ENERGY DEMAND IN GHANA: A CASE STUDY OF THE ELECTRICITY SUBSECTOR
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Date
2011-06-06
Authors
ADOM, PHILIP KOFI
Journal Title
Journal ISSN
Volume Title
Publisher
University of Ghana , Legon
Abstract
In spite of the policy relevance associated with identifying the factors that affect
electricity demand and quantifying their effects, there is still a dearth of research
analysing aggregate electricity demand in developing countries. Even with the few
studies that exist in the literature, the focal countries have been in Asia and the Middle
East leaving a gap for Sub-Saharan Africa and Ghana in particular. In Ghana, efforts
have been made (see Constantine et al, 1999 & Buskirk et al, 2006) to fill this gap.
However, the focus of these studies has been on the household sector. The main focus
of this work is, therefore, to forecast domestic electricity consumption specifically
identifying what factors affect aggregate domestic consumption and assessing their
impact using the ARDL Bounds Cointegration from 1975 to 2008. Also using data on
Ghana I test the energy (electricity) conservation hypothesis using the Toda and
Yomamoto Granger Causality test. The Bounds cointegration test shows evidence of a
long-run equilibrium relationship implying that real per capita GDP, industrial
efficiency, structural changes, and degree of urbanisation can be treated as the “longrun forcing variables” explaining total domestic electricity consumption. In the longrun, real per capita GDP, industrial efficiency, degree of urbanisation, and structural
changes in the economy were found to be the main determinants of aggregate
domestic electricity demand in Ghana while in the short-run all factors with the
exception of structural changes in the economy were found to significantly impact on
electricity demand. Aggregate domestic electricity demand is predicted to increase
from 7,324 GWh in 2009 to 21,974 GWh in 2019 which represents an annual average
growth rate of 11.8 percent. Based on the projected growth in electricity consumption,
the total required plant capacity increase is projected to be 1,419 MW which
represents an increase of 60% above the 2010 figure. This result implies that thermal
generation as a percentage of total installed capacity is predicted to increase from the
current 40% to 58% by 2019. Also I found evidence in support of the energy
(electricity) conservation hypothesis for Ghana. The result shows that only industrial
efficiency drives electricity consumption downwards. Based on this I suggest the
development and intensification of the country‟s energy efficiency programs.
Specifically proprietary electricity efficiency technologies and processes that have
significant electricity-savings potential should be identified systematically. Also
options should be provided to facilitate the deployment of such technologies in the
industrial sector