Determinants of the European electricity companies efficiency: 2005-2014

Abstract

The growing dependence of economies on electricity makes essential the improvement of the power sector efficiency levels. This study aims to assess the factors that influence the efficiency of companies operating in the European electricity sector. To this end, a Stochastic Frontier Analysis has been applied to 4639 companies, located in 26 European countries, over the 2009-2014 period. Based on the results, it would be advisable, for all electricity subsectors, to reduce the level of indebtedness and to increase the firm size in order to enhance the efficiency levels. The results also show how the activity diversification and the company age affect firms' performance depending on the subsector