5. Conclusion and policy implications
To solve the problem of the low generation efficiency of the thermal power industry, China implemented market-oriented reforms in 2003. This paper uses the polynomial functions, PLS algorithm, and generation efficiency data from 1993 to 2012 to evaluate the effect of these reforms. Empirical results show that the trends in improvements in the generation efficiency of China's thermal power industry have decreased since the reforms. More specifically, along with a shape change in the efficiency curve, a suddenly down shift of 0.142 kW h per kg SCE also occurred in 2003. Further analysis shows that the former is a consequence of innovations in heating system for buildings in northern China. This should be encouraged, although it may lower the general electricity generation efficiency of the industry as a whole. The latter is mainly because of the nonimplementation of electricity price bidding which caused ineffi- cient dispatch decisions.