Falling efficiency levels of Indian coal-fired power plants: A slacks-based analysis

We use a comprehensive data set covering almost all Indian coal-fired power plants over the period 2005-14 to evaluate the technical efficiency of power plants using the Slacks-Based Measure model. We find that average technical efficiency falls from0.847 in 2005 to 0.742 in 2014, indicating substantial scope for efficiency improvement. This trend is driven primarily by declining energy efficiency rather than declining managerial (non-energy) efficiency. We use Simar and Wilson's bootstrapped truncated regression approach to analyze the determinants of technical efficiency. We find an inverted-U shaped relationship exists between efficiency and plant age, withmaximumefficiency levels observed between 22 and 23 years of age. Privately owned plants operate at higher efficiency levels than their State-owned counterparts. Large plants are more efficient than small and medium size plants. Coal quality has no significant influence on efficiency as usage of higher calorific value coal is not accompanied by a concomitant reduction in coal use. Foreign equipped plants operate at higher efficiency levels than Indian equipped plants. (C) 2020 Elsevier B.V. All rights reserved.

Automated summary

The technical efficiency of Indian coal-fired power plants decreased from 0.847 in 2005 to 0.742 in 2014, mainly due to declining energy efficiency. Factors like plant age, ownership, size, coal quality, and equipment type have different impacts on efficiency.