IDEAS home Printed from https://ideas.repec.org/a/aea/aecrev/v104y2014i5p586-90.html
   My bibliography  Save this article

Why Are Power Plants in India Less Efficient Than Power Plants in the United States?

Author

Listed:
  • Hei Sing (Ron) Chan
  • Maureen L. Cropper
  • Kabir Malik

Abstract

India's coal-fired generating capacity doubled between 1990 and 2010 and currently accounts for 70 percent of electricity produced. Despite this, thermal efficiency at state-owned coal-fired power plants in India is significantly lower than at plants in the United States. When matched on age and capacity, heat input per kWh was 8 percent higher at Indian plants between 1997 and 2009. This can only partly be explained by the lower heat content of Indian coal. Electricity sector restructuring in the United States improved thermal efficiency at investor-owned plants; however, electricity sector restructuring in India has yet to improve thermal efficiency at state-owned coal-fired power plants.

Suggested Citation

  • Hei Sing (Ron) Chan & Maureen L. Cropper & Kabir Malik, 2014. "Why Are Power Plants in India Less Efficient Than Power Plants in the United States?," American Economic Review, American Economic Association, vol. 104(5), pages 586-590, May.
    • Handle: RePEc:aea:aecrev:v:104:y:2014:i:5:p:586-90
    Note: DOI: 10.1257/aer.104.5.586
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.104.5.586
    Download Restriction: no
    File URL: http://www.aeaweb.org/aer/app/10405/P2014_1156_app.pdf
    Download Restriction: no
    File URL: http://www.aeaweb.org/aer/data/10405/P2014_1156_data.zip
    Download Restriction: no
    File URL: http://www.aeaweb.org/aer/ds/10405/P2014_1156_ds.zip
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    ---><---

