Measures to improve the performance of China’s thermal power industry in view of cost efficiency

The heavy losses of China’s thermal power industry have attracted lots of attention. Besides the adjustment of power price, how to improve its poor performance becomes an important issue. Combining the cost Malmquist with the Luenberger index, this paper introduces a new method to measure the cost efficiencies of China’s 30 provinces’ thermal power industries with carbon emissions considered. Furthermore, we quantify the influence of input price changes on the price effect (PE) using panel data regression. The empirical results indicate that: (1) combining dynamic efficiency with static efficiency, the results will be more objective; (2) compared with previous emphasis on adjusting external factors, the future policy reforms should incentivize corporations to improve their management; and (3) external fuel price change is not the direct reason for cost efficiency fluctuation, and the thermal power industry should make more efforts to improve their technical efficiency.