Investigating the Impacts of Price, Income and Efficiency Factors on Energy intensity of Iran,s Power Sector: Application of SVAR Model for Thermal Power Plants

The main purpose of this study is to investigate the impacts of price, efficiency and income factors on energy intensity of Iran's thermal power plants. To meet this end, while using SVAR method and Blanchard-Quah approach, the impacts of power plants efficiency, revenue from power sales and the fuel price on energy intensity of thermal power plants was investigated for the e period 1986-2018. The results based on Impulse-Response analysis show that the response of energy intensity of power plants to an incremental impulse on efficiency is negative. This finding is consistent with the theoretical expectation of a reducing effect of efficiciency improvement on energy intensity. Moreover, energy intensity in power plants decreases following an incremental impulse in power plant revenues. This finding is in line with the theoretical expectation that in the long run, with increasing firm revenue, they tend to use energy saving technology which leads to reduce energy consumption. In addition, an impulse to energy prices (fuels prices), result in a decrease in energy intensity, which is in line with the theoretical expectation that with rising energy prices, there is an incentive to increase efficiency as well as decrease the energy intensity. Based on findings, it is recommended to improve the efficiency of power plants by converting gas power plants into combined cycle, using new technologies and removing fuel price subsidies.