    References listed on IDEAS

    as
    1. James B. Bushnell & Catherine Wolfram, 2009. "The Guy at the Controls: Labor Quality and Power Plant Efficiency," NBER Chapters, in: International Differences in the Business Practices and Productivity of Firms, pages 79-102, National Bureau of Economic Research, Inc.
    2. Chan, H. Ron & Fell, Harrison & Lange, Ian & Li, Shanjun, 2017. "Efficiency and environmental impacts of electricity restructuring on coal-fired power plants," Journal of Environmental Economics and Management, Elsevier, vol. 81(C), pages 1-18.
    3. Joshua Linn & Erin Mastrangelo & Dallas Burtraw, 2014. "Regulating Greenhouse Gases from Coal Power Plants under the Clean Air Act," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 1(1), pages 97-134.
    4. Kabir Malik & Maureen Cropper & Alexander Limonov & Anoop Singh, 2011. "Estimating the Impact of Restructuring on Electricity Generation Efficiency: The Case of the Indian Thermal Power Sector," NBER Working Papers 17383, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Li, Jianglong & Ho, Mun Sing, 2022. "Indirect cost of renewable energy: Insights from dispatching," Energy Economics, Elsevier, vol. 105(C).
    2. Gupta, Ridhima & Pelli, Martino, 2021. "Electrification and cooking fuel choice in rural India," World Development, Elsevier, vol. 146(C).
    3. Rakesh Kumar Jain & Surender Kumar, 2018. "Shadow price of CO2 emissions in Indian thermal power sector," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(4), pages 879-902, October.
    4. Nicholas Ryan, 2020. "Contract Enforcement and Productive Efficiency: Evidence From the Bidding and Renegotiation of Power Contracts in India," Econometrica, Econometric Society, vol. 88(2), pages 383-424, March.
    5. Sushama Murty & Resham Nagpal, "undated". "Measuring output-based technical efficiency of Indian coal-based thermal power plants: A by-production approach," Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi Discussion Papers 18-07, Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi, India.
    6. Nicholas Ryan, 2019. "Contract Enforcement and Productive Efficiency: Evidence from the Bidding and Renegotiation of Power Contracts in India," Cowles Foundation Discussion Papers 2164, Cowles Foundation for Research in Economics, Yale University.
    7. Chenxi Xiang & Xinye Zheng & Feng Song & Jiang Lin & Zhigao Jiang, 2023. "Assessing the roles of efficient market versus regulatory capture in China’s power market reform," Nature Energy, Nature, vol. 8(7), pages 747-757, July.
    8. Jitendra Narayan Biswal & Kamalakanta Muduli & Suchismita Satapathy & Devendra K. Yadav, 2019. "A TISM based study of SSCM enablers: an Indian coal- fired thermal power plant perspective," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 10(1), pages 126-141, February.
    9. Stefan Seifert, 2015. "Measuring Productivity When Technologies Are Heterogeneous: A Semi-Parametric Approach for Electricity Generation," Discussion Papers of DIW Berlin 1526, DIW Berlin, German Institute for Economic Research.
    10. Charles N. Mock & Rachel Nugent & Olive Kobusingye & Kirk R. Smith, 2017. "Disease Control Priorities, Third Edition," World Bank Publications - Books, The World Bank Group, number 28576, December.
    11. Liu, Hongxun & Gao, Jinfeng & Tian, Peng & Ma, Xiaoming & Meng, Guanfei & Yang, Jingnan & Li, Zhi, 2023. "The impact of environmental regulation on productivity with co-production of goods and bads," Energy Economics, Elsevier, vol. 125(C).
    12. Sudhir Mahadeo Bobde & Makoto Tanaka, 2020. "Structural Reforms and Technical Efficiency in the Indian Electricity Distribution Sector," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 37(02), pages 1-36, March.
    13. Kabir Malik, Maureen Cropper, Alexander Limonov and Anoop Singh, 2015. "The Impact of Electricity Sector Restructuring on Coal-fired Power Plants in India," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    14. Stephen O'Connell & Allan Collard-Wexler & Hunt Allcott, 2015. "How Do Electricity Shortages A\00ffect Production? Evidence from India," 2015 Meeting Papers 159, Society for Economic Dynamics.
    15. Hunt Allcott & Allan Collard-Wexler & Stephen D. O'Connell, 2016. "How Do Electricity Shortages Affect Industry? Evidence from India," American Economic Review, American Economic Association, vol. 106(3), pages 587-624, March.
    16. Maamoun, Nada & Chitkara, Puneet & Yang, Joonseok & Shrimali, Gireesh & Busby, Joshua & Shidore, Sarang & Jin, Yana & Urpelainen, Johannes, 2022. "Identifying coal plants for early retirement in India: A multidimensional analysis of technical, economic, and environmental factors," Applied Energy, Elsevier, vol. 312(C).
    17. Nicholas Ryan, 2019. "Contract Enforcement and Productive Efficiency: Evidence from the Bidding and Renegotiation of Power Contracts in India," Cowles Foundation Discussion Papers 2164R, Cowles Foundation for Research in Economics, Yale University, revised Jul 2019.
