The effects of electricity reforms on productivity and efficiency of China's fossil-fired power plants: An empirical analysis

Abstract

This paper investigates the effects of electricity reforms on productivity and efficiency of China's generation plants, based on the third industrial census data and the first economic census data. Partial factor productivity (PFP) analysis indicates that the productivity improvements in labor and capital inputs associated with the reforms are approximately 26% and 45% respectively. The effect of the reforms on fuel expense is weakly significant, but there is evidence of significant productivity improvement in fuel usage. Further total factor productivity (TFP) analysis shows that the efficiency gain from the reforms is still significant when the substitution effect of labor and capital inputs are considered, though the magnitude is much lower than that of the PFP analysis. The effect of the reforms on technical efficiency becomes weakly significant when fuel expense is further included in TFP analysis, but a significant positive effect is expected if fuel input is measured in physical quantity.