An Application of Divisia Decomposition Analysis to the Measurement of Thermal Efficiency Improvement of Power Generation

화력발전소 효율개선 측정에 대한 디비지아분해기법의 적용

Since improved thermal efficiency reduces capacity requirements and energy costs, electricity producers often treat thermal efficiency as a measure of management or economic performance. The conventional measure of the thermal efficiency of a fossil-fuel generation system is the ratio of total electricity generation to the simple sum of energy inputs. As a refined approach, we present a novel thermal efficiency measure using the concept of the Divisia index number. Application of this approach to the Korean power sector shows improvement of thermal efficiency of 1.1% per year during 1970-1998. This is higher than the 0.9% improvement per year given by the conventional method. The difference is attributable to the effect of fuel substitution. In the Divisia decomposition context, we also show the limitations of the popular $T{\ddot{o}}rnqvist$ index formula and the superiority of the Sato-Vartia formula.