FINANCING GHANA'S NET-ZERO POWER SECTOR PATHWAY

Ghana's National Energy Transition Framework sets out a pathway to net-zero emissions by 2070 (Ministry of Energy, 2023), requiring an estimated USD 101 billion of power sector investments over the period. Applying the Model for Informed National Financing (MINFin) to an OSeMOSYS least-cost energy model to achieve a net-zero investment trajectory shows that, under the business-as-usual (BAU) financing structure, the cumulative financing gap reaches USD 76.97 billion, indicating that sector revenues are insufficient to service the debt and equity obligations the pathway creates. Grant financing, introduced at USD 11.48 million and escalated at 3% per year and targeted at solar generation, narrows the gap only marginally, to USD 75.76 billion, because the volume of concessional support available is small relative to the scale of the shortfall. Adjusting PPA tariffs for wind and nuclear generation is more effective, reducing the gap to USD 72.65 billion, but tariff increases raise end-user costs and are politically and socially constrained. The financing structure scenario, which combines the mix of public, private, debt, and equity finance, has by far the largest effect: it converts the BAU deficit into a surplus of USD 49.91 billion, demonstrating that the terms on which capital is raised matter more than the volume of any single revenue-side lever. Combining grants, tariff adjustment and financing restructuring in an all-in-one scenario produces the largest cumulative surplus of all, at USD 137.19 billion. Recommendations: prioritise concessional and appropriately structured finance ahead of tariff increases; use available grants to support technologies close to the bankability threshold; and denominate operating costs in local currency wherever possible to reduce the sector's revenue exposure to foreign exchange risk.

This work was supported by the Climate Compatible Growth Programme (#CCG) of the UK's Foreign Development and Commonwealth Office (FCDO). The views expressed in this paper do not necessarily reflect the UK government's official policies.