IDEAS home Printed from https://ideas.repec.org/a/eee/energy/v114y2016icp734-741.html
   My bibliography  Save this article

Have market-oriented reforms improved the electricity generation efficiency of China's thermal power industry? An empirical analysis

Author

Listed:
  • Meng, Ming
  • Mander, Sarah
  • Zhao, Xiaoli
  • Niu, Dongxiao

Abstract

In 2003, China implemented market-oriented reforms to its electric power industry, aimed at improving the generation efficiency of its thermal power plants. In this paper, we use the polynomial functions, PLS (partial least squares) algorithm, and generation efficiency data from 1993 to 2012 to evaluate the effect of these reforms. Empirical analysis shows that the reforms caused a sudden down shift of 0.142 kW h per kg SCE (standard coal equivalent) to the “natural” generation efficiency curve of the thermal power industry, resulting in 555.8 million tons of SCE of wasted fossil energy during 2003–2012. This was mainly due to the non-implementation of electricity price bidding. To improve the generation efficiency of the thermal power plants, market competition should be further introduced into China's electric power industry as a matter of urgency. The major policy adjustment directions include: a) Electricity price bidding should be promoted by sub-region according to the unified trading rules designed by the central government; b) Over-the-counter transaction should be permitted; as well as c) Dynamic incentive mechanisms for renewable energy development should be established.

