[KSCI] Korea Science Citation Index Service

http://dx.doi.org/10.15266/KEREA.2021.30.4.557

Evaluation of Technical Production Efficiency and Business Structure of Domestic Combined Heat and Power (CHP) Operators: Panel Stochastic Frontier Model Analysis for 16 Collective Energy Operators

Lim, Hyungwoo (Korea Environment Institute)
Kim, Jaehyeok (Yonsei University)
Shin, Donghyun (Korea Energy Economics Institute)

Publication Information

Environmental and Resource Economics Review / v.30, no.4, 2021 , pp. 557-579 More about this Journal

Abstract

Collective energy is an intermediate stage in energy conversion and has a great influence on the power structure as a distributed power source. However, the problem of the collective energy business has recently emerged due to the worsening profitability of some collective energy operators. This study measured the technical efficiency of major operators through the estimation of the production efficiency of Korean collective energy operators, and based on this, we looked at ways to improve the profit structure of operators. After collecting detailed data from 16 collective energy operators between 2016 and 2019, the production efficiency of operators was estimated using the panel stochastic frontier model. As a result of the estimation, combined steam power operators showed the highest production efficiency and reverse CHP operators showed the lowest efficiency. Furthermore, as a result of examining the factors influencing profitability, it was confirmed that production efficiency has a positive effect on overall profitability. However, businesses with a high proportion of heat production, such as small district electricity operators, profitability was lower. This phenomenon is due to the structural limitations of the current heat sales market. Hence, the adjustment of the heat sales unit price is necessary to improve profitability of collective energy operators.

Keywords

Combined heat and power (CHP); Technical production efficiency; Efficiency analysis; Profitability analysis;

Citations & Related Records

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