Journal
ENERGY ECONOMICS
Volume 55, Issue -, Pages 272-283Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.eneco.2016.02.011
Keywords
Electric grid utilities in China; Cost efficiency; SFA-MLE; SFA-Bayes; StoNED-CNLS
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Funding
- National Science Council in China [71173032]
- Academy of Finland [AKA285944]
- Academy of Finland Strategic Research Council Cloud Computing as an Enabler of Large Scale Variable Distributed Energy Solution (BC-DC-project) [AKA292854]
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With the purpose of estimating the range of cost efficiency levels of the power grid sector in China, we assembled a data set including 23 provincial power grid companies spanning from 2005 to 2009 and conducted an empirical study based on the SFA-MLE, SFA-Bayes and StoNED-CNLS methodologies. Empirical results show that the average values of efficiency from different models vary from 0.85 to 0.92, depending especially on the assumptions underlying inefficiency content. Further, results demonstrate that there is exogenous technical progress during the sample period, and per capita GDP of the province is negatively related to the costs of the electric grid company located in the corresponding province. We hope this empirical study will contribute to the debate on an efficiency-based regulation scheme which was introduced to the Chinese electric grid sector on a pilot base in 2014. (C) 2016 Elsevier B.V. All rights reserved.
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