Energy production efficiency assessment using network data envelopment analysis

Abstract The performance of an energy generation system depends on three sectors of generation, transmission, and distribution. Especially when the power generation system has a decentralized structure in which different companies have different types of power plants, transmission, and distribution architectures. In this study, a network data envelopment analysis (NDEA) model is extended to assess the energy generation system's performance considering all three sectors of the regional electricity companies. There is a gap in the published DEA literature on energy network efficiency in studying the function of individual processes of these subsystems. After identifying the companies' structure, inputs, and outputs for all sectors, the extended NDEA model is implemented to estimate the efficiency of the whole energy generation network including production, transfer, and circulation sectors of the firms. The proposed model's network-based features allow computing the efficiency of individual subsystems and the whole system simultaneously. Iran’s energy generation system, including all three sectors during 2015–2019, is used to verify the model. The results indicate that while the annual average efficiency score of electricity companies has been increasing by 2018, it was decreased during 2018–2019. The model can be easily applied to energy generation systems in other countries.