Suggested Citation

  • Meng, Ming & Mander, Sarah & Zhao, Xiaoli & Niu, Dongxiao, 2016. "Have market-oriented reforms improved the electricity generation efficiency of China's thermal power industry? An empirical analysis," Energy, Elsevier, vol. 114(C), pages 734-741.
    • Handle: RePEc:eee:energy:v:114:y:2016:i:c:p:734-741
    DOI: 10.1016/j.energy.2016.08.054
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0360544216311677
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.energy.2016.08.054?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Du, Limin & Mao, Jie & Shi, Jinchuan, 2009. "Assessing the impact of regulatory reforms on China's electricity generation industry," Energy Policy, Elsevier, vol. 37(2), pages 712-720, February.
    2. Shahbaz, Muhammad & Lean, Hooi Hooi, 2012. "The dynamics of electricity consumption and economic growth: A revisit study of their causality in Pakistan," Energy, Elsevier, vol. 39(1), pages 146-153.
    3. Huang, Lei & Chen, Yucheng & Liu, Geng & Li, Shengnan & Liu, Yun & Gao, Xu, 2015. "Non-isothermal pyrolysis characteristics of giant reed (Arundo donax L.) using thermogravimetric analysis," Energy, Elsevier, vol. 87(C), pages 31-40.
    4. Zhao, Xiaoli & Ma, Chunbo, 2013. "Deregulation, vertical unbundling and the performance of China's large coal-fired power plants," Energy Economics, Elsevier, vol. 40(C), pages 474-483.
    5. Bry, X. & Trottier, C. & Verron, T. & Mortier, F., 2013. "Supervised component generalized linear regression using a PLS-extension of the Fisher scoring algorithm," Journal of Multivariate Analysis, Elsevier, vol. 119(C), pages 47-60.
    6. Liu, Lanbin & Fu, Lin & Jiang, Yi & Guo, Shan, 2011. "Major issues and solutions in the heat-metering reform in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(1), pages 673-680, January.
    7. Wang, Qiang & Chen, Xi, 2012. "China's electricity market-oriented reform: From an absolute to a relative monopoly," Energy Policy, Elsevier, vol. 51(C), pages 143-148.
    8. Huber, Matthias & Weissbart, Christoph, 2015. "On the optimal mix of wind and solar generation in the future Chinese power system," Energy, Elsevier, vol. 90(P1), pages 235-243.
    9. Hamdi, Helmi & Sbia, Rashid & Shahbaz, Muhammad, 2014. "The nexus between electricity consumption and economic growth in Bahrain," Economic Modelling, Elsevier, vol. 38(C), pages 227-237.
    10. Du, Limin & He, Yanan & Yan, Jianye, 2013. "The effects of electricity reforms on productivity and efficiency of China's fossil-fired power plants: An empirical analysis," Energy Economics, Elsevier, vol. 40(C), pages 804-812.
    11. Boomsma, Trine Krogh & Linnerud, Kristin, 2015. "Market and policy risk under different renewable electricity support schemes," Energy, Elsevier, vol. 89(C), pages 435-448.
    12. Mou, Dunguo, 2014. "Understanding China’s electricity market reform from the perspective of the coal-fired power disparity," Energy Policy, Elsevier, vol. 74(C), pages 224-234.
    13. Kahrl, Fredrich & Williams, James H. & Hu, Junfeng, 2013. "The political economy of electricity dispatch reform in China," Energy Policy, Elsevier, vol. 53(C), pages 361-369.
    14. Ngan, H.W., 2010. "Electricity regulation and electricity market reforms in China," Energy Policy, Elsevier, vol. 38(5), pages 2142-2148, May.
    15. Wolde-Rufael, Yemane, 2014. "Electricity consumption and economic growth in transition countries: A revisit using bootstrap panel Granger causality analysis," Energy Economics, Elsevier, vol. 44(C), pages 325-330.
    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. He, Y.X. & Jiao, J. & Chen, R.J. & Shu, H., 2018. "The optimization of Chinese power grid investment based on transmission and distribution tariff policy: A system dynamics approach," Energy Policy, Elsevier, vol. 113(C), pages 112-122.
    2. Jiajia Zheng & Pengfei Sheng, 2017. "The Impact of Foreign Direct Investment (FDI) on the Environment: Market Perspectives and Evidence from China," Economies, MDPI, vol. 5(1), pages 1-15, March.
    3. Bai-Chen Xie & Jie Gao & Shuang Zhang & ZhongXiang Zhang, 2017. "What Factors Affect the Competiveness of Power Generation Sector in China? An Analysis Based on Game Cross-efficiency," Working Papers 2017.12, Fondazione Eni Enrico Mattei.
