Analysis of energy efficiency practices of SMEs in rural Ghana: an application of product generational dematerialization method

Abstract

Energy is a key input in industrial production, education and health, and is one of the main drivers of economic growth in developing economies. However, expanding energy access in the rural areas is one of the key challenges faced by policy makers in developing countries such as Ghana. In this regard, small and medium-sized enterprises (SMEs) in developing countries face the hydra-headed challenges of energy access, power outages, access to finance and access to market. In some cases, whilst energy efficiency appears to be improving at the national level, the story at the rural areas are different due to overdependence on biomass and other traditional forms of energy and relatively low access compared to urban areas. This research is structured in three steps. In the first step, the PGD method is applied to examine the energy efficiency consumption of electricity and fossil fuels. In a second step, the energy efficiency practices of small and medium scale enterprises are investigated. In a third step, the general unrestricted model (GUM) is employed to investigate the relationship between energy efficiency, productivity and carbon emissions. The key findings of the study i) confirm that the consumption of energy has not been efficient, ii) show that the reduction in energy consumption among SMEs can be attributed mostly to blackouts and not efficiency, and iii) productivity is a major driver of energy efficiency. In a nutshell, the national analysis shows that improved productivity from more energy efficient technologies is not responsible for energy reduction. Rather, an analysis of the rural energy situation, shows that that blackouts render energy reductions unintentionally. Moreover, energy efficient practices are observed to be nearly non-existent within rural SMEs. The study recommends that public education on energy efficiency is increased and that new appliances rather than secondhand one are used to save energy.

Assessment of energy efficiency investment in Onitsha business cluster, Nigeria

“…The most significant variables discovered were firms that are innovative and export their products as well as those that are mindful of the environment. Ackah (2017) revealed that energy consumption by firms has been inefficient and the reduction in energy consumption witnessed in Ghana’s SMEs is engendered by blackouts and not efficiency.…”

“…The most significant variables discovered were firms that are innovative and export their products as well as those that are mindful of the environment. Ackah (2017) revealed that energy consumption by firms has been inefficient and the reduction in energy consumption witnessed in Ghana's SMEs is engendered by blackouts and not efficiency. Hassen et al (2018) applied a generalised-ordered probit model to data from 8,174 Ethiopian enterprises to investigate the predictors of EE technologies and practices adoption by MSMEs.…”