Integrating cost information in energy efficiency measurement: An empirical study on thermal power companies

Energy saving and emission reduction sometimes mean high cost, so companies do not have enough motivation to always support the related policy. By neglecting the economic cost and the imperfect substitution among input factors, widely used energy efficiency indicators such as “energy intensity” will sometimes lead to uneconomic results. Based on the theory of economic efficiency, “energy economic efficiency” is proposed as a new energy efficiency measurement to integrate cost information. In this paper, we further discuss energy economic efficiency, propose supplementary properties, and measure the efficiency of twelve public thermal power companies during the period of China’s 12th five-year plan. Our results show that (2) the economic efficiency of the twelve public companies decreased slowly. The average economic efficiency was 0.82, and there was approximately 40 billion RMB in potential cost savings in 2015, accounting for 18% of the total cost. (2) The energy economic efficiency of these twelve companies increased by approximately 10% during 2011–2015. (3) The primary mission of most thermal power company is to improve the coal combustion technology. (Christensen 4) When expanding production, the input factors will sometimes be uncoordinated, which will lead to increased costs and decreased energy economic efficiency.