Efficiency of household electricity consumption in Ghana

Abstract

One explanation that can be associated with the inadequate focus on demand-side management of household electricity consumption is the poor knowledge on consumption inefficiency. This study estimates the efficiency of Ghanaian households’ electricity consumption and factors influencing inefficiency using the energy demand frontier model and data from the seventh round of the Ghana Living Standards Survey. The results indicate that income is inelastic to electricity demand while price elasticity to demand is inversely related. Appliance ownership, number of rooms, location and ecological zones significantly affected electricity demand. The mean efficiency score is 63.0% for the entire sample and, 69.9% and 66.3% for rural and urban households respectively, suggesting the existence of an immense potential for implementation of energy efficiency measures. Factors that negatively influence efficiency included education, ageing and power outages. Households living in bungalows and apartments are less efficient compared to those in compound houses possibly because of selfmonitoring behaviour. Compared to very poor households, poor and non-poor households are less efficient in electricity consumption while public sector employees are less energy efficient compared to the unemployed. Policy choices should focus on standardization of appliances, education on energy efficiency and development of the rural appliance markets through incentives.