Effectiveness of a Power Factor Correction Policy in Improving the Energy Efficiency of Large-Scale Electricity Users in Ghana

Samuel Lotsu, Yuichiro Yoshida, Katsufumi Fukuda and Bing He
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Samuel Lotsu: Akosombo Hydro Station, Hydro Generation Department, Volta River Authority, 28 February Road, Accra GA-145-7445, Ghana
Katsufumi Fukuda: Center for Far Eastern Studies, University of Toyama, 3190 Gofuku, Toyama 930-8555, Japan

Energies, 2019, vol. 12, issue 13, 1-11

Abstract: Confronting an energy crisis, the government of Ghana enacted a power factor correction policy in 1995. The policy imposes a penalty on large-scale electricity users, namely, special load tariff (SLT) customers of the Electricity Company of Ghana (ECG), whose power factor is below 90%. This paper investigates the impact of this policy on these firms’ power factor improvement by using panel data from 183 SLT customers from 1994 to 1997 and from 2012. To avoid potential endogeneity, this paper adopts a regression discontinuity design (RDD) with the power factor of the firms in the previous year as a running variable, with its cutoff set at the penalty threshold. The result shows that these large-scale electricity users who face the penalty because their power factor falls just short of the threshold are more likely to improve their power factor in the subsequent year, implying that the power factor correction policy implemented by Ghana’s government is effective.

Keywords: energy efficiency; power factor; regression discontinuity design (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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