Depreciating currency impacts on local-scale energy system planning: The case study of Accra, Ghana
Mashael Yazdanie, Prince Boakye Frimpong, John Bosco Dramani, Kristina Orehounig
Abstract
Currency depreciation poses challenges to long-term sustainable energy planning, particularly in the context of developing nations and cities. Yet, energy system models typically fail to assess the impacts of currency depreciation on sustainability strategies. This study employs a cost optimization model of Accra, Ghana (developed using OSeMOSYS) to evaluate a range of depreciation scenarios and their effects on local energy system planning. We find that investments in renewable energy technologies (RETs) (PV and wind energy) are significantly impacted in terms of scale of deployment, technology type, and timing, depending on the depreciation scenario. PV investments are reduced by up to 80% compared to a base case scenario, and total CO2 emissions increase by up to 65% due to reduced RET investment. Total system costs increase by a factor of three in a worst-case scenario. However, waste energy power plants appear to be a robust investment decision for Accra under the evaluated scenarios. Overall, this study demonstrates the importance of considering currency depreciation in long-term planning processes. Energy system optimization models can serve as a valuable tool in understanding depreciation impacts on investment decisions and local sustainability targets, and should be harnessed to support resilient energy system planning, especially in developing economies.