- Think Tank Backs 1,200MW Plant but Urges Stronger Renewable Energy Investments
The Africa Sustainable Energy Centre has welcomed key energy measures in Ghana’s 2026 Mid-Year Budget Review, but warned that the government’s renewed emphasis on gas-fired thermal generation must not crowd out the country’s longer-term green transition agenda.
In its assessment of the budget, ASEC endorsed the proposed development of a 1,200-megawatt state-owned combined-cycle gas-fired power plant, describing it as an important intervention to strengthen power supply, support industrial activity and improve national energy security.
The government announced in the Mid-Year Review that the plant will be located at Kafodzidzi-Abrobeano in the Komenda-Edina-Eguafo-Abrem Municipality, with the first 600-megawatt phase expected to be commissioned in 2028. The Finance Minister said feasibility studies had confirmed the project’s viability, while environmental, engineering and permitting processes were progressing.
Government also said it had secured gas turbines directly from GE Vernova, achieving projected savings of between 35.00% and 45.00% compared with third-party procurement, while the project is expected to help lower electricity generation costs, reduce tariffs by 10.00% to 20.00% and create more than 2,000 direct and indirect jobs during the first phase.
ASEC’s support for the project reflects a practical recognition of Ghana’s energy realities. The country requires reliable baseload power to support industry, mining, agro-processing, manufacturing, digital infrastructure and the government’s 24-hour economy agenda. In that context, gas-fired generation offers a transitional route: cleaner than light crude oil and heavy fuel oil, more dispatchable than intermittent renewables, and more compatible with Ghana’s existing gas-to-power strategy.
But the Centre cautioned that energy security and the green transition must advance together rather than compete with each other.
According to ASEC, Ghana risks widening the gap between its current energy mix and its target of sourcing 10.00% of electricity generation from renewable energy by 2030 if conventional generation expands faster than solar, wind, battery storage and distributed renewable energy systems.
The warning is significant because renewable energy still contributes only about 2.00% of Ghana’s electricity generation, far below the 2030 target. ASEC argues that without stronger fiscal commitment, policy coordination and project financing, Ghana may continue to speak about green transition while allowing thermal generation to dominate investment decisions.
The 2026 Mid-Year Review does contain green-transition measures. Government said it is implementing 35 mini-grids across 47 island and lakeside communities, has procured about 3,600 smart net meters, is implementing 750 Solar Home Systems for public institutions and households, and has completed Battery Energy Storage System studies to support renewable energy integration and grid stability.
The budget also notes the development of a Renewable Energy Authority Bill and a Renewable Energy Implementation and Green Transition Framework to strengthen the institutional basis for Ghana’s energy transition.
ASEC, however, believes the measures do not yet amount to the scale of investment required to move Ghana meaningfully towards its renewable energy target. The Centre welcomed the renaming of the Ministry of Energy as the Ministry of Energy and Green Transition, but said the budget offered limited evidence of large-scale investments in renewable energy, energy efficiency, battery storage, electric mobility and other low-carbon technologies.
That criticism goes to the heart of Ghana’s energy policy dilemma. The country needs cheaper and more reliable electricity today, but it must also avoid building an energy system that becomes too dependent on fossil-fuel infrastructure just as global financing, technology and climate policy are shifting towards cleaner energy.
Government’s gas-to-power strategy is already delivering cost savings. The Mid-Year Review said Ghana increased gas supply for power generation by an additional 35 million standard cubic feet per day by end-June 2026, bringing total supply to about 490 million standard cubic feet per day. By replacing light crude oil with natural gas, government said it saved GH¢3.08 billion, equivalent to US$268.50 million, in fuel costs during the first half of 2026.
ASEC’s position is not that gas should be abandoned. Rather, it is that gas should be treated as a transition fuel, not the destination. In the Centre’s view, Ghana’s energy security strategy must be matched by a credible renewable energy investment pipeline, clearer financing instruments and stronger incentives for private-sector participation in clean energy.
The think tank also criticised government’s decision to retain the GH¢1 fuel levy, arguing that its removal would provide immediate relief to households and businesses through lower transport costs and reduced inflationary pressure.
ASEC further called for greater transparency regarding the utilisation of proceeds from the levy and a clearly defined timetable for its eventual withdrawal. This argument is likely to resonate with consumers and transport operators, especially at a time when fuel-related costs continue to feed into food prices, public transport fares and business operating expenses.
The government, however, appears to be balancing consumer relief against energy-sector financing needs. The Mid-Year Review showed that Energy Sector Levy proceeds amounted to GH¢7.70 billion in the first half of 2026, exceeding the half-year target of GH¢4.20 billion, driven by strong Energy Debt Recovery Levy collections contributing at least GH¢1.00 billion monthly.
That makes the levy politically difficult but fiscally useful. Removing it could reduce pump prices, but it would also create a financing gap unless government identifies an alternative revenue source for energy-sector obligations.
On clean cooking, ASEC welcomed government’s plan to expand access to Liquefied Petroleum Gas but argued that Ghana’s long-term strategy should move beyond LPG. The Centre wants policy to include electric cooking, bioethanol, biogas and improved biomass cookstoves as part of a broader route to universal access to modern cooking energy.
The budget indicates that government is scaling up the distribution of 457,000 LPG cookstoves to expand access to clean cooking.
ASEC’s concern is that LPG, while cleaner than charcoal and firewood, remains a fossil fuel. It can reduce household air pollution and deforestation pressures, but Ghana’s clean-cooking strategy will ultimately need a wider technology mix if it is to become both affordable and climate-aligned.
The Centre also welcomed plans for a second gas processing plant, recognising its importance in strengthening domestic gas infrastructure and improving energy security. The Mid-Year Review said government, in partnership with the private sector, is developing a 100 million standard cubic feet per day modular gas processing facility, with financial close expected before the end of 2026. The project is expected to create nearly 1,000 jobs and generate about US$2.00 billion in benefits to the state over five years through fuel savings, foreign-exchange savings, taxes, levies and dividends.
ASEC, however, urged broader public consultation on the private-sector-led financing model, stressing that fiscal terms, local content provisions and long-term value retention mechanisms must maximise national economic benefits.
That caution is well placed. Ghana’s past energy-sector challenges have often emerged not from the absence of projects, but from weak contracting, poor risk allocation, hidden costs and obligations that later become public liabilities. If new gas infrastructure is to support energy security without creating future fiscal pressure, transparency in financing, procurement and ownership terms will be essential.
ASEC’s assessment therefore gives government partial credit. It accepts that the budget contains important measures to improve power supply, lower generation costs and strengthen energy security. But it also warns that Ghana cannot afford a one-sided energy strategy in which gas infrastructure moves quickly while renewable energy and low-carbon technologies remain underfunded.
