2.1. Policy Background
2.1.1. Energy Resource Endowment and Cross-Regional Power Dispatch
Cross-regional power dispatch is crucial for transmitting electricity over long distances and enhancing energy efficiency. It addresses the mismatch between the locations of energy resources and the areas where electricity is needed in China. Over 80% of China’s energy resources are in the northwest, whereas more than 70% of electricity consumption occurs in the central and eastern regions. These resource-rich areas are approximately 1000 to 4000 km from the main demand centers. This mismatch between electricity demand and energy resources significantly restricts regional economic growth and the utilization of valuable resources. Therefore, China has initiated UHV cross-regional power dispatch projects. In the late 1970s, Central Committee of the Communist Party of China introduced the “West-to-East” electricity transmission strategy with UHV projects, establishing UHV construction as a key component of electrical infrastructure development.
2.1.2. Development Process of China’s UHV Project
UHV projects are the main conduits for regional electricity transmission and are crucial for implementing clean energy transformation strategies that prioritize electricity over conventional energy sources. The development of UHV projects in China can be divided into three main stages:
The initial phase (2005–2010): Exploration and Feasibility. In 2005, the National Development and Reform Commission, in collaboration with power grid companies, research institutions, universities, equipment manufacturers, and project design and implementation units, initiated a comprehensive feasibility study for China’s first UHV project. By 2009, after overcoming numerous technical challenges, the 1000 kV UHV alternating current (AC) demonstration project from Jindongnan to Nanyang to Jingmen was successfully commissioned. In 2010, the first set of UHV direct current (DC) demonstration projects, including routes from Yunnan to Guangdong and Xiangjiaba to Shanghai at ±800 kV, were progressively completed and became operational, marking the start of China’s UHV construction efforts.
The second phase (2011–2014): Refinement and Advancement. Sustained advancements in UHV technology research and engineering have gradually clarified and refined the technical trajectory of UHV project development. At the same time, equipment manufacturing capabilities improved, talent pools expanded, and standardization efforts made significant progress. In May 2014, the National Energy Administration issued a directive to accelerate the construction of 12 key power transmission corridors as part of a broader initiative for air pollution reduction and management. Subsequently, the State Grid established the “Three Vertical and Three Horizontal” UHV backbone networks and completed 13 DC transmission projects, marking a peak in UHV construction efforts.
The third phase (2015-present): Acceleration and Expansion. In September 2018, the National Energy Administration issued a directive to expedite the planning and execution of key power transmission and transformation projects, leading to a new surge in UHV development. During this period, China’s UHV technology advanced significantly, construction methods were refined, and project expertise increased, facilitating rapid progress. By the end of 2022, China had successfully constructed 36 UHV lines, including 16 AC and 20 DC lines. In January 2023, the National Energy Administration released the “Blueprint for the Development of New Power Systems (Draft for Comments)”, designating several UHV projects as key components in developing new power systems.
After over two decades of practical exploration and scientific research, China’s UHV technology has transitioned from being “Made in China” to “Led by China”, and from “Equipping China” to “Equipping the World.” During the 14th Five-Year Plan period (2021–2025), the State Grid of China plans to build 24 AC UHV projects and 14 DC UHV projects, spanning over 30,000 km of lines, with a transformation and conversion capacity of 340 million kVA and a total investment of 380 billion RMB. By 2022, the cumulative power transmission capacity of China’s UHV projects reached approximately 2834.611 billion kWh. Additionally, the annual contract value of UHV DC transmission business is around RMB 1 billion. China’s flexible DC transmission technology is highly regarded internationally; for example, in 2022, China Light and Power Corporation won the bid for the offshore wind power grid connection project in Germany. Cross-regional UHV projects have become crucial for energy transport, aligning with China’s strategic vision of “West-to-East Power Transmission, North-to-South Power Supply, Mutual Support of Hydro and Thermal Power, and Complementary Deployment of Wind and Solar Energy”. These initiatives are strategically significant for reducing regional electricity disparities, advancing energy transformation, and promoting high-quality economic development.
