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Efficiency and environmental impacts of electricity restructuring on coal-fired power plants

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Listed:
  • Chan, H. Ron
  • Fell, Harrison
  • Lange, Ian
  • Li, Shanjun

Abstract

We investigate the efficiency and environmental impacts of electricity market restructuring by examining changes in fuel efficiency, cost of coal purchases, and utilization among coal-fired power plants based on a panel data set from 1991 to 2005. Our study focuses exclusively on coal-fired power plants and uses panel data covering several years after implementation of restructuring. The estimation compares how investor-owned (IOs) plants in states with restructuring changed their behavior relative to IOs in states without. Our analysis finds that restructuring led to: (1) a 1.4 percent improvement in fuel efficiency, (2) an 8 percent decrease in unit cost of heat input, and (3) a lower capacity factor even after adjusting for cross-plant generation re-allocation due to cost reductions. The estimates imply that restructuring has led to nearly 15 percent savings in operating expenses and up to 7.5 percent emissions reduction among these plants.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:jeeman:v:81:y:2017:i:c:p:1-18
    DOI: 10.1016/j.jeem.2016.08.004
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    Cited by:

    1. 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.
    2. Chan, H. Ron & Chupp, B. Andrew & Cropper, Maureen & Muller, Nicholas Z., 2015. "The Net Benefits of the Acid Rain Program: What Can We Learn from the Grand Policy Experiment?," Discussion Papers dp-15-25, Resources For the Future.
    3. Corrado Di Maria & Ian Lange & Emiliya Lazarova, 2014. "A Look Upstream: Electricity Market Restructuring, Risk, Procurement Contracts and Efficiency," Working Papers 2014-12, Colorado School of Mines, Division of Economics and Business.
    4. Yin Chu & J. Scott Holladay & Jacob LaRiviere, 2017. "Opportunity Cost Pass-through from Fossil Fuel Market Prices to Procurement Costs of the U.S. Power Producers," Working Papers 2017-02, University of Tennessee, Department of Economics.
    5. Du, Limin & Hanley, Aoife & Rehdanz, Katrin, 2014. "China's CO2 emissions from power generating stations: A first exploration," Kiel Working Papers 1934, Kiel Institute for the World Economy (IfW).
    6. 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.
    7. repec:eee:resene:v:52:y:2018:i:c:p:153-172 is not listed on IDEAS
    8. 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 - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    9. 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.
    10. Teng Ma & Kenji Takeuchi, 2017. "Cleaning up the air for the 2008 Beijing Olympic Games: Empirical study on China’s thermal power sector," Discussion Papers 1718, Graduate School of Economics, Kobe University.
    11. repec:kap:revind:v:52:y:2018:i:3:d:10.1007_s11151-017-9608-6 is not listed on IDEAS
    12. repec:eee:jeeman:v:88:y:2018:i:c:p:180-209 is not listed on IDEAS
    13. repec:eee:indorg:v:57:y:2018:i:c:p:35-83 is not listed on IDEAS
    14. 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).
    15. repec:eee:jeeman:v:89:y:2018:i:c:p:1-28 is not listed on IDEAS
    16. Steve Dahlke, 2017. "Effects of Changes in Wholesale Electricity Market Structure on Wind Generation in the Midwestern United States," Working Papers 2017-02, Colorado School of Mines, Division of Economics and Business.
    17. Linn, Joshua & Anna Muehlenbachs, Lucija & Wang, Yshuang, 2014. "How Do Natural Gas Prices Affect Electricity Consumers and the Environment?," Discussion Papers dp-14-19, Resources For the Future.

    More about this item

    Keywords

    Electricity restructuring; Firm behavior; Emissions;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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