The political economy of electricity dispatch reform in China

► Savings from China's energy efficient dispatch (EED) policy are at best relatively small. ► EED exacerbates imbalances and center-provincial tensions in China's current power system. ► Incentive-based dispatch reform is likely to produce better outcomes than EED. ► Keys to reform are independent regulation and a formal, transparent ratemaking process. ► Transition to cleaner, cost-efficient electricity system in China is political-economic as well as technological.