Estimating and forecasting suppressed electricity demand in Ghana under climate change, the informal economy and sector inefficiencies

Abstract

Suppressed demand arises from inadequate energy access, resulting in unmet basic needs. Therefore, this study investigates the impact of the informal economy, rising temperatures, and electricity transmission losses on suppressed demand in Ghana from 2000 to 2020, using a quantile autoregressive distributed lag (QARDL) approach. The study forecasts suppressed demand using Shared Socioeconomic Pathway (SSP) scenarios, offering insights for energy system planning. The results indicate that all the variables significantly affect suppressed demand in the mid-quantiles. Notably, transmission losses and growth of informal economy variables significantly impact suppressed demand within the 50th to 75th quantiles but have minimal impact before the 50th and after the 75th quantiles in the long run. Additionally, rising temperatures substantially increase suppressed demand by increasing electricity demand for cooling. All future scenarios project this growth trend will continue through 2050, albeit at varying rates. In the business-as-usual (BAU) case, suppressed demand is expected to steadily increase from 1782 MW in 2020 to 8636 MW in 2050. This trajectory aligns well with historical growth trends, which saw suppressed demand increase from 659 GWh to 1782 GWh between 2000 and 2020. SSP scenarios suggest that suppressed demand could grow substantially through 2050, driven by high losses and informal sector growth. Despite sustainable development narratives like SSP1, suppressed demand remains high without major grid and governance improvements. Comparing the results with past studies shows that our findings align with previous research but provide more nuanced insights by incorporating the effects of the informal economy and using advanced forecasting techniques. Practical policy implications include investing in green infrastructure, upgrading grid infrastructure, and formalising the informal economy to alleviate suppressed demand. These actions are critical for sustainable energy access and meeting future electricity needs effectively.

Keywords

• Suppressed demand
• Informal economy
• Transmission losses
• Climate change
• Developing countries