A data envelopment analysis of the efficiency of China's thermal power generation

This study applies the data envelopment analysis (DEA) approach to measure the technical efficiency of China's thermal power generation based on cross-sectional data for 1995 and 1996. Our results show that municipalities and provinces along the eastern coast of China and those with rich supplies of coal achieved the highest levels of technical efficiency. There is no clear evidence of excess capacity. However, the presence of labor slack in many regions indicates that labor redundancy was a serious problem. In our second stage regression analysis, we find that fuel efficiency and the capacity factor significantly affect technical efficiency. Provinces and autonomous regions that were not under the control of the State Power Corporation (SPC) achieved higher levels of efficiency. The presence of foreign investment, however, did not have a significant effect on efficiency.