Perspectives on The Future of the Energy Sector 2019 GhIE ANNUAL CONFERENCE Perspectives on The Future of the Energy Sector Ing. Dr. Nii Darko Asante Director, Technical Regulation Energy Commission

Overview Power Sector Gas Sector Where Are we Going? Supply Demand Balance Outlook for Capacity Additions Disruptive Technology Gas Sector Outlook for Gas Use Where Are we Going?

Power Sector Supply Demand Balance

Over Capacity in Power Sector There is over-capacity of generation, and there is no need for additional thermal generation till mid 2020s Net dependable capacity is about 4,000 MW, and will increase to over 4,600 MW by the end of 2019 with addition of about 700 MW of capacity currently under construction Current recorded peak demand is 2,691 MW, and is expected to grow to about 3,100 MW by 2022. After including a 20% reserve margin on top of the peak demand, there is significant excess capacity until the mid-2020s. Even under an unlikely high demand scenario, there will be significant excess capacity until the middle of the next decade.

Supply-Demand Balance (Reference Case) 1,160 1,500 1,930 1,780 1,580 DRAFT -- NOT FOR DISTRIBUTION

Supply-Demand Balance (High Case) 680 490 820 1,140 1,750 DRAFT -- NOT FOR DISTRIBUTION

Power Sector Outlook for Capacity Additions

Additional Generation Capacity Many conventional and renewable Power Purchase Agreements already signed by ECG Some attempt to delay and/or cancel some of them Ghana has some commitments on Climate Change Mitigation No major impact on build plan Costs of Renewables (Solar) continuing to drop Solar may become competitive even with excess generation capacity Will however need to consume contracted gas (more on this later)

Transmission Improvements Additional transmission builds are necessary over time to support new local generation capacity, and the need to improve grid stability and reliability, particularly in the Middle Belt and NEDCO regions. Transmission builds lower the overall system cost and allows for greater export opportunities. Reliability improves upon completion of current transmission projects including the 330kV Aboadze-Prestea-Kumasi-Tamale-Bolga line— Integrating variable RE capacity up to 10-15% of total system capacity improves reliability of supply in the northern part of the country during off-peak hours, and reduces system losses.

DRAFT -- NOT FOR DISTRIBUTION Least Regrets Capacity & Transmission Additions – Reference Demand Gen 0MW 2018-21 2022-23 Gen 180 MW 80 MW Small Hydro 100 MW Solar Trans 125 MVA Gen 250 MW 100 MW Solar 150 MW Wind Trans 140 MVA 2024-25 Gen 410 MW 200 MW Solar 150 MW Wind 60 MW Biomass 2026-27 2028-29 Gen 600 MW 500 MW CC 100 MW Solar Gen 530 MW 280 MW CC 50 MW Solar 200 MW Wind Trans. 235 MVA 2030-32 Gen 1890 MW 480 MW Solar 300 MW Wind 1,110MW CC Trans. 425 MVA 2033-37 DRAFT -- NOT FOR DISTRIBUTION

Power Sector Disruptive Technology

Distributed Generation What is it? Small grid-connected generation (mainly solar) that is located within the distribution network (sometimes on customer premises) What does it do? Lowers cost of supply to customer What is the problem? Avoids centralised planning process (risk of stranded assets), lower cost of supply can undermine established economics of power generation & supply. Things will need to change!

A few years ago we were trying to reduce demand!!! Electric Vehicles Introduction and Promotion of Electric Vehicles Private vehicles and/or Electric buses for public transport Utilise redundant power generation capacity Replace Oil Imports with Increased Power Consumption Would Contribute to Climate Change Mitigation A few years ago we were trying to reduce demand!!!

Gas Sector Supply Demand Balance

Excess Supply of Gas With completion of OCTP Sankofa project, there is an oversupply of gas, and this may increase to about 550 MMscfd with introduction of LNG from 2020 onwards, and create a huge annual financial burden. On a regional basis, oversupply will be in the Western region, which shall require transfer of gas to East through the WAGP. As usage volumes increase in the East (Tema), there is an economic justification of building an onshore gas pipeline between Tema and Takoradi.

Gas Supply-Demand Balance Contracted Gas Supplies (MMscfd) Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Greater Jubilee (AG) 96 97 93 94 103 108 106 111 110 48 TEN (AG + NAG) 10 30 50 49 47 46 45 42 31 23 19 OCTP Sankofa (NAG) 140 171 AKER (HESS) 35 65 77 90 85 70 Sub-total indiginous gas supply 246 298 314 318 353 379 386 402 412 409 382 361 WAPCo/N-Gas 60 Rosneft LNG 250 WAGL LNG 180 Continental Fuels LNG Sub-total imported LNG supply 490 430 Total Contracted Supply 306 448 894 898 933 899 906 922 932 929 902 881 834 Gas Demand (MMscfd) Power Sector (From IPSMP Ref Case)   Western Power Enclave 157 179 172 156 124 126 127 129 Eastern Power Enclave 61 84 81 101 146 216 224 232 241 258 275 292 310 Sub-total (Power) 217 263 254 257 286 339 350 360 370 387 404 422 439 Non Power Sectors Western Region 6.5 7.5 29 Fertiliser Western Region) Eastern Region 20 Northern Regions (Bauxite Kumasi) 15 Sub-total (Non Power) 120 130 135 150 Total Demand (Power & Non Power) 271 338 377 416 474 500 510 520 537 554 572 589 Gas Balance Surplus/(Shortage) 82 177 556 521 517 424 406 392 347 309 245

Gas Sector Outlook for Gas Use

Outlook for Gas Use Short-term actions: Medium to long-term actions Reduce OCTP take-or-pay volumes. Delay development of non-associated gas fields. Delay LNG development in both Tema and Takoradi. Medium to long-term actions Stimulate economically viable (high-value) non-power use of gas (e.g. CNG for transport).

So where are we going…?

Heaven knows where we are going… Upward pressure on pricing Redundant Capacity of gas and electricity Locked into expensive supplies of gas and electricity Stranded distribution and transmission assets Private distribution pushing up prices by bringing all costs into open Pointers to lower energy prices Increased consumption due to economic growth wiping out excess Competitive procurement delivering lower energy supply costs Innovation and Technology driving down prices Efficiency gains from private distribution bringing down costs

We know we will! THANK YOU.