An analysis of industrial sector demand for electricity in Ghana

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Demand for Electricity in Ghana far exceeds the supply and is perhaps the greatest infrastructure problem confronting the industrial sector which contributes immensely to economic growth. A typical Ghanaian industry experiences power failure or voltage fluctuations about 5 times per week each lasting for about twelve hours without prior warning. The study used partial adjustment model approach to analyze industrial sector demand for electricity in Ghana and the definition for electricity intensity that is electricity consumed in the industrial sector divided by gross domestic product. The study used data from 1971 to 2013 to calculate the model. From the estimation, industrial value added is positive and significant at 1% significance level. In both the short run and long run there is a positive relationship between industrial value added and industrial electricity demand. The elasticity of petrol price in both the short run and long run is statistically significant in the partial adjustment model. Hence an increase in petrol price will make customers move to the use of electricity. Energy intensity is significant and is positive in both the short run and long run and can be used for policy purposes in the country in both the short run and long run. Policy should aim at increasing the efficiency level of the industries by using good machines and appliances at the work place. Policy can also be directed towards following the standards of Environmental Protection Agency especially using appliances with approved labels.
A thesis submitted to The Department of Economics in partial fulfilment of the requirement for the award of the degree of Master of Science in Economics, 2016