The centralised data envelopment analysis model integrated with cost information and utility theory for power price setting under carbon peak strategy at the firm-level

The post-pandemic economic rebound has accelerated power demand. However, in a power generation system dominated thermal power plants, implementing the carbon peak strategy induces a contradiction between power supply and demand. This gives rise to the issues of the rational power allocation. To address this issue, based on enterprise micro-data, this study develops a model that allows power allocation across industrial enterprises to maximise their output. The ladder price is used for power redistribution seeking to ensure efficiency and fairness of the power allocation. Then, the utility theory is used to explore the effects of changes in the power use under different ladder prices. The paper relies on the unique dataset for Chinese enterprises. The results show that the proposed model renders power re-allocation among the enterprises (31 % of enterprises should reduce their power use, 32 % whereas should increase their power use by more than 50 %). By including the power cost in the model, significant differences were discovered between the optimal power use of three ladder price levels. This study provides recommendations for power allocation and the use of the ladder prices.