Evaluating the Investment Efficiency of China’s Provincial Power Grid Enterprises under New Electricity Market Reform: Empirical Evidence Based on Three-Stage DEA Model

Jingqi Sun, Nuermaimaiti Ruze, Jianjun Zhang, Haoran Zhao and Boyang Shen
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Jingqi Sun: School of Economics and Management, North China Electric Power University, Beijing 102206, China
Nuermaimaiti Ruze: School of Economics and Management, North China Electric Power University, Beijing 102206, China
Jianjun Zhang: School of Economics and Management, North China Electric Power University, Beijing 102206, China
Haoran Zhao: School of Economics and Management, North China Electric Power University, Beijing 102206, China
Boyang Shen: Electrical Engineering Division, Department of Engineering, University of Cambridge, Cambridge CB3 0FA, UK

Energies, 2019, vol. 12, issue 18, 1-17

Abstract: The new round of electricity market reform in 2015 completely changed the profit pattern of power grid enterprises (PGEs) in China, and directly affected their investment plans. Under the new electricity market reform (NEMR), the government regulatory authority made higher requirements for the investment efficiency of PGEs, and the investment effectiveness hence became the core criterion for investment plans. Therefore, the PGEs are now attaching great importance to the investment efficiency. According to their geographical differences, this paper divides the Chinese provincial PGEs into three groups, namely eastern, central and western region enterprises. Based on the NEMR, we developed an evaluation system of investment efficiency for the above-mentioned enterprises. Moreover, this paper selects GDP per capita, electricity consumption in industry, and electrification rate as external environment variables, and conducts an empirical research on the investment efficiency of 31 provincial PGEs in China in 2017. The analysis reveals that three external environment variables have considerable impacts on the investment efficiency. Though the increase of GDP per capita and electricity consumption in industry are not conducive to improving investment efficiency, the advancement of electrification plays a positive role in its improvement. And from the real efficiency results, Tianjin, Liaoning, Jiangsu, and Fujian have relatively higher investment efficiency, while Henan, Shandong, and Shanghai exhibit lower investment efficiency. By comparing the investment efficiency of PGEs in the first and third stage, conclusions can be drawn that in the first stage the investment efficiency of PGEs was overestimated, and the inefficient investments prevailed some provincial PGEs, which caused by low scale efficiency.

Keywords: new electricity market reform; government regulation; three-stage DEA model; investment efficiency; external environment variables (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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