    4. Jiang, Jingjing & Ye, Bin & Liu, Junguo, 2019. "Peak of CO2 emissions in various sectors and provinces of China: Recent progress and avenues for further research," Renewable and Sustainable Energy Reviews, Elsevier, vol. 112(C), pages 813-833.
    5. Ye Fan & Zhicheng Zhang & Xiaoli Zhao & Haitao Yin, 2018. "Interaction between Industrial Policy and Stock Price Volatility: Evidence from China’s Power Market Reform," Sustainability, MDPI, vol. 10(6), pages 1-19, May.
    6. Corsatea, Teodora Diana & Giaccaria, Sergio, 2018. "Market regulation and environmental productivity changes in the electricity and gas sector of 13 observed EU countries," Energy, Elsevier, vol. 164(C), pages 1286-1297.
    7. Lin, Boqiang & Xie, Yongjing, 2022. "Analysis on operational efficiency and its influencing factors of China’s nuclear power plants," Energy, Elsevier, vol. 261(PA).
    8. Cheng, Shulei & Wu, Yinyin & Chen, Hua & Chen, Jiandong & Song, Malin & Hou, Wenxuan, 2019. "Determinants of changes in electricity generation intensity among different power sectors," Energy Policy, Elsevier, vol. 130(C), pages 389-408.
    9. Ju, Liwei & Wu, Jing & Lin, Hongyu & Tan, Qinliang & Li, Gen & Tan, Zhongfu & Li, Jiayu, 2020. "Robust purchase and sale transactions optimization strategy for electricity retailers with energy storage system considering two-stage demand response," Applied Energy, Elsevier, vol. 271(C).
    10. Liu, Yang & Jiang, Zhigao & Guo, Bowei, 2022. "Assessing China’s provincial electricity spot market pilot operations: Lessons from Guangdong province," Energy Policy, Elsevier, vol. 164(C).
    11. Sun, Kege & Wu, Libo, 2020. "Efficiency distortion of the power generation sector under the dual regulation of price and quantity in China," Energy Economics, Elsevier, vol. 86(C).
    12. Liu, Benxi & Liao, Shengli & Cheng, Chuntian & Chen, Fu & Li, Weidong, 2018. "Hydropower curtailment in Yunnan Province, southwestern China: Constraint analysis and suggestions," Renewable Energy, Elsevier, vol. 121(C), pages 700-711.
    13. Liu, Y. & Jiang, Z. & Guo, B., 2021. "Assessing China's Provincial Electricity Spot Market Pilot Operations: Lessons from the Guangdong Province," Cambridge Working Papers in Economics 2165, Faculty of Economics, University of Cambridge.
    14. Gao, Kang & Yuan, Yijun, 2022. "Does market-oriented reform make the industrial sector “Greener” in China? Fresh evidence from the perspective of capital-labor-energy market distortions," Energy, Elsevier, vol. 254(PA).
    15. Li, T. & Gao, C. & Pollitt, M. & Chen, T. & Ming H., 2022. "Measuring the effects of power system reform in Jiangsu province, China from the perspective of Social Cost Benefit Analysis," Cambridge Working Papers in Economics 2247, Faculty of Economics, University of Cambridge.
    16. Ding, Qingguo & Wang, Jianxiao & Zhang, Bing & Yu, Yang, 2023. "Economic burden of China's fairness regulations on power generation sector," Energy, Elsevier, vol. 278(C).
    17. Jia, Zhijie & Lin, Boqiang & Wen, Shiyan, 2022. "Electricity market Reform: The perspective of price regulation and carbon neutrality," Applied Energy, Elsevier, vol. 328(C).
    18. Lu, Shenghua & Wang, Hui, 2022. "Market-oriented reform and land use efficiency: Evidence from a regression discontinuity design," Land Use Policy, Elsevier, vol. 115(C).
    19. Li, Feng & Zhang, Danlu & Zhang, Jinyu & Kou, Gang, 2022. "Measuring the energy production and utilization efficiency of Chinese thermal power industry with the fixed-sum carbon emission constraint," International Journal of Production Economics, Elsevier, vol. 252(C).
    20. Peng, Xu & Tao, Xiaoma, 2018. "Cooperative game of electricity retailers in China's spot electricity market," Energy, Elsevier, vol. 145(C), pages 152-170.
    21. Xuecheng Wang & Xu Tang & Baosheng Zhang & Benjamin C. McLellan & Yang Lv, 2018. "Provincial Carbon Emissions Reduction Allocation Plan in China Based on Consumption Perspective," Sustainability, MDPI, vol. 10(5), pages 1-23, April.
    22. Xie, Bai-Chen & Gao, Jie & Zhang, Shuang & Pang, Rui-Zhi & Zhang, ZhongXiang, 2018. "The environmental efficiency analysis of China’s power generation sector based on game cross-efficiency approach," Structural Change and Economic Dynamics, Elsevier, vol. 46(C), pages 126-135.

