Undesirable congestion under natural disposability and desirable congestion under managerial disposability in U.S. electric power industry measured by DEA environmental assessment

Toshiyuki Sueyoshi and Mika Goto

Energy Economics, 2016, vol. 55, issue C, 173-188

Abstract: This study discusses a new use of DEA environmental assessment to measure a possible occurrence of desirable congestion, or eco-technology innovation, in electric power plants. The phenomenon is compared with an occurrence of undesirable congestion in this study. The identification of undesirable congestion is important to avoid a cost increase and a shortage of generation. However, the identification of desirable congestion is much more important than that of undesirable congestion from the perspective of environmental assessment. This study looks for a sustainable economic growth by identifying eco-technology innovation that can be effectively used to reduce the amount of air pollution so that electric power companies satisfy a governmental standard on environmental protection. The proposed approach is applied to evaluate the performance of coal-fired power plants in the United States. This study finds two policy implications. First, power plants operated by bituminous coal (i.e., black coal) outperform those with sub-bituminous coal (i.e., brawn coal). The result implies that power plants with sub-bituminous coal should be replaced by bituminous coal. Second, the undesirable congestion, due to a line limit between points of power generation and consumption, may occur on most of coal-fired power plants. In contrast, desirable congestion, due to eco-technology innovation, may occur on a limited number of power plants. Thus, the identification of desirable congestion assists us in selecting which technology, or the type of power plant, should be invested to facilitate eco-technology innovation and its related engineering management for a future sustainable economic growth.

Keywords: Congestion; DEA; Environmental assessment; Electric power industry (search for similar items in EconPapers)
JEL-codes: C18 C61 Q54 Q56 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (34)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:55:y:2016:i:c:p:173-188

DOI: 10.1016/j.eneco.2016.01.004

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