Utilities post record revenues after price hikes

From the newsletter

Ghana’s power utility, Electricity Company of Ghana (ECG), generated approximately $155 million in revenue during the first six months of 2025. This represents a 36% increase compared to the same period in 2024. The revenue increase follows significant tariff hikes, including a 14% increase in May 2025 and a further 2% increase in July 2025.

• ECG, like many African utilities, continues to struggle to meet the country’s electricity demand. Ghana aims for a 90% national electrification rate by the end of 2025, yet power supply remains inconsistent and unreliable for many consumers. 

• At the same time, renewable energy technologies are becoming far more affordable. According to Ember Data, solar panel prices have fallen from $0.35/Watt in 2017 to $0.09/Watt in 2025, a nearly fourfold decrease over eight years.

More details

• The Public Utilities Regulatory Commission (PURC) of Ghana adjusts tariffs quarterly to reflect inflation, exchange rates, and generation costs, aiming to keep utilities financially viable. The recent tariff hikes have helped ECG improve cash flow, which is crucial as Ghana plans to repay a $2.5 billion debt owed to independent power producers (IPPs).

• Similar revenue improvements are observed elsewhere in Africa. Kenya Power reported a net profit of around $2.5 million in the first half of 2025, continuing its stretch of profit-making since the tariff hike in 2023. Utilities in countries like South Africa, Namibia and Nigeria have also posted revenue gains, often following tariff adjustments.

• The increased revenues collected by these utilities offer an opportunity to accelerate electrification through renewables. Investing in solar, wind, and battery storage can expand access, reduce dependence on costly fossil fuels, and improve supply reliability. This shift aligns with Africa’s abundant renewable resources and global climate commitments, making it a smart long-term move for utilities and governments alike.

• Leading utilities are beginning to diversify their portfolios by investing in renewables. South Africa’s Eskom and Kenya’s KenGen are notable examples. KenGen plans to enter into commercial and industrial solar. Eskom is establishing a separate, independent renewable energy subsidiary to accelerate the deployment of renewable energy solutions in South Africa.

• However, before fully committing to renewables, utilities must consider grid integration challenges. Renewables like solar and wind are intermittent and require grid upgrades and storage solutions to ensure a stable supply. They also need to consider financial risks. Large upfront capital investments and fluctuating policy environments can pose financial risks.

• Most importantly, utilities should consider competition. Utilities will compete with major private players such as Amea Power, Scatec, and Engie, who are aggressively pursuing utility-scale renewable projects across Africa. These companies often have access to international financing and specialised expertise, posing a competitive challenge to debt-burdened utilities seeking to expand in renewables.

Our take

• The shift from fossil fuel dependency by utility companies is very necessary for Africa’s energy future. Renewables offer more affordable, reliable, and sustainable electricity, which is critical for economic growth and climate goals.

• The most logical next step for utilities like ECG is to strategically reinvest increased revenues into grid modernisation and renewable energy projects, balancing immediate financial needs with long-term sustainability.

• Overall, African utilities' future depends on the ability to transform from traditional fossil-fuel-reliant entities into agile, renewable-focused power providers. This transition will require bold leadership, innovative financing, and collaboration with private sector players to meet the continent’s growing energy demands sustainably.