![By Elikplim Kwabla APETORGBOR (Dr.)](https://i0.wp.com/thebftonline.com/wp-content/uploads/2024/01/By-Elikplim-Kwabla-APETORGBOR-Dr.jpg?resize=500%2C330&ssl=1)
![By Elikplim Kwabla APETORGBOR (Dr.)](https://i0.wp.com/thebftonline.com/wp-content/uploads/2024/01/By-Elikplim-Kwabla-APETORGBOR-Dr.jpg?resize=500%2C330&ssl=1)
The CEO of Independent Power Producers (IPPs), Dr. Erikpurim Kwabla Apetlubolu, has indicated that electricity prices will increase with the implementation of the emission tax that came into effect on February 1, 2024.
In his analysis of the emissions tax of GH₵100 per tonne of carbon dioxide (CO2), he said the tax would lead to an increase in the cost of electricity generation, or cost per kilowatt hour (kWh), resulting in lower prices for consumers. warned that the price would rise. .
“Any change in legislation that affects the cost of electricity generation will necessarily have a consequential impact on end users through tariffs.
“Therefore, it is important that our decision-makers anticipate the impact of the economic impact before enacting such legislation,” he advised.
The amount of carbon dioxide (CO2) emitted by a 1MW gas-fired power plant depends on several factors, including the efficiency of the power plant, the type of gas used (usually natural gas), and the operating load of the power plant. Masu. He explained that a 1 MW natural gas-fired power plant operating at 50 percent efficiency emits approximately 362 kg of CO2 for every megawatt hour (MWh) of electricity produced.
He argued that applying a GH₵100 per tonne CO2 levy would therefore increase the cost per kWh for energy consumers by around GH₵0.0362, a figure that resonates across the energy landscape.
Considering that the emissions tax per kg of CO2 is GH₵100 per 1,000 kg (or 0.1 GH₵/kg), the tax on 362 kg of CO2 is equivalent to 1 MWh of electricity generated. He said it will be GH₵36.2. Content included in the amount of natural gas required for 1MWh.
He also said that the per kWh levy, or additional cost per kWh, converted to a consumer unit is GH₵0.0362, calculated as GH₵36.2/1,000kWh.
However, he emphasized the simplifications inherent in these calculations and cautioned that they were based on average values of a large number of variables. He notes that actual emissions and costs can vary significantly based on the specific characteristics of the power plant, the quality of the natural gas used, and operational efficiency.
Dr. Apetlubolu also shared the formula for determining annual CO2 emissions, which shows how much CO2 a gas-fired power plant emits each year. “Assuming the plant operates at full capacity 24 hours per day per year (equivalent to 8,760 hours per year) and using an approximate natural gas emission factor of 0.231 kg CO2/kWh, multiply the output by the megawatt. (MW ) in hours per year (8,760) and an emission factor of 0.231 kg CO2/kWh.”
Meanwhile, the Chamber of Commerce said in an earlier statement that under the Power Purchase Agreement (PPA), the bill is a “political risk (cost escalation event) that is mitigated by cost escalation provisions within the agreement, suggesting a pass-through mechanism.” “I’m in trouble,” he lamented. The economic impact is on the end user. ”
According to Dr. Apetlubolu, changes in the law that impose legal obligations on power producers could increase the cost of electricity generation. He said that, like the downstream oil sector, power plant management and operations are cost-sensitive.
“Specifically, this levy will be added to the accumulated operating costs of power plants,” he said, adding that “the implementation of the Emissions Tax Act in 2023 will ensure predictability of emissions. In order to do so, power generation charges will also need to be reviewed using the same standards.” Improve cash flow for power producers. ”
He said that this adjustment is essential to cover the increase in operational costs caused by the imposition of the Emissions Tax Act 2023 (Act 1112), in order to ensure the reliability and sustainability of operations.