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Technical efficiency in electricity generation - the impact of smallness and isolation of island economies

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  • Preetum Domah

Abstract

This paper conducts a comparative technical efficiency analysis of electricity generators in 16 small island economies using panel data, and two methodologies: data envelopment analysis (DEA) and stochastic frontier analysis (SFA). The results indicate neither apparent differences in the production structure between islands and non-islands electric utilities, nor any evidence suggesting that they are less technically efficient. At a theoretical level, our results suggest that benchmarking of small islands, using non-island generating utilities as comparators, is both feasible and desirable given the lack of historical generation data for most small islands. On a more empirical basis, our study bridges an important gap in research on the efficiency of small and interconnected electricity systems.

Suggested Citation

  • Preetum Domah, 2002. "Technical efficiency in electricity generation - the impact of smallness and isolation of island economies," Cambridge Working Papers in Economics 0232, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:0232
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    Cited by:

    1. Nepal, Rabindra & Sofe, Ronald, 2024. "Electricity reforms in small Island developing states under changing policy contexts – Lessons for Papua New Guinea," Energy Policy, Elsevier, vol. 186(C).
    2. Rabindra Nepal & Flavio Menezes, 2017. "Regulatory Reforms in Small Energy Systems: Experience from Australia's Northern Territory Electricity Market," Economic Papers, The Economic Society of Australia, vol. 36(3), pages 300-316, September.
    3. Rabindra Nepal & Flavio Menezes, 2016. "Small Energy Markets, Scattered Networks and Regulatory Reforms: The Australian Experience," Discussion Papers Series 561, School of Economics, University of Queensland, Australia.
    4. Fokaides, Paris A. & Kylili, Angeliki, 2014. "Towards grid parity in insular energy systems: The case of photovoltaics (PV) in Cyprus," Energy Policy, Elsevier, vol. 65(C), pages 223-228.
    5. Weisser, Daniel, 2004. "Power sector reform in small island developing states: what role for renewable energy technologies?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 8(2), pages 101-127, April.
    6. Grace Njeru & John Gathiaka & Peter Kimuyu, 2020. "Technical Efficiency of Thermal Electricity Generators in Kenya," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 340-347.
    7. Mota, R.L., 2004. "‘Comparing Brazil and USA electricity performance; what was the impact of privatisation?’," Cambridge Working Papers in Economics 0423, Faculty of Economics, University of Cambridge.
    8. See, Kok Fong & Coelli, Tim, 2012. "An analysis of factors that influence the technical efficiency of Malaysian thermal power plants," Energy Economics, Elsevier, vol. 34(3), pages 677-685.
    9. Tim Coelli & Denis Lawrence (ed.), 2006. "Performance Measurement and Regulation of Network Utilities," Books, Edward Elgar Publishing, number 3801, August.
    10. Nepal, Rabindra & Jamasb, Tooraj, 2012. "Reforming small electricity systems under political instability: The case of Nepal," Energy Policy, Elsevier, vol. 40(C), pages 242-251.

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    JEL classification:

    • D20 - Microeconomics - - Production and Organizations - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • N70 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - General, International, or Comparative

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