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An Empirical Analysis of Reform and Efficiency in China’s Electricity Sector

In: The Handbook of Energy Policy

Author

Listed:
  • Chin-Hsien Yu

    (Southwestern University of Finance and Economics)

  • Xinhao Li

    (Southwestern University of Finance and Economics)

  • Xiuqin Wu

    (Guizhou University of Finance and Economics)

  • Ping Qin

    (Renmin University of China)

Abstract

This chapter reviews the history of electricity market reforms and the evolution of electricity pricing mechanism and examines the effect of reforms on the improvement in efficiency of thermal power plants from 1998 to 2013. The results show that, during this period, significant improvement was achieved in the technical efficiency of thermal power plants calculated using the data envelopment analysis (DEA) method and in the efficiency of thermal power plants proxied by techno-economic indicators, including the auxiliary power ratio, the coal consumption rate, and the oil consumption rate. Two representative reform policies, the electricity system reform and direct trading policy, are considered to examine the effect of reforms on improvement in efficiency. It finds that the electricity system reform improves the efficiency of thermal power plants only in the short run and has minor influence on technical efficiency; the direct trading policy can reduce the oil consumption rate and the auxiliary power ratio of thermal power plants, and this effect is mitigated by increases in installed capacity. The government should thus continue to promote electricity market reform and emphasize the active role of market reform in power plant efficiency.

Suggested Citation

  • Chin-Hsien Yu & Xinhao Li & Xiuqin Wu & Ping Qin, 2023. "An Empirical Analysis of Reform and Efficiency in China’s Electricity Sector," Springer Books, in: Farhad Taghizadeh-Hesary & Dayong Zhang (ed.), The Handbook of Energy Policy, chapter 29, pages 817-844, Springer.
    • Handle: RePEc:spr:sprchp:978-981-19-6778-8_34
    DOI: 10.1007/978-981-19-6778-8_34
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