Market Power and Electricity Market Reform in Northeast China

Working Paper
Market Power and Electricity Market Reform in Northeast China
Zhang, X., and J.E. Parsons (2008)
MIT Center for Energy and Environmental Policy Research Working Paper, WP-2008-001, January

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Abstract/Summary:

The Northeast region of China has been used as a testing ground for the creation
of a functioning wholesale electric power market. We describe the profile of generation
assets throughout the region and the ownership of plants. We calculate the 4-firm
Concentration Ratio (CR4) and the Hirschman-Herfindahl Index (HHI). The current
ownership structure exhibits modest concentration. We also describe the ownership
structure of those plants participating in the trial operation of the Northeast China
Regional Electricity Market. Ownership of this subset of plants is much more
concentrated. Arguably, this is a troublesome obstacle to instituting some form of
competitive bidding in the wholesale power market, and this may be one factor in the
poor outcome of the trial operation.

Citation:

Zhang, X., and J.E. Parsons (2008): Market Power and Electricity Market Reform in Northeast China. MIT Center for Energy and Environmental Policy Research Working Paper, WP-2008-001, January (http://web.mit.edu/ceepr/www/publications/workingpapers.html)
  • Working Paper
Market Power and Electricity Market Reform in Northeast China

Zhang, X., and J.E. Parsons

MIT Center for Energy and Environmental Policy Research Working Paper
WP-2008-001, January

Abstract/Summary: 

The Northeast region of China has been used as a testing ground for the creation
of a functioning wholesale electric power market. We describe the profile of generation
assets throughout the region and the ownership of plants. We calculate the 4-firm
Concentration Ratio (CR4) and the Hirschman-Herfindahl Index (HHI). The current
ownership structure exhibits modest concentration. We also describe the ownership
structure of those plants participating in the trial operation of the Northeast China
Regional Electricity Market. Ownership of this subset of plants is much more
concentrated. Arguably, this is a troublesome obstacle to instituting some form of
competitive bidding in the wholesale power market, and this may be one factor in the
poor outcome of the trial operation.

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