The mechanism of the power shortage in China: capacity shortage or capacity underutilisation?

Liang Zhang (), Jian Ruan () and Jianhua Ding ()
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Liang Zhang: Accounting School, SUIBE; Economics and Finance Department, Brunel University
Jian Ruan: School of Brunel Engineering and Design, Brunel University
Jianhua Ding: China Architecture Design & Research Group

Economics Bulletin, 2013, vol. 33, issue 4, 3050-3058

Abstract: This paper investigates the mechanism of the power shortage in China by estimating the capacity expansion and capacity utilisation behaviour of the power firms. The theoretical and empirical evidence is presented to show that the state planner deals with the ‘coal-electricity' conflict by internalising the coal price inflation in the power generation sector. This policy may distort the market signal of the capacity utilisation and lead to the power shortage even if the capacity supply is sufficient.

Keywords: electricity price; power shortage; capacity utilisation; capacity expansion; coal-electricity conflict; China (search for similar items in EconPapers)
JEL-codes: L2 Q4 (search for similar items in EconPapers)
Date: 2013-12-23
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