    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. Liu, Shuangquan & Yang, Qiang & Cai, Huaxiang & Yan, Minghui & Zhang, Maolin & Wu, Dianning & Xie, Mengfei, 2019. "Market reform of Yunnan electricity in southwestern China: Practice, challenges and implications," Renewable and Sustainable Energy Reviews, Elsevier, vol. 113(C), pages 1-1.
    2. Zeng, Ming & Yang, Yongqi & Wang, Lihua & Sun, Jinghui, 2016. "The power industry reform in China 2015: Policies, evaluations and solutions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 57(C), pages 94-110.
    3. Cheng, Chuntian & Chen, Fu & Li, Gang & Ristić, Bora & Mirchi, Ali & Qiyu, Tu & Madani, Kaveh, 2018. "Reform and renewables in China: The architecture of Yunnan's hydropower dominated electricity market," Renewable and Sustainable Energy Reviews, Elsevier, vol. 94(C), pages 682-693.
    4. Liu, HuiHui & Zhang, ZhongXiang & Chen, Zhan-Ming & Dou, DeSheng, 2019. "The impact of China's electricity price deregulation on coal and power industries: Two-stage game modeling," Energy Policy, Elsevier, vol. 134(C).
    5. Wei Shang & Guifen Pei & Conor Walsh & Ming Meng & Xiangsong Meng, 2016. "Have Market-oriented Reforms Decoupled China’s CO 2 Emissions from Total Electricity Generation? An Empirical Analysis," Sustainability, MDPI, vol. 8(5), pages 1-12, May.
    6. Bai-Chen Xie & Jie Gao & Shuang Zhang & ZhongXiang Zhang, 2017. "What Factors Affect the Competiveness of Power Generation Sector in China? An Analysis Based on Game Cross-efficiency," Working Papers 2017.12, Fondazione Eni Enrico Mattei.
    7. Chen, Hao & Cui, Jian & Song, Feng & Jiang, Zhigao, 2022. "Evaluating the impacts of reforming and integrating China's electricity sector," Energy Economics, Elsevier, vol. 108(C).
    8. Zhang, Chi & Zhou, Kaile & Yang, Shanlin & Shao, Zhen, 2017. "On electricity consumption and economic growth in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 76(C), pages 353-368.
    9. HuiHui Liu & ZhongXiang Zhang & ZhanMing Chen & DeSheng Dou, 2018. "The Impact of China’s Electricity Deregulation on Coal and Power Industries: Two-stage Game Modeling Approach," Working Papers 2018.17, Fondazione Eni Enrico Mattei.
    10. Wu, Wei & Lin, Boqiang, 2018. "Application value of energy storage in power grid: A special case of China electricity market," Energy, Elsevier, vol. 165(PB), pages 1191-1199.
    11. Liu, Xiao-Yan & Pollitt, Michael G. & Xie, Bai-Chen & Liu, Li-Qiu, 2019. "Does environmental heterogeneity affect the productive efficiency of grid utilities in China?," Energy Economics, Elsevier, vol. 83(C), pages 333-344.
    12. Chen, Zhongfei & Barros, Carlos Pestana & Borges, Maria Rosa, 2015. "A Bayesian stochastic frontier analysis of Chinese fossil-fuel electricity generation companies," Energy Economics, Elsevier, vol. 48(C), pages 136-144.
    13. Li, Gao & Ruonan, Li & Yingdan, Mei & Xiaoli, Zhao, 2022. "Improve technical efficiency of China's coal-fired power enterprises: Taking a coal-fired-withdrawl context," Energy, Elsevier, vol. 252(C).
    14. Osman, Mohamed & Gachino, Geoffrey & Hoque, Ariful, 2016. "Electricity consumption and economic growth in the GCC countries: Panel data analysis," Energy Policy, Elsevier, vol. 98(C), pages 318-327.
    15. Dai, Xiaoyong & Cheng, Liwei, 2016. "Market distortions and aggregate productivity: Evidence from Chinese energy enterprises," Energy Policy, Elsevier, vol. 95(C), pages 304-313.
    16. Zhang, Ning & Jiang, Xue-Feng, 2019. "The effect of environmental policy on Chinese firm's green productivity and shadow price: A metafrontier input distance function approach," Technological Forecasting and Social Change, Elsevier, vol. 144(C), pages 129-136.
    17. Zeng, Ming & Yang, Yongqi & Fan, Qiannan & Liu, Yingxin & Zou, Zhuojun, 2015. "Coordination between clean energy generation and thermal power generation under the policy of “direct power-purchase for large users” in China," Utilities Policy, Elsevier, vol. 33(C), pages 10-22.
    18. He, Yiming & Fullerton, Thomas M. & Walke, Adam G., 2017. "Electricity consumption and metropolitan economic performance in Guangzhou: 1950–2013," Energy Economics, Elsevier, vol. 63(C), pages 154-160.
    19. Tomas Baležentis & Dalia Štreimikienė, 2019. "Sustainability in the Electricity Sector through Advanced Technologies: Energy Mix Transition and Smart Grid Technology in China," Energies, MDPI, vol. 12(6), pages 1-21, March.
    20. Du, Limin & He, Yanan & Yan, Jianye, 2013. "The effects of electricity reforms on productivity and efficiency of China's fossil-fired power plants: An empirical analysis," Energy Economics, Elsevier, vol. 40(C), pages 804-812.

    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:eee:energy:v:114:y:2016:i:c:p:734-741. 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: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/energy .

    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.