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Falling efficiency levels of Indian coal-fired power plants: A slacks-based analysis

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  • Jindal, Abhinav
  • Nilakantan, Rahul

Abstract

We use a comprehensive data set covering almost all Indian coal-fired power plants over the period 2005–14 to evaluate the technical efficiency of power plants using the Slacks-Based Measure model. We find that average technical efficiency falls from 0.847 in 2005 to 0.742 in 2014, indicating substantial scope for efficiency improvement. This trend is driven primarily by declining energy efficiency rather than declining managerial (non-energy) efficiency. We use Simar and Wilson's bootstrapped truncated regression approach to analyze the determinants of technical efficiency. We find an inverted-U shaped relationship exists between efficiency and plant age, with maximum efficiency levels observed between 22 and 23 years of age. Privately owned plants operate at higher efficiency levels than their State-owned counterparts. Large plants are more efficient than small and medium size plants. Coal quality has no significant influence on efficiency as usage of higher calorific value coal is not accompanied by a concomitant reduction in coal use. Foreign equipped plants operate at higher efficiency levels than Indian equipped plants.

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  • Jindal, Abhinav & Nilakantan, Rahul, 2021. "Falling efficiency levels of Indian coal-fired power plants: A slacks-based analysis," Energy Economics, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:eneeco:v:93:y:2021:i:c:s0140988320303625
    DOI: 10.1016/j.eneco.2020.105022
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    More about this item

    Keywords

    Efficiency; Coal-fired power plants; Slacks-based measure; Data envelopment analysis;
    All these keywords.

    JEL classification:

    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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