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Annals of Operations Research

, Volume 268, Issue 1–2, pp 513–537 | Cite as

Operational performance management of the power industry: a distinguishing analysis between effectiveness and efficiency

  • Ke WangEmail author
  • Chia-Yen Lee
  • Jieming Zhang
  • Yi-Ming Wei
S.I.: BOM in Social Networks

Abstract

The trend toward a more competitive electricity market has led to efforts by the electric power industry to develop advanced efficiency evaluation models that adapt to market behavior operations management. The promotion of the operational performance management of the electric power industry plays an important role in China’s efforts toward energy conservation, emission control and sustainable development. Traditional efficiency measures are not able to distinguish sales effects from productive efficiency and thus are not sufficient for measuring the operational performance of an electricity generation system for achieving its specific market behavior operations management goals, such as promoting electricity sales. Effectiveness measures are associated with the capacity of an electricity generation system to adjust its input resources that influence its electricity generation and, thus, the capacity to match the electricity demand. Therefore, the effectiveness measures complement the efficiency measures by capturing the sales effect in the operational performance evaluation. This study applies a newly developed data envelopment analysis-based effectiveness measurement to evaluate the operational performance of the electric power industry in China’s 30 provincial regions during the 2006–2010 periods. Both the efficiency and effectiveness of the electricity generation system in each region are measured, and the associated electricity sales effects and electricity reallocation effects are captured. Based on the results of the effectiveness measures, the alternative operational performance improvement strategies and potentials in terms of input resources savings and electricity generation adjustments are proposed. The empirical results indicate that the current interregional electricity transmission and reallocation efforts are effective in China overall, and a moderate increase in electricity generation with a view to improving the effect on sales is more crucial for improving effectiveness.

Keywords

China Data envelopment analysis (DEA) Electricity generation system Electricity reallocation Electricity sales effect 

Abbreviations

AR

After electricity reallocation

BR

Before electricity reallocation

DEA

Data envelopment analysis

DMU

Decision making unit

EE

Efficiency–effectiveness

FG

Frontier gap

FYP

Five Year Plan

GDP

Gross domestic product

PF

Production function

RE

Reallocation effect

SPF

Sales-truncated production function

VRS

Variable returns to scale

Notes

Acknowledgments

We gratefully acknowledge the financial support from the National Natural Science Foundation of China (Grant Nos. 71471018, 71101011 and 71521002); the Ministry of Science and Technology of Taiwan (MOST103-2221-E-006-122-MY3); and the Basic Scientific Research Foundation of BIT (20152142008). We also thank the reviewers for their valuable and constructive comments.

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Copyright information

© Springer Science+Business Media New York 2016

Authors and Affiliations

  • Ke Wang
    • 1
    • 2
    • 3
    Email author
  • Chia-Yen Lee
    • 4
    • 5
  • Jieming Zhang
    • 1
    • 2
  • Yi-Ming Wei
    • 1
    • 2
    • 3
  1. 1.Center for Energy and Environmental Policy ResearchBeijing Institute of TechnologyBeijingChina
  2. 2.School of Management and EconomicsBeijing Institute of TechnologyBeijingChina
  3. 3.Collaborative Innovation Center of Electric Vehicles in BeijingBeijingChina
  4. 4.Institute of Manufacturing Information and SystemsNational Cheng Kung UniversityTainanTaiwan
  5. 5.Research Center for Energy Technology and StrategyNational Cheng Kung UniversityTainanTaiwan

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