Performance evaluation of emerging grid infrastructure Operations: Evidence from ultra-high-voltage transmission lines in China

Emerging electrical infrastructure, especially network infrastructure, is increasingly important for the electricity sector to respond to extreme shocks and transition to clean energy. However, limited research has included system stability indicators into the evaluation framework of this new infrastructure. This study takes the example of ultra-high-voltage (UHV) lines in China, a key new infrastructure, to explore whether the substantial investment in labor and capital of UHV lines will lead to satisfactory service reliability and other returns. Using province-level balanced panel data from 2005 to 2022 in China, we apply the non-radial directional distance function (NDDF) model combined with a difference-in-differences (DID) approach to assess how UHV projects influence the total factor productivity (TFP) of grid firms. The findings reveal that UHV projects lead to a notable improvement in utility performance, as measured by TFP, with an average increase of 1.07 %. Mechanism analysis shows that the resource allocation and energy substitution effects are both significant for facilitating TFP, although the contribution of UHV projects to energy transition cannot manifest in the short term. The benefits of UHV are particularly significant in regions with high demand for electricity and at firms on the electricity input end. These findings suggest that planners should adopt a long-term, context-specific approach to the development of electrical infrastructure. Given that the energy transition is a gradual process, grid utilities, as key enablers, must effectively address the challenges of the transitional phase to ensure a future with sustainable energy.