    18. Ghani, Ejaz & Goswami, Arti Grover & Kerr, William R., 2014. "Spatial dynamics of electricity usage in India," Policy Research Working Paper Series 7055, The World Bank.
    19. Nicholas Ryan, 2019. "Contract Enforcement and Productive Efficiency: Evidence from the Bidding and Renegotiation of Power Contracts in India," NBER Working Papers 25547, National Bureau of Economic Research, Inc.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Linn, Joshua & Muehlenbachs, Lucija, 2018. "The heterogeneous impacts of low natural gas prices on consumers and the environment," Journal of Environmental Economics and Management, Elsevier, vol. 89(C), pages 1-28.
    2. Linn, Joshua & Anna Muehlenbachs, Lucija & Wang, Yshuang, 2014. "How Do Natural Gas Prices Affect Electricity Consumers and the Environment?," RFF Working Paper Series dp-14-19, Resources for the Future.
    3. Doyle, Matthew & Fell, Harrison, 2018. "Fuel prices, restructuring, and natural gas plant operations," Resource and Energy Economics, Elsevier, vol. 52(C), pages 153-172.
    4. Ling Huang & Yishu Zhou, 2019. "Carbon Prices and Fuel Switching: A Quasi-experiment in Electricity Markets," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(1), pages 53-98, September.
    5. Zhou, Yishu & Huang, Ling, 2021. "How regional policies reduce carbon emissions in electricity markets: Fuel switching or emission leakage," Energy Economics, Elsevier, vol. 97(C).
    6. Matthew Doyle & Harrison Fell, 2016. "Fuel Prices, Restructuring, and Natural Gas Plant Operations," Working Papers 2016-03, Colorado School of Mines, Division of Economics and Business.
    7. Chan, H. Ron & Fell, Harrison & Lange, Ian & Li, Shanjun, 2017. "Efficiency and environmental impacts of electricity restructuring on coal-fired power plants," Journal of Environmental Economics and Management, Elsevier, vol. 81(C), pages 1-18.
    8. Chan, H. Ron & Zhou, Yichen Christy, 2021. "Regulatory spillover and climate co-benefits: Evidence from New Source Review lawsuits," Journal of Environmental Economics and Management, Elsevier, vol. 110(C).
    9. Corrado Di Maria & Ian A. Lange & Emiliya Lazarova, 2014. "A Look Upstream: Electricity Market Restructuring, Risk, Procurement Contracts and Efficiency," CESifo Working Paper Series 5124, CESifo.
    10. Karney, Daniel H., 2019. "Electricity market deregulation and environmental regulation: Evidence from U.S. nuclear power," Energy Economics, Elsevier, vol. 84(C).
    11. Chan, H. Ron & Chupp, B. Andrew & Cropper, Maureen L. & Muller, Nicholas Z., 2018. "The impact of trading on the costs and benefits of the Acid Rain Program," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 180-209.
    12. Germeshausen, Robert, 2018. "The European Union emissions trading scheme and fuel efficiency of fossil fuel power plants in Germany," ZEW Discussion Papers 18-007, ZEW - Leibniz Centre for European Economic Research.
    13. Tin Cheuk Leung & Kwok Ping Ping & Kevin K. Tsui, 2019. "What can deregulators deregulate? The case of electricity," Journal of Regulatory Economics, Springer, vol. 56(1), pages 1-32, August.
    14. LaPlue, Lawrence D., 2022. "Environmental consequences of natural gas wellhead pricing deregulation," Journal of Environmental Economics and Management, Elsevier, vol. 116(C).
    15. Harrison Fell & Daniel T. Kaffine, 2014. "A one-two punch: Joint effects of natural gas abundance and renewables on coal-fired power plants," Working Papers 2014-10, Colorado School of Mines, Division of Economics and Business.
    16. Andrea Lasagni & Annamaria Nifo & Gaetano Vecchione, 2015. "Firm Productivity And Institutional Quality: Evidence From Italian Industry," Journal of Regional Science, Wiley Blackwell, vol. 55(5), pages 774-800, November.
    17. Ma, Teng & Takeuchi, Kenji, 2020. "Cleaning up the air for the 2008 Beijing Olympic Games: Empirical study on China's thermal power sector," Resource and Energy Economics, Elsevier, vol. 60(C).
    18. T. Sivageerthi & Bathrinath Sankaranarayanan & Syed Mithun Ali & Ali AlArjani & Koppiahraj Karuppiah, 2022. "Modeling Challenges for Improving the Heat Rate Performance in a Thermal Power Plant: Implications for SDGs in Energy Supply Chains," Sustainability, MDPI, vol. 14(8), pages 1-19, April.
    19. Emerick, Kyle & Burke, Marshall & Maue, Casey, 2020. "Productivity dispersion and persistence among the world’s most numerous firms," CEPR Discussion Papers 14553, C.E.P.R. Discussion Papers.
    20. Nicholas Ryan, 2017. "The Competitive Effects of Transmission Infrastructure in the Indian Electricity Market," NBER Working Papers 23106, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:104:y:2014:i:5:p:586-90. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.