The Economic Integration of Wind Energy: An Analysis of the ECOWAS Subregion

This study evaluates the economic integration of wind energy in the Economic Community of West African States (ECOWAS) between 2010 and 2020. Wind energy is the energy source that can cost-effectively meet the energy needs of the sub-regions due to the theoretical and economic potential of the sub-regions. For this reason, the study uses data from the World Bank Development Indicators using Panel Vector Auto Regression to analyze the determinants underpinning the economic integration of wind energy. The Panel VAR estimate shows a significant direct link between fossil fuel consumption and private sector investment in renewable energy. This implies that the sub-region consumes a significant amount of fossil fuels, hence the need to increase clean energy investments to move the sub-region towards a low-carbon future. Another significant lag variable is the power consumption per capita in the subregion. Per capita electricity consumption in the sub-region is woefully insufficient. Therefore, wind energy can ensure access via the development of small community wind farms where the national power grid cannot be extended to. When assessing the economic justification of wind integration, the LCOE for wind power is 2.98 cents per kilowatt for the lowest cost scenario compared to nuclear power’s 2.26 per kilowatt hour. The FEVD shows that 13.4% of renewable energy investments are self-explanatory within the first and last periods. The FEVD for wind energy illustrates the short-term variance of 16.4 percent and increases to 51.1 percent in the following years after system shocks. This implies that the expansion of wind capacity in the sub-region is expected to increase in the long-term. This serves as a blueprint for integrating wind energy into the sub-region.