Household Electricity Consumption in Efficiency and Poverty: Evidence from Ghana

In Ghana, growth in electricity demand has largely been met through an increase in thermal generation leading to increases in local air pollutants, mainly greenhouse gas emissions. One way of improving the environmental performance of the electricity sector is to increase end-user efficiency. Unfortunately, very little is known about the level of energy efficiency together with factors that influence efficiency and how inefficiency deepens poverty.  In this work, we propose using the stochastic energy demand frontier model to estimate the energy inefficiency of Ghanaian households and the factors that influence inefficiency using primary household survey data.  We then calculate the expenditure-equivalent measure of lost consumption and inefficiency, and analysis their relationship with both consumption and multidimensional poverty. The findings will help policymakers strengthen the development and implementation of energy efficiency measures, support the introduction of energy efficiency policy choices on grounds of poverty reduction, increase awareness on potential improvements in electricity consumption efficiency and resulting welfare improvements and encourage the transitioning to improved energy efficiency among households.  The outcome of the research will support policy choices on demand-side management of electricity through efficiency improvement and poverty reduction.