ABSTRACT
The Ghanaian electric power system, like most Sub-Saharan African countries, is bedevilled with the problem of inadequate generation of electric power amidst growing demand for electricity. Governments over the years have tried to tackle the issue of inadequate generation capacity and supply of electricity in Ghana to meet the increasing demand for electric power. Yet electricity supply in Ghana remains erratic and inconsistent. The purpose of this study was to develop a long-term (20-years) electricity generation expansion plan for Ghana’s electricity sub-sector that takes into account important attributes specially related to Ghana, such as budget constraint. The study employs multi-period stochastic mixed-integer linear programming (MILP) to model and solve the problem of determining the technology type, timing and number of units of generators to add to the existing capacity under uncertain demand taking into account budget constraint. Secondary data was used to estimate all the model parameters. Periodic electricity demand scenarios were obtained by assuming that the uncertain demand follows a triangular distribution with a minimum increase of 1%, the most likely increase of 7% and a maximum increase of 15% over the immediate past year’s electricity demand. The proposed multi-period stochastic MILP model was run for two cases: without budget constraint which depicts the case where there are sufficient funds to undertake an expansion plan and the budget constraint case, where the expansion plan is faced with lack of funds. The imposition of budget constraint is a departure from the typical generation capacity expansion models found in the literature and helps explain generation expansion pattern in Ghana. The expected values of the objective function and the generation expansion plans considering no budget constraint and budget constraints were optimized in order to draw analogy. It is observed that the presence of budget constraint sometimes forces the decision maker to take decisions that might be sub-optimal compared to when sufficient funds are available.
CHAPTER ONE INTRODUCTION
Background of the Study
Electricity has become a basic necessity of life. Its form and modes of use are expanding every day because it is the easiest and least expensive transportable form of energy (Sharma, 2009). It is particularly crucial for emerging economies whose national developmental agenda oblige steady availability of electric power. Interestingly, an estimated 1.2 billion people; roughly, one sixth of the world’s population lack access to electricity supply, of which almost 80% of them are in developing countries especially in Sub-Saharan Africa and South Asia (World Bank, IFC, & MIGA, 2013).
Demand for electric power in Sub-Saharan Africa has increased dramatically in recent times due to modernisation. Key sectors of the economy such as manufacturing, health, construction, entertainment, education and communication significantly depend on the generation and supply of electric power for their activities. However, Sub-Saharan Africa, like most developing regions, is in the midst of electric power crisis due to inadequate generation capacity and unreliable supply. The total installed generation capacity of Sub-Saharan Africa is lower compared to any other region in the world (International Energy Agency (IEA), 2014). The total installed generation capacity of all the countries in Sub-Saharan Africa was around 90 gigawatt (GW) in 2012, less than the installed capacity of Spain (Deloitte Conseil, 2015; IEA, 2014). Excluding South Africa, the installed generation capacity of the remaining Sub- Saharan Africa countries reduces to a mere half of the total (IEA, 2014). Sub-Saharan Africa’s installed generation capacity has remained largely stagnant, with growth rates of about half of
those found in other developing regions (Eberhard, Rosnes, Shkaratan, & Vennemo, 2011). Consequently, there is a wide gap in electricity generation capacity between Sub-Saharan Africa and the other developing regions. In general, generation capacity should be at the same growth rate as the economy in order to keep pace with electricity demand increase ( Eberhard, Foster, Briceño-Garmendia, Ouedraogo, Camos, & Shkaratan, 2008). However, this is not the case in Sub-Saharan Africa.
