Understanding China’s electricity market reform from the perspective of the coal-fired power disparity

In China, electricity consumption has grown quickly, supply is highly dependent on coal-fired power, and the prices of electricity are determined by the government, which increases the need for reform to enhance efficiency. In response to disputes about China’s electricity market reform, this paper analyses the efficiency of China’s coal-fired power plants using the Data Envelopment Analysis—Slack Based Measure (DEA-SBM) method on three levels: groups, provinces, and plants. The results indicate that there are both coal-electricity efficiency disparities and generation-hour arrangement unfairness across groups; the disparity across provinces is obvious and long-lasting, as indicated by capacity surpluses and coal-electricity efficiencies; and the disparities are displayed in detail by the estimation at the plant level. The disparities are primarily caused by the generator combination and generation hour arrangement. Competition may be able to solve the disparities, but a further comparison indicates that competition at the national level will enhance the efficiency to a greater degree than competition at the regional level. These results demonstrate that both competition and a united electricity market are necessary for further electricity market reform.