Economies of scale in Chinese electricity generation enterprises

This paper analyzes the economy scale of Chinese electricity generation enterprises.The DSA method is used to estimate the envelope of cost function in electricity generation enterprises.Analysis of the economy scale in Chinese base-load coal-fired generation companies is based on data in1991.The analysis shows that the bound of"flat"region of cost curve is about10TW·h per year,while most companies generated their output between2~4TW·h per year,and most generation companies are in the increasing return to scale region.The restructuring of generation assets can improve cost efficiency through economy scale,but the generation assets should be as decentralized as possible to avoid potential market power while the economy scale is still held.