Performance Analysis of Power Plants under Heterogeneous Technologies with Meta Frontier Framework

There have been numerous studies measuring efficiency and productivity in the electricity industry worldwide but little research focusing on the comparisons of generation technologies. This study provides a better direction for the proper analysis of the electricity generation sector by examining the performance changes and comparing efficiencies among different types of electric power plants. To account for technology heterogeneity, we apply a meta frontier framework, which is composed of technology specific frontiers. This method allows analyses of the existing gap between generation technologies in the generation part of the electricity industry. The inter- and intra-efficiency variations of the technology groups are investigated using determinant analysis. The overall process is composed of two parts: efficiency measurement by deterministic meta frontier framework and regression analysis for determinant analysis. In the determinant analysis of efficiency differences, we exploit several common and time invariant characteristics of the plants. The results based on panel data of power plants indicate that there are significant technological gaps among different types of plants and several external factors affect performance of the plants.