiation levels are estimated at about 4-6 kWh/m 2 and average wind speed along the coastal areas estimated at 5 8m/s. Wind speeds of 9 m/s have been recorded on the mountains along south eastern corner of the country. The wind speed regime along the coast suggests that wind can be harnessed along the coastline of the country for power generation as well as mechanical applications. The development and use of renewable and wastes energy resources have the potential to ensure Ghanas energy security and also mitigate the negative climate change impact of energy supply and also solving national sanitation problems. 4.6 Policy Goal

Government is committed to the exploitation of renewable and waste energy to enhance energy supplies as well as improving sanitation in the country.

4.7

Challenges

A major challenge facing renewable energy development is the high cost of these energy sources owing to the current state of their technology.
4.8 Policy Direction

Solar and Wind Government is committed to improving the cost-effectiveness of renewable energy technologies by addressing the technological difficulties, institutional barriers as well as market constraints that hamper the deployment of solar and wind technologies. In that respect, Government seeks to: Promote the exploitation and use of solar and wind energy resources through creation of favorable regulatory and fiscal regimes and attractive pricing incentives for solar and wind energy technologies Engage Ghanaian engineers and scientists to cooperate with other experts to undertake research and development aimed at reducing the cost of renewable energy technologies Provide tax incentives for the importation of all equipment used in the development of renewable and waste energy projects Support the use of decentralized off-grid alternative technologies (such as solar PV and wind ) where they are competitive

Mini Hydro
8

Measurement at a height of 12 meters.

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About twenty one (21) potential mini9 hydro sites, with generating capacities ranging between 4kW and 325kW, have been identified in the country which could be developed for power generation. The policy actions will focus on the following:
Promote the development of the potential min hydro sites for the generation of electricity to meet the needs of the surrounding communities. Institute appropriate fiscal and regulatory framework and attractive pricing incentives for mini hydropower projects

5.0 Energy Efficiency and Conservation Policy

5.1 High Energy Consumption and Energy Efficiency and Conservation The annual growth in the demand for fuelwood and charcoal is estimated at 3%. . Electricity consumption, on the other hand, is growing between 6% -7% annually while consumption of petroleum products is estimated at about 5% per annum. These growth rates are high. The losses in the production, transportation and use of energy are also high. System losses in electricity distribution is about 25% with wastage in the end-use of electricity also estimated at about 30%. Losses in energy supply and inefficient use of energy contribute to the high levels of energy consumption.

5.2

Policy Goal

Government is committed to ensuring efficient production, transportation and use of energy.

5.3

Energy Efficiency and Conservation Challenge

The challenge is how to promote and finance energy conservation and efficiency programmes. 5.4 Policy Direction

The following policy directions will be pursued by Government to conserve and use energy efficiently: General Establish appropriate pricing regime for energy services that would encourage (provide incentive) domestic and industrial consumers to voluntarily manage their energy consumption

Mini hydro refers to hydropower projects with generating capacity of less than 1 MW

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Develop and implement programmes and measures to help consumers optimize their energy use. Support a sustained and comprehensive public education and awareness building campaign on the methods and benefits of energy efficiency conservation.

Electricity Discontinue, through legislation on standardisation and labelling, the local production, importation and use of inefficient electricity consuming equipment and appliances.

Transportation Develop and implement measures to reduce petroleum product consumption in transportation. These measures will include institution of fiscal intruments such as prohibitive import duties on high fuel-consuming vehicles and use of alternative transportation fuels

Biomass
Promote the utilization of more efficient charcoal production and end-use technologies through research, training, fiscal incentives and regulation

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6.0
6.1

Energy and Environment Policy

Environmental Impact of Energy

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The production and use of energy impact on the environment and global climate in varying degrees. The exploitation of biomass for energy purposes result in deforestation while the use of fossil-based fuels contribute to climate change. The burning of biomass energy forms in inferior cooking equipment also has negative health impacts. The exploitation, transportation of petroleum oil, flaring and venting of natural gas associated with petroleum production and the production of petroleum products all have associated environmental risks. 6.2 Policy Goal

