The Case for Ghana’s Renewable Energy Transition: A Path to Sustainability and Economic Resilience
Ghana’s energy sector faces a financial crisis that threatens its long-term sustainability, efficiency, and ability to drive economic growth. While oil and gas thermal plants have traditionally been a cornerstone of Ghana’s electricity generation, its heavy reliance on imported fuels exposes the country to price volatility, supply chain disruptions, and mounting financial strain.
Several challenges have exacerbated the sector’s financial instability, including:
Limited supply of both domestic and international natural gas supply due to arrears owed, pipeline infrastructure challenges, and declining upstream investments in oil and gas.
Dependence on costly alternative fuels such as heavy fuel oils (HFOs) and distillate oils, adding significant fiscal pressure to the sector.
An unsustainable electricity pricing model, where tariffs are often politically influenced with subsidies and misaligned with actual production costs.
As of September 2024, the country’s energy sector debt stood at over $3 billion, owed to independent power producers (IPPs). This financial strain has forced some power plants to shut down operations, creating a gap in electricity supply. Investor confidence in the sector has also eroded as the government struggles to honor its power purchase agreements (PPAs) with the IPPs.
At the heart of the sector’s financial crisis is a structurally inefficient and financially strained state utility. The Electricity Company of Ghana (ECG), the nation’s primary power distributor, has recorded Aggregate Technical, Commercial, and Collection (ATC&C) losses of up to 40%, meaning nearly half of the power generated is either wasted or unaccounted for. This inefficiency results in a monthly revenue shortfall of $25.8 million, further deepening the sector's financial instability.
Renewable Energy
Given these financial constraints, renewable energy presents a viable alternative to ease the sector’s fiscal burden while enhancing energy security, yet it currently accounts for only about 2% of the country’s installed capacity (see Figure 1). Ghana’s daily solar insolation levels range from 4 kWh/m² to 6 kWh/m², with a sunshine duration between 1800 and 3000 hours per year, which offers a high potential for solar electricity generation. Wind energy also holds untapped potential, particularly along Ghana’s coastal regions, where wind speeds are favorable for electricity generation.
Integrating wind power, solar, and battery storage solutions to complement the thermal plants could provide a stable and reliable energy supply for the country. With its low operational costs, renewables can reduce the need for government subsidies to allow electricity prices to remain low while accurately reflecting actual generation costs. This will contribute to easing the sector’s financial burden, and lessening dependence on expensive imported fuels.
Source: International Perspective for Policy Governance (IPPG Africa) (2025)
Current Renewable Energy Policy Framework
Ghana has long planned to incorporate renewable energy into its energy mix, a commitment reflected in the Renewable Energy Act, 2011 (Act 832), which was later amended by the Renewable Energy (Amendment) Act, 2020 (Act 1045). Among other provisions, the law promotes the development, management, adequate supply, and utilization of renewable energy for heat and power generation while ensuring environmental efficiency.
This legal framework is supported by the 2019 Ghana Renewable Energy Master Plan (REMP), which sets a target of 1,363.63 MW of grid-connected renewable energy (non-hydro) by 2030. With 5 years to go, the government is not on track to meeting this goal. The 2020 amendment also introduced opportunities for net-metering to encourage self-generation by commercial, industrial, and residential electricity users, which has since been reinforced by the 2023 Net Metering Code developed by the Energy Commission.
However, non-hydro renewable energy generation remains very low, partly due to limited political commitment, as government efforts are primarily focused on addressing the financial challenges of the energy sector overall, which has also led to low investor interest. More importantly, the lack of essential policy instruments, such as tax incentives and production incentives, continues to hinder the growth and adoption of renewable energy in Ghana.
New Ministry of Energy & Green Transition
The new government led by H.E. John Dramani Mahama has signaled a commitment to greening the national grid by expanding the scope of the Energy Ministry to include the Green Transition in its portfolio. This marks an important policy shift towards greening Ghana’s energy sector. While this is a commendable and bold step, the Ministry has yet to outline a clear roadmap detailing the specific goals, targets, and implementation strategies for achieving a just and effective green transition.
Recommendations
Ghana can more effectively implement its energy transition by considering some or all of the following measures:
The Ministry should consider developing a comprehensive roadmap that sets clear targets, identifies key renewable energy investment opportunities, and provides regulatory support for the integration of clean energy solutions in line with the Ghana Renewable Energy Master Plan (REMP) (2019), the National Energy Transition Framework (2022–2070), and Ghana’s Updated Nationally Determined Contribution (2022–2030).
The government could introduce strong policy incentives, including tax breaks, production incentives, and competitive tariff structures, to attract private sector participation in renewable energy development.
Strengthening energy infrastructure, such as expanding grid capacity and modernizing transmission networks, will be critical in ensuring that renewable energy sources can be efficiently integrated into the system.
Prioritizing the implementation of the net metering policy would allow the government to accelerate renewable energy adoption. Currently, residential, and commercial and industrial (C&I) customers in Ghana are turning to captive solar generation as a cheaper alternative to grid electricity. As of 2023, C&I customers alone had installed 61.4MW of captive solar PV capacity (see Figure 2), primarily concentrated in industrial zones with reliable grid connections which demonstrates that cost savings remain the key driver of this shift.
Strengthening policy incentives for net metering would help maximize the impact of this trend, ensuring that surplus energy generated by C&I and residential consumers can be fed into the grid and credited against their consumption. Strengthening the net metering framework would also reduce dependence on costly fossil fuel generation and further enhance energy affordability by providing cheaper and more stable electricity to consumers.
Source: International Perspective for Policy Governance (IPPG Africa) (2025)
Ghana’s renewable energy transition is essential for economic resilience and energy security. While policy frameworks exist, progress has been slow due to the sector’s financial constraints and limited investor confidence. The government’s commitment to a green transition is a step in the right direction, but further progress depends on clear implementation plans and strong policy incentives.
Seth Owusu-Mante is a Predoctoral Research Fellow at the Climate Policy Lab at the Fletcher School, Tufts University.