A Cost-Effectiveness Analysis of Power-Distribution Equipment in Ghana: A Difference-in-Differences Model (2000–2026)

{ "background": "The selection of power-distribution equipment in developing economies is often based on initial capital cost, with limited long-term cost-effectiveness analysis. This has led to suboptimal asset management and recurrent expenditure challenges within the sector.", "purpose and objectives": "This case study aims to develop and apply a rigorous methodological framework for evaluating the comparative cost-effectiveness of different power-distribution equipment systems, specifically transformers and switchgear, within a national utility context.", "methodology": "A quasi-experimental difference-in-differences (DiD) model is employed, analysing longitudinal cost data for equipment cohorts. The core model is $Y{it} = \\beta0 + \\beta1 \\text{Treat}i + \\beta2 \\text{Post}t + \\delta (\\text{Treat}i \\cdot \\text{Post}t) + \\epsilon{it}$, where $Y{it}$ is total cost of ownership. Inference is based on cluster-robust standard errors to account for serial correlation.", "findings": "The analysis indicates that modern amorphous-core transformers demonstrate a statistically significant reduction in total cost of ownership compared to conventional silicon-steel units. The DiD estimator, $\\delta$, is negative and significant at the 5% level, with a point estimate suggesting a net present cost reduction exceeding 15% over the evaluation period when operational and failure costs are incorporated.", "conclusion": "The applied DiD model provides a robust empirical framework for cost-effectiveness evaluation in infrastructure asset management, moving beyond simplistic capital cost comparisons.", "recommendations": "Utilities should adopt total cost of ownership models, informed by quasi-experimental methods, for procurement and asset planning. Regulatory frameworks should incentivise investments in equipment with higher initial cost but superior long-term economics.", "key words": "difference-in-differences, cost-effectiveness, distribution transformers, asset management, total cost of ownership, quasi-experimental design", "contribution statement": "This study provides a novel application of the