2.2. Theoretical Analysis
Cross-regional power dispatch is crucial for improving energy efficiency and optimizing the power supply framework. By addressing the imbalance between resource availability and energy demand, it improves energy efficiency. Additionally, cross-regional power dispatch promotes balanced economic development across regions and improves the energy consumption matrix. Indirectly, it affects the total factor energy efficiency of enterprises by adjusting industrial frameworks, stimulating regional innovation, and restructuring the energy landscape. Typically, when cross-regional power dispatch policies are implemented, the total factor energy efficiency of enterprises does not directly affect the policy, and there is no clear reverse causal relationship.
China’s UHV project policy strategically involves transferring electricity from resource-rich western regions to energy-scarce eastern regions. Deng et al. [
17] emphasized the importance of optimizing energy allocation to reduce wastage and improve efficiency across various consumption sectors. This method improves electricity utilization efficiency, thereby increasing the total factor energy efficiency of enterprises. Cross-regional power dispatch directly increases the electricity resources available to enterprises. Unlike conventional power supply models, which may lead to shortages due to geographic and resource constraints, cross-regional power transmission ensures equitable distribution of electricity resources, providing a stable supply to various regions [
15]. A stable power supply is crucial for enterprises, preventing production disruptions from outages and thereby enhancing both production and energy efficiency.
Additionally, inter-regional power dispatch reduces electricity costs for enterprises. By optimizing electricity resource distribution, supply and demand equilibrium is restored, leading to lower electricity prices [
18]. This cost reduction directly lowers operational expenses, allowing enterprises to use electricity more cost effectively and efficiently. This is especially important for energy-intensive industries, where energy costs represent a significant portion of total expenses. A reliable and cost-effective electricity supply allows enterprises to plan production schedules better and optimize processes. This leads to increased production efficiency and better energy utilization, reducing waste and improving overall sustainability and overall energy efficiency. Consequently, cross-regional power dispatch creates a favorable environment for business operations, significantly improving overall energy efficiency. This improvement is reflected in reduced production costs, increased production efficiency, and optimized energy utilization. Thus, Hypothesis 1 is proposed as follows:
Hypothesis 1: Cross-regional power dispatching can improve the total factor energy efficiency of firms.
Cross-regional power dispatching has transformed the energy supply landscape and directly affected the industrial structure in various regions. Zhang et al. [
19] suggest that changes in the energy supply framework can lead to shifts in industrial focus. UHV projects enable interregional energy flow, improving the energy supply in eastern regions and supporting the overall development of industries there. In western regions, known for exporting electricity, there may be a reduced reliance on local energy-intensive sectors, leading to a shift towards developing sectors like services and high-tech industries. These adjustments and optimizations in industrial structure significantly affect firms’ energy utilization patterns [
20], causing notable variations in energy efficiency across sectors. Typically, non-energy-intensive sectors have lower energy efficiency compared to high-tech and service sectors, which generally show higher efficiency. Consequently, as the industrial structure shifts towards more efficient sectors, overall energy efficiency increases.
In eastern regions, boosted by increased energy supply, enterprises are more likely to develop industries with higher energy efficiency, thereby improving the overall total factor energy efficiency of firms. Acemoglu et al. [
21] suggest that industrial upgrading often coincides with technological innovation. In the context of cross-regional power dispatching, as the industrial structure evolves, firms adopt technologies suited to the new landscape, promoting technological innovation and advancement. This technological evolution not only increases production efficiency but also improves energy utilization efficiency.
Additionally, changes in industrial structure are closely linked to regional economic development levels. Gai et al. [
22] explain that higher levels of economic development lead to increased energy efficiency. This correlation arises from the need for more efficient energy technologies to support complex, high-value economic activities. Moreover, changes in industrial structure are linked with reforms in environmental policies and market mechanisms. Effective environmental policies and market mechanisms drive the optimization of industrial structure. In the context of cross-regional power dispatching, local governments can implement supportive policies like tax incentives and technical assistance. These measures encourage enterprises to adopt energy-efficient and environmentally sustainable practices, promoting industrial optimization and improving the total factor energy efficiency of firms.
