Efficiency analysis of hydroelectric generating plants: A case study for Portugal

This paper estimates changes in total productivity, breaking this down into technically efficient change and technological change, by means of data envelopment analysis (DEA) applied to the hydroelectric energy generating plants of EDP - the Portugal Electricity Company. The aim of this procedure is to seek out those best practices that will lead to improved performance in the energy market. We rank the plants according to their change in total productivity for the period 2001-2004, concluding that some plants experienced productivity growth while others experienced a decrease in productivity. The implications arising from the study are that EDP should adopt an internal benchmark management procedure in order to evaluate the relative position of each hydroelectric generating plant and to adopt managerial strategies designed to catch up with the frontier of “best practices”. As the frontier is shifting along the time, constant efforts are needed in this respect along the time.