China’s Electricity Market Reform and Power Plants Efficiency

In the past three decades, Chinese electricity industry has experienced a series of regulatory reforms serving different purposes at different stages. In 2002, the former vertically integrated electricity utility - the State Power Corporation (SPC) – was divested and the generation sector was separated from the transmission and distribution networks in an effort to improve production efficiency. In this paper we study the impact of the reform on efficiency of fossil-fired power plants using plant-level data during 2000-2008. Our results from the data envelopment analysis (DEA) and panel regressions show that: 1) the total factor productivity (TFP) growth mainly comes from technological change; 2) the technical efficiency of previously SPC-managed power plants is converging to that of better-performing independent power producers (IPPs); 3) capacity utilization and unit size are significant factors affecting changes in technical efficiency and the pattern of converging technical efficiency between the two kinds of power plants; 4) most plants operate at increasing returns to scale indicating further cost savings could be achieved through increasing output.


Issue Date:
Nov 07 2011
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/117811
Total Pages:
21
JEL Codes:
D24; L11; L51; L94; L98
Series Statement:
Working Paper
WP1125




 Record created 2017-04-01, last modified 2017-08-26

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