Abstract
The electricity industry is a basic industry of the national economy. It has experienced several large-scale power shortages, hard power shortage and soft power shortage, which have brought a great threat to China’s sustainable economic development. To solve this problem better, it is necessary to make a quantitative assessment of the economic impacts of power shortage. The CGE model is commonly used for simulating economic shocks and policy effects. It describes supply, demand and equilibrium in different markets by simulating the economic mechanism through a set of equations. Once changed, the exogenous variables will affect a certain part of the system and then the whole system, leading to changes in quantities and prices. The equilibrium state will also change from one to another. A static CGE model is built in this paper, and the Social Accounting Matrix (SAM) of eight sectors of China in 2007 is compiled, in order to simulate the economic impacts of hard power shortage and soft power shortage. Simulation results show that the negative effects of power shortage on economic development are very significant, and the effects vary in different sectors. Especially, under the background of hard power shortage, the industrial sector suffers most. The economic cost of power shortage is considerable, and the main reason for it is the specific administrative pricing system in China. The low electricity price in the long term will lead to insufficient construction and hard power shortage; moreover, that in the short run would result in soft power shortage. In order to solve the problem of power shortage completely, power system reform is inevitable.
Highlights
The electricity industry is a basic and significant industry of the national economy, which is closely related to economic development
Parameters in this computable general equilibrium (CGE) model are divided into two kinds: one needs to be calibrated by social accounting matrix (SAM), such as the coefficients of shares of the element inputs in the production function and the initial values of all variables; the other ones are set by certain econometric methods or experience, such as the elasticity of the production function and the conversion elasticity of import and export
A CGE model is used to simulate the impacts of hard electricity shortage and soft electricity shortage on China’s economy, and we have these research findings
Summary
The electricity industry is a basic and significant industry of the national economy, which is closely related to economic development. The long-term low electricity price and the single property rights hinder the free flow of capital, which cause insufficient construction and hard power shortage. The power plants are unwilling to produce more electricity due to the high generation costs and low electricity price, which causes the widespread soft power shortages. Analysis of the relationship between economic output and power demand is conductive to making decisions on electric power construction and investment. From another perspective, the study of the economic cost of electricity shortage provides a reference for current power policies and future electricity system reform.
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
