Abstract:
The wave of technological advancement has made electricity an indispensable input in an economy. It reigns at the center of households’ basic activities and productivity of industrial and service firms. Its supply in Ghana, like many other African countries has however, not been consistent over the years. This lays demand on policymakers from households and firms to increase the quantity supplied. In response to this, several thermal plants have been installed to augment the limited supply from the hydro sources. Policymakers have also implemented some demand-side measures to encourage efficiency, conservation and energy savings. However, little efforts have been made to estimate empirically how efficient households have been in their use of the limited supply. It is against this backdrop that this study was conducted, to obtain empirically the efficiency of households in their consumption of electricity in Ghana.
The stochastic demand frontier was employed and a mean efficiency of approximately 71% was obtained for households in Ghana. This indicates an immense opportunity for electricity energy savings through efficiency measures. A further locational disaggregated study revealed that the mean efficiency for rural and urban households are approximately 67% and 78% respectively. Though a direct comparison between these two locational areas was not the goal of the study, a significant difference can be noticed.
Among the factors that influence the level of inefficiency, it was obtained that, the years of appliances, the age of household head, dwelling types and house ownership status were significant. However, the educational qualification of the household head was not a significant determinant. Regarding the demand for electricity, the average price, income of households, appliance ownership, household size and ecological zones were found to impact the demand for electricity. Policy recommendations to help realize this opportunity was offered at the end of the study.