In summary, changes in industrial structure significantly affect how cross-regional power dispatching impacts firms’ total factor energy efficiency. Cross-regional power dispatching significantly impacts regional industrial structure, promotes technological innovation in firms, and enhances regional economic development. Additionally, along with environmental policy reforms and market mechanisms, it indirectly improves firms’ total factor energy efficiency. Therefore, this study formulates the second hypothesis as follows:
Hypothesis 2: Cross-regional power dispatching improves the total factor energy efficiency of firms by adjusting the industrial structure.
Cross-regional power dispatch optimizes resource allocation and supports the innovative development of cities. Electricity, a crucial input in socio-economic activities, significantly affects the stability and efficiency of enterprise operations and technological innovation. For example, a reliable electricity supply reduces uncertainties in business operations, increases efficiency, and supports high-energy-consuming research activities [
23]. Thus, cross-regional power dispatch creates favorable conditions for economic development and technological innovation by ensuring a stable electricity supply. Technological advancements and improved management practices are crucial for enhancing the total factor energy efficiency of firms. Technological innovation promotes the development of efficient energy technologies, while management innovation optimizes resource allocation and reduces energy waste [
24]. Therefore, fostering innovation in cities indirectly improves the total factor energy efficiency of firms through cross-regional power dispatch. Additionally, it facilitates the exchange of knowledge and technology between regions, accelerating the diffusion and adoption of new energy technologies.
Cities are crucial in influencing the operations and growth of regional firms due to their role as economic hubs. Reliable electricity is essential for cities to attract talent and capital, accelerating technological innovation and knowledge dissemination [
25]. A favorable business environment encourages the adoption of efficient production technologies and management practices, improving energy efficiency. This is especially important for the manufacturing sector, where a stable electricity supply and technological innovation are vital for improving energy efficiency. In an innovation-driven urban environment, firms can use technological advancements and improve management practices to optimize energy use and production processes. This approach not only reduces production costs but also lowers environmental pollution, promoting sustainable economic development.
The previous analysis shows that cross-regional power dispatching promotes the innovative development of cities, which in turn indirectly enhances the total factor energy efficiency of firms. This mechanism supports balanced regional economic growth and positively impacts environmental protection and sustainable development. Based on this analysis, this study hypothesizes the following:
Hypothesis 3: Cross-regional power dispatching will enhance the total factor energy efficiency of firms through the mechanism of urban innovative development.
Cross-regional power dispatching is a complex process with multiple dimensions, affecting electricity distribution, consumption, regional economic growth, and energy efficiency. A key aspect of this process is energy transformation, which involves shifting from carbon-intensive and non-renewable sources to low-carbon and renewable ones [
26]. The main objective of cross-regional power dispatching is to meet diverse regional electricity needs through strategic resource optimization. In high-voltage direct current transmission projects, surplus electricity from resource-rich western regions can be efficiently transferred to demand-heavy eastern regions. This strategic transfer alleviates electricity shortages in the east and improves the utilization of underused resources in the west. This approach refines current electricity resource allocation and consumption while also laying the groundwork for future energy transitions.
Energy transformation is central to this evolution, as cross-regional power dispatching enables the efficient distribution of both traditional and clean energy resources [
27]. The western regions, rich in natural resources, are well suited for generating clean energy sources such as hydro and wind power. Cross-regional dispatching allows these resources to be efficiently directed to the east, thereby increasing the share of clean energy in the overall mix and guiding the energy sector towards a greener and more sustainable path.
Total factor energy efficiency is a key metric for evaluating a firm’s energy efficiency, including traditional measures and the sustainability and environmental impacts of energy use. By increasing the proportion of clean energy, cross-regional power dispatching can lower energy costs and reduce firms’ environmental impact, thereby improving their total factor energy efficiency. In summary, cross-regional power dispatching promotes energy transformation by optimizing electricity resource distribution, increasing the share of clean energy, and significantly improving the total factor energy efficiency of firms. Based on the above analysis, we hypothesize the following:
Hypothesis 4: Cross-regional power dispatching will improve the total factor energy efficiency of firms by facilitating the transition to clean energy.