Analysis Of Technical Efficiency Of China's Power Generation Industry Factors

Since the1980s, China’s electric power industry has carried out a series ofregulatory reform, and various economic indexes have got a greater improvement.However, in the electric power industry, high input, low output, high price, lowefficiency still exists, electricity reform has a long way to go. This paper will analysistechnical efficiency in the process of reform and influencing factors, and providepolicy suggestions for China’s electric power industry.First, this thesis starts with summarizing the research method and researchresults of technical efficiency at home and abroad. The thesis has measured andcalculates the technology efficiency of China’s power generation industries byadopting the SFA and the panel data of the coal-fired power industries from30provinces，autonomous regions and municipalities across the nation during the year2003-2011, and mainly focused on the impact of ownership structure, electricity andcoal price and environment regulation on the technology efficiency of powergeneration industries. Currently，most scholars has adopted the DEA method toanalyze the efficiency of power generation industries; some scholars adopt theDirectional Distance Function, however, fewer has ever used the SFA to study theefficiency. Most foreign literatures adopt SFA method instead of DEA method to measure the technical efficiency in the power generation industry because DEAmethod is applicable to carry out the efficiency analysis in the industry with moreinput and more output, but the Power generation industry is a typical of a structureof more input and single output. Besides, compared with DEA method, anotheradvantage SFA has is that it takes account of the effect the statistical noise(originating from the approximation error caused by ignoring the input variables andchoice of functional forms) has on the technical efficiency. The technical efficiencyfrom this method is more accurate.The main findings and conclusions of the power industries technology efficiencywill be discussed herein are:(1)the overall technology efficiency of China’s powergeneration industries is quite low with the average rate0.53during the year2003-2011;(2) since the reform of power system, the change trend of technicalefficiency in China2003-2011power industry is monotonous pattern improved yearby year;(3)the gap of technology efficiency over the power generation industriesacross the provinces is quite big, so that the developed regions or provinces rich incoal resources may gain the higher technology efficiency than those of lessdeveloped and lack of coal resources.This thesis has further analyzed the factors affecting the technology efficiency ofChina’s power generation industries:(l) the owner ship structure has significantimpact on the technology efficiency of power generation industries, that is, morestate-owned assets, lower technology efficiency;(2)This paper finds out the positiveand negative relations between the electricity price, but the impact of price on thepower industry technical efficiency was not statistically significant. This finding hasimportant implications for the price regulation reform;(3)efficiency of environmentaltechnology regulation and power industry showed negative. In this paper, the sulfurdioxide emissions represent the environmental regulation intensity, found thatenvironmental regulation is weak, sulfur dioxide emissions is higher, the higher theefficiency of power industry; environmental regulation is more strong, sulfur dioxide emissions is lower, the higher the efficiency of power generation industry;(4)Thispaper also shows a parabola relation ship with its opening down between the sizeand the production without efficiency in an enterprise. Most of the observations arein the left of the critical points and concentrated in the top of the parabola，whichsuggests that there are significant diseconomies in the scale of the power plants inChina under the present average size of enterprises, namely, the more quickly thesize develops towards the critical Point and the higher the production withouteminency is;(5) The regional power structure (power ratio) is related to inefficientand production, that is to say, thermal power in the power structure in theproportion is higher, the higher rate of production is invalid, technical efficiency islow;(6) the improvement of facility utilization has a significant influence on theefficiency of power generation industries.Finally, the content and the conclusion based on this study, in the last chaptergives some specific reference to the proposed. And due to the restrictions on thedata, and research focus, research methods and the depth, there are also someshortcomings also be stated in the end.