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Economic Impacts of Power Shortage

by 1, 2 and 2,3,*
Electric Power Research Institute of China Southern Power Grid, Guangzhou 510060, China
China Center for Energy Economics Research, School of Economics, Xiamen University, Xiamen 361005, China
Collaborative Innovation Center for Energy Economics and Energy Policy, Xiamen University, Xiamen 361005, China
Author to whom correspondence should be addressed.
Academic Editors: Bing Wang, Ning Zhang and Marc A. Rosen
Sustainability 2016, 8(7), 687;
Received: 13 March 2016 / Revised: 11 July 2016 / Accepted: 13 July 2016 / Published: 21 July 2016
The electricity industry is a basic industry of the national economy. It has experienced several large-scale power shortages, hard power shortage and soft power shortage, which have brought a great threat to China’s sustainable economic development. To solve this problem better, it is necessary to make a quantitative assessment of the economic impacts of power shortage. The CGE model is commonly used for simulating economic shocks and policy effects. It describes supply, demand and equilibrium in different markets by simulating the economic mechanism through a set of equations. Once changed, the exogenous variables will affect a certain part of the system and then the whole system, leading to changes in quantities and prices. The equilibrium state will also change from one to another. A static CGE model is built in this paper, and the Social Accounting Matrix (SAM) of eight sectors of China in 2007 is compiled, in order to simulate the economic impacts of hard power shortage and soft power shortage. Simulation results show that the negative effects of power shortage on economic development are very significant, and the effects vary in different sectors. Especially, under the background of hard power shortage, the industrial sector suffers most. The economic cost of power shortage is considerable, and the main reason for it is the specific administrative pricing system in China. The low electricity price in the long term will lead to insufficient construction and hard power shortage; moreover, that in the short run would result in soft power shortage. In order to solve the problem of power shortage completely, power system reform is inevitable. View Full-Text
Keywords: hard power shortage; soft power shortage; CGE model; economic impacts; electricity system reform hard power shortage; soft power shortage; CGE model; economic impacts; electricity system reform
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MDPI and ACS Style

Ou, P.; Huang, R.; Yao, X. Economic Impacts of Power Shortage. Sustainability 2016, 8, 687.

AMA Style

Ou P, Huang R, Yao X. Economic Impacts of Power Shortage. Sustainability. 2016; 8(7):687.

Chicago/Turabian Style

Ou, Peng, Ruting Huang, and Xin Yao. 2016. "Economic Impacts of Power Shortage" Sustainability 8, no. 7: 687.

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