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Ghana Priorities: Rural Electrification

The problem

According to Ghana Energy Commission (2019), the electricity access rate in rural areas was 67.2% in 2018. The recently published Ghana Living Standards Survey (Ghana Statistical Service, 2019), indicates that regions in the northern parts of the country have much lower access to electricity, compared to regions in the southern parts of the country. In all three northern regions, national grid connection is less than 70%. This unfortunate situation emanates from the fact that most communities in the northern parts of the country are mostly of lower population densities and are quite far from major medium voltage lines. Furthermore, many of these communities are difficult to access due to poor road infrastructure and difficult terrain.

The analysis in this report focuses on the Gushiegu Municipality of the Northern Region. It is assumed that this region is representative of other unelectrified rural communities, and the policy implications arising from this analysis are therefore broadly applicable across rural Ghana.

Intervention 1: Expand grid-based electrification to less remote communities

Overview

This intervention extends the national grid to 79 communities with a population of around 40,000. In the first year 4,547 people will be connected corresponding to 743 households. In 2027 no more capital investment is required and 42,000 people (7,005 households) will be connected. Over time as the population expands, the number of households will grow within the community such that by 2040, 55,334 people across 9,222 households are connected to the grid without any additional large-scale capital investment required. 

Costs

The intervention will require GHS 59m in investments over 8 years, using an 8% discount rate. Cost of electricity generation is assumed to equal 31 GHp per kWh, and distribution 45.2 GHp per kWh based on tariffs set by the regulatory agency in Ghana. The total discounted costs are GHS 59m of investment (GHS 6,378 per household) and GHS 42m in ongoing operations and maintenance costs (GHS 4,563 per household) for a total of GHS 101m (10,940) over 20 years. 

Benefits

The intervention will lead to several benefits including a 46% increase in household income and improved health services. These benefits are worth GHS 378m (GHS 40,973 per household) and 74m (GHS 7,976 per household), respectively. Total benefits are 4.5 times the cost.

Intervention 2: Microgrids for selected ‘more remote communities’

Overview

A micro-grid generates less than 10MW of electricity and distributes to a limited number of customers via a distribution grid that can operate in isolation from national electricity transmission networks. Here we consider both diesel and solar micro-grid options. The modelling suggests diesel micro-grids are suitable for 3 communities with expected higher energy demand (300 households), while solar micro-grids are suitable for 46 communities (1911 households). 

Costs

For diesel microgrids, the levelized cost is GHS 4.3 ($0.94) per kWh and includes all investment, maintenance, distribution and fuel costs. For solar microgrids the levelized cost is GHS 5.1. For diesel microgrids there are also a small amount of negative externalities associated with reduced health from exposure to air pollution and carbon emissions.

Benefits

For diesel microgrids, main benefit is an increase in household income equivalent to GHS 39,454 per household over the time period of analysis. There is also an improvement in health associated with electrification equivalent to GHS 5,891 per household. For solar micro-grids the main benefit is an increase in household income equivalen to GHS 28,137 per household. There is also an improvement in health associated with electrification equivalent to GHS 5,912 per household.

Intervention 3: Expand grid-based electrification to more remote communities

Overview

This intervention models costs and benefits for expanding the grid to more remote communities above a threshold value of 200 people for a total of 2,493 households.

Costs

The costs of the intervention include an investment cost of GHS 58m (GHS 23,224 per household) and ongoing operations and maintenance cost of GHS 25m (GHS 10,026 per household) over 20 years.

Benefits

The main benefit is an expected income increase of GHS 84m (GHS 33,782 per household) over 20 years. Additional health benefits are worth GHS 7m (GHS 2,979 per household)