Demand for grid electricity falls in Ghana as consumers switch to renewables

Due to the adverse effects that power crisis has on economic agents, successive experiences of power crisis lead them to find long-term alternatives to reduce the impact of future power crisis. The switch to other alternatives has a potential financial impact on electricity consumers, especially for those switching to renewables such as solar energy whose costs continue to significantly decline.

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Recurring supply crises in Ghana electricity over an extended period have driven consumers to turn to alternative sources of energy. In turn, this resulted in a sharp decline in demand for electricity.

Recurring supply crises in Ghana electricity over an extended period have driven consumers to turn to alternative sources of energy. In turn, this resulted in a sharp decline in demand for electricity.

Ghana has had several periods of power shortfalls, particularly in 1984, 1994, 1998, 2007 and 2012-2015. The reasons have been given as losses in the distribution system, a tariff structure that makes it difficult for electricity producers to recover their costs, and the non-payment of electricity bills by consumers.

Demand is always expected to increase due to factors like population growth, economic growth and increasing incomes. But demand can fall too. In Ghana, electricity demand or consumption increased  from 10,583 gigawatt hours in 2013 to 10,695 gigawatt hours in 2014 but fell to 9,685 gigawatt hours in 2015.

Ghana’s electricity supply fell by 12% in the period 2013-2015. In the same period, electricity demand declined by 8.49%. Demand from residential consumers fell the most: by 20.39%.

A study co-researched and published by Frank Adusah-Poku, a lecturer in the Department of Economics of the Kwame Nkrumah University of Science and Technology,  looked at the association between power crises and Ghana electricity demand.

It used data from 1980 to 2018 and in particular, the severe power crisis of 2012–2015. It found that power crises are sometimes followed by a fall in demand for electricity from the grid. Consumers appear to reconsider their sources of energy.

The study results showed that the short term effects were smaller than the long-term effects. This suggests that the adverse impact of the crisis was so severe that economic agents did not respond only in the short term but also in the long term. This indicates that the over reliance on grid electricity was reduced forcing economic agents to resort to other alternatives.

BuyAfriQue – because Africa matters – available on the Apple IOS and Google Playstore: Due to the adverse effects that power crisis has on economic agents, successive experiences of power crisis lead them to find long-term alternatives to reduce the impact of future power crisis. The switch to other alternatives has a potential financial impact on electricity consumers, especially for those switching to renewables such as solar energy whose costs continue to significantly decline.

Due to the adverse effects that power crisis has on economic agents, successive experiences of power crisis lead them to find long-term alternatives to reduce the impact of future power crisis. The switch to other alternatives has a potential financial impact on electricity consumers, especially for those switching to renewables such as solar energy whose costs continue to significantly decline.

The study provides evidence for the need to pay equal attention to supply side policies. Over the years, Ghana has paid more attention to the demand side of Ghana electricity.

The 2012-2015 power crisis was the most intense and protracted in the history of Ghana. It started with inadequate gas supply to power thermal plants and inability to supply electricity from hydro sources due to poor rainfall. At the end of 2011, Ghana’s electricity generation mix stood at 67% hydro sources against 33% thermal.

In 2012, the utility companies announced a power rationing programme which ended in 2015. At the peak of the rationing, customers were provided with an average of 12.5 hours of electricity every three days. Ghana experienced about 159 days of blackout in 2014 alone. To add to that, equipment failures sometimes caused unscheduled power outages.

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