The Government of Ghana is committed to ensuring that energy is produced and used in internationally accepted environmental manner in the face of the development agenda of the country 6.3 Energy and Environment Challenge

The challenge is how to mitigate the environmental hazards of energy production, transportation, and use. 6.4 Policy Direction

To address the challenge, Government will: Promote the gradual increase in the use of environmentally friendly energy supply sources such as renewable energy (solar, wind, waste and small hydro) in the energy supply mix of the country. Promote a shift from oil to gas wherever gas is a technically feasible and sustainable alternative. Promote the use of improved woodfuel burning equipment for cooking in households and other commercial activities. Support and actively participate in international efforts and cooperation that seek to ensure sustainable delivery of energy to mitigate negative environmental impacts and climate change.
Encourage and enable all relevant entities engaged in activities in the energy sector to explore and access international environmental financial mechanisms and markets to overcome investment, technology and other relevant barriers in order to support the implementation of energy projects.

Ensure effective disposal of all hazardous substances and materials associated with the production, transportation, and use of energy

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7.0
7.1

Managing the Future

Strengthening the Regulatory Environment

Government is committed to strengthening the institutional and regulatory capacity in the country in order to ensure that energy is produced, supplied and delivered to the expectation of consumers. The regulatory institutions are limited in professional capacity and operational effectiveness leading to uncertainty in the economic regulation. Enhancing the regulatory environment will require strengthening the regulatory agencies. In this regard, the strategic development of the regulatory environment will focus on the following: Strengthen institutionan and human resource capacity of the regulatory institutions Ensure the independence of the national regulatory agencies Implement administrative and regulatory changes that will enhance the financial independence of regulatory institutions Improve and strengthen the enforcement of regulations.

7.2

Mobilisation of Investments for Energy Sector Development

The key objective of Governments investment policy for the energy sector is to encourage private sector investment, both domestic and external, through the provision of appropriate fiscal and financial incentives and creation of conducive legal and regulatory environment. In that respect Government will: Create an enabling environment for Public Private Partnership in the energy sector. Encourage the use of Capital market including the Ghana Stock Exchange to raise financing for investments in energy sector. To facilitate their listing, Government will ensure that the energy sector enterprises are financially viable. Provide selective sovereign guarantees for energy projects of strategic national importance. Improve the fiscal and financial incentives in the Investment Code in order to attract private sector investors Establish transparent and non-discriminatory practices in the implementation of rules and regulations that applies to all private investors in the sector.

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7.3

Building Human Resource Capacity and R&D

A strategic focus of energy policy is to build adequate human resource capacity in the management of the sector and Resaecrh and Development (R&D). To this end, Government will give priority attention to the following: Support the training of Ghanaians in all fields of energy development and management and build capacity in indigenous manufacture of energy technologies. Increase the allocation of resources for energy Research & Development activities. Give priority to adaptive R&D in energy technology while promoting basic research. Support the transformation of Ghanaian energy research institutions into Centres of Excellence for energy research and development.

7.4

Implementing the Energy Policy

To make the necessary impact on the national economy will require that the management, operations and monitoring of the energy sector receive adequate attention. Team work and total commitment of all stakeholders should be the primary driving principle to ensure smooth implementation of the National Energy Policy. The requisite human resource capacity and logistical support for the implementation and monitoring of the Energy Policy will be developed by strengthening the Planning, Implementation and Monitoring Divisions of the Ministries, Department and Agencies responsible for Energy, Finance and Environment. Implementation will involve regular interaction between the Ministry of Energy and its Departments and Agencies on one hand and all relevant Ministries, Departments and Agencieson the other hand to discuss issues relating to the National Energy Policy and further refine strategies and programmes to achieve the policy goals. Government will further support the implementation of a comprehensive programme to create awareness among policy makers and the general public on the National Energy Policy, Strategies, Programmes and Projects.

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