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Ghana: Coal-Fired Power Plant for Valco?
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Public Agenda (Accra)
OPINION
4 August 2008
Posted to the web 4 August 2008
Asks Kofi Asante
Accra
The news report that the Volta Aluminium Company Limited (VALCO) is to construct a coal-fired power plant at Tema to generate electricity for its use (Daily Graphic, July 2, 2008) calls for public debate. I must make some preliminary comment on VALCO's decision.
First, coal is the dirtiest fossil fuel for electric power generation in terms of pollution. Coal power plants emit harmful particles and gases into the environment. The emissions can only be reduced to an extent by investing in cleaning equipment for harmful particles and gases (such as carbon) and by using coal with little sulphur content.
There are no compelling reasons for the use of coal as fuel for power generation in the country. Ghana does not have coal as South Africa, India or China, the use of which would create jobs. We do not have carbon capture and storage technologies to reduce the harmful effects of carbon. In this day and age, we should be mindful of the impact of coal-fired power plants on the environment and the climate.
South Africa, unlike Ghana has abundant coal resources. For years, it has had coal-fired power stations as part of its energy mix. Eskom of South Africa, the counterpart of the Volta River Authority, operates coal-fired (base load) power stations, hydro, pumped storage and gas turbines (which make up the peaking group of power stations), and nuclear energy. Eskom has over the years, pioneered the development of modern technologies for coal-fired power plant activities such as coal stockyard handling, ash handling and cooling systems which directly impact on the environment and affect everyday living.
Ghana's principal sources of electricity are water (hydro); light crude oil; and natural gas. Each source has its peculiar challenges. Should we add coal, the dirtiest fuel for power generation, in the face of general concern for the environment and climate change? Should we add coal when nuclear energy, arguably the cleanest after wind power, is being seriously considered?
Second, the West African Gas Pipeline project (WAGP) has a critical place in power generation, energy sufficiency and security. Natural gas as the fuel for power generation at the Aboadze, Takoradi thermal plants is eminently superior: It is kinder on the environment and much more efficient. Further, gas flaring in Nigeria, the emission of green house gases in our region, will be reduced. Whatever the current status of the gas pipeline enterprise, Ghana is bound to ensure that the project is completed and natural gas, the fuel of choice, is made available for power generation at the Takoradi plants.
Under the terms of WAGP, Ghana is committed to a take-or-pay contract in the case of Nigerian natural gas. If the Takoradi power plants are not run at capacity, the take-or-pay contract would create enormous cost of the gas. That in turn would result in exceedingly high tariff for all consumers, industrial, commercial and domestic. The only way to avoid excessive tariff is to have VALCO as a consumer as envisaged.
Assuming the cost of electricity generated at the Takoradi power plants is US$42/MWH at the proposed cost of gas, the point of the WAGP is to have a full load operation of 600MW net generation of power (80% availability). Now the effective use of the net 600MW would only be achieved with maximum supplies (about 300 GWH per year) to VALCO. We seem to forget that the early construction of the Takoradi complex was driven by the electric power requirement for VALCO.
If VALCO is allowed to opt out of the supply of power generated at the Takoradi plants by its construction of a dedicated coal-fired plant at Tema, the cost of electricity produced at Takoradi from natural gas under the WAGP terms would be too much for consumers. Without VALCO as a consumer, the take-or-pay for the WAGP would be underabsorbed for years.
Third, now that Ghana owns VALCO, a carefully crafted power contract with the owner of the gas pipeline, the West African Power Company of which Ghana has 16% shares, should engage the attention of VALCO. It should also use its considerable influence to exert pressure to bring the gas pipeline project to fruition so that it and other consumers would begin to enjoy the benefits to be derived from the WAGP investment.
The minimum that the VALCO leadership could do in the circumstances is to stop the imminent construction of a coal-fired power plant. Put it on hold, at least for further consideration.
Fourth, the question whether or not Ghana should construct a coal-fired power plant to serve the power requirement of VALCO, regardless of the WAGP, should be left to the incoming administration. A decision as to Ghana's fuel sources and energy mix would doubtless be made within the framework of a national energy policy.
As recently as April, 2008, four presidential nominees took turns to discuss publicly their ideas on energy at the Great Hall, Kwame Nkrumah University of Science and Technology, Kumasi. The platform was made available by the university. It was a refreshing experience. If VALCO's leadership was then seriously considering the construction of a coal fired power-plant, the WAGP regardless, it should have seized the opportunity to attend the forum on 11th and 18th April to tell the presidential nominees about it. The minimum that VALCO should do now is to defer to the wisdom of our presidential candidates, individually and collectively. It was clear from all four presentations at Kumasi that come January 2009, energy will get priority attention at the highest level.
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New VALCO should not tie the hands of our new political leaders and policymakers behind their backs in the important area of energy. A coal-fired power plant once started must be completed. Otherwise, it would be money turned into ash.
I agree with Kofi on this issue. Even advance nations which have aboundant coal are finding a way out of coal power plants or pursuing gasification technologies and carbon capture or sequestration. Why should the signatories on record for the government hold Valco to the fire if they were one of the initial beneficiaries of the new peaking or combined cycle power plant at Abadze? Valco cannot have it both ways, either the accept what they have agreed to or stay closed and wait for the Akosombo electric to peak again to satisfy their needs. As a business entity,... [Read Full Text]
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