A hybrid model for explaining the short-term dynamics of energy efficiency of China's thermal power plants

Highlights: • The new hybrid method consists of a multiple regression model and the GARCH model. • The hybrid model is an improved benchmarking methodology. • The method analyses the energy efficiency index of thermal power plants without artificial intervention. • The volatility degree between determinants and energy efficiency index can be evaluated. • Environment constraints of thermal power plants are considered. - Abstract: A new hybrid methodology is introduced which is a combination of multiple regression model and generalised autoregressive conditional heteroskedasticity (GARCH) model. Comparing the new approach and the vector auto-regression (VAR) model, this paper analyses the short-term dynamics of the energy efficiency index (EEI) in response to change in the five indicator variables for thermal power plants in China. The result indicates that: (i) The new hybrid model can directly calculate the EEIs of thermal power plants without artificial intervention. (ii) It can eliminate the disturbance of residual superposition. (iii) The new method will offer more direct information on the degree of volatility among determinants and operating inefficiency.