See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/310830870

Energy Efficiency Index via Data Envelopment Analysis (DEA): Methodology

and Application

Chapter · June 2015

CITATIONS READS

0 288

1 author:

Ke Wang
Beijing Institute of Technology
67 PUBLICATIONS   1,914 CITATIONS   

SEE PROFILE

Some of the authors of this publication are also working on these related projects:

China's coal industry transformation: performance, challenges and prospects View project

Education Economics and Management View project

All content following this page was uploaded by Ke Wang on 28 January 2019.

The user has requested enhancement of the downloaded file.

Energy Efficiency Index via Data Envelopment
Analysis (DEA): Methodology and Application
Ke Wang
Center for Energy and Environmental Policy Research, Beijing Institute of Technology, Beijing, P. R. China
1 INTRODUCTION
The enthusiasm of researchers in developing models and
techniques for regional energy efficiency evaluation has
extensively increased since the 1990s, and this enthu-
siasm was further enhanced after the 2000s because of the
worldwide concern on environmental protection and global
warming mitigation and adaptation. Considerable amount of
studies have focused on the energy and environmental effi-
ciency evaluation as it is considered the first and critical step
for improving energy utilization efficiency, decelerating the
rapid growth of greenhouse gas emissions, and protecting
environment, at both the national and regional levels. Among
the various efficiency evaluation modeling techniques, the
data envelopment analysis (DEA) has recently become
a popular and widely utilized approach in measuring the
regional energy and environmental efficiency at the macroe-
conomy level. In the survey on DEA in energy and environ-
mental studies (Zhou, Ang, and Poh, 2008a), a total of 100
literatures published during 1983 and 2006 were listed, and
the increasing tendency on this topic has not yet changed.
DEA is a well-established mathematical methodology
using a linear programming technique to evaluate the rela-
tive efficiencies of a set of decision-making units (DMUs),
which are homogeneous and comparable (Charnes, Cooper,
and Rhodes, 1978). These DMUs perform the same produc-
tion function that transforms multiple inputs into multiple
outputs; however, the functional relationships between these
inputs and outputs are not required to be prior assumed when
evaluating the efficiency of each DMU. Therefore, DEA
Handbook of Clean Energy Systems, Online © 2015 John Wiley & Sons, Ltd.
This article is © 2015 John Wiley & Sons, Ltd.
This article was published in the Handbook of Clean Energy Systems
in 2015 by John Wiley & Sons, Ltd.
DOI: 10.1002/9781118991978.hces083
is considered a nonparametric method and a data-driven
frontier analysis technique. This property is also considered
the main advantage of using DEA as the relative efficiency
evaluation technique. A piecewise frontier composed of effi-
cient DMUs, which produce the maximum level of outputs
by taking the minimum level of inputs among all DMUs
under evaluation, is constructed by DEA for comparative
measurement of efficiency (Cooper, Seiford, and Zhu, 2004).
The monetary-based energy efficiency indicator repre-
sented by the energy consumption per unit of current output
(Ang, 2006) is often applied to measure the economy-wide
energy efficiency at the macro level. Energy intensity defined
as the energy consumption divided by the economic output
is an example of conventional energy efficiency indicator,
which considers energy consumption as a single input to
produce economic outputs but ignores some other essential
inputs such as material, labor, and capital. Therefore, this
indicator is considered a partial-factor energy efficiency indi-
cator. However, the principle of producing indicates that any
economic production activity is a joint production process, in
which the energy resources and other nonenergy resources
are utilized to produce economic or desirable outputs and
emit or discharge undesirable outputs as byproducts (pollu-
tions). Therefore, a total-factor efficiency evaluation model
and associated efficiency indicator will be more appro-
priate for comprehensively characterizing the joint produc-
tion process and the energy utilization efficiency in this
process. Here, “total-factor” implies that the major input
factors, including energy and nonenergy resource consump-
tions, and the major economic output factors are all included
in the energy efficiency evaluation, and the total-factor
productivity improvement, denoted by the efficiency fron-
tier promotion, can be considered. In addition, “total-factor
energy efficiency” implies that the energy efficiency measure
2 Sustainability Indicators, Evaluation Criteria, and Reporting
can be defined as the actual energy consumption divided by
the target or optimal energy consumption, that is, projected
energy input on the efficiency frontier that is identified
within the total-factor evaluation framework (Hu and Wang,
2006).
As mentioned earlier, considering the emission or
discharge of pollutants (undesirable outputs) associated
with the consumption of energy input and the producing
of economic outputs (desirable outputs), the environmental
impact of undesirable outputs should not be neglected
when evaluating total-factor energy efficiency, so as to
provide a more comprehensive and appropriate efficiency
measure. Therefore, the undesirable outputs or bad outputs
should also be included in the total-factor energy efficiency
evaluation framework. According to Zhou, Ang, and Poh
(2008a) and Sahoo et al. (2011), the DEA-based energy
efficiency evaluation methods can be classified into two
groups, when the modeling of bad outputs is included,
namely, those methods based on using the traditional
DEA associated with bad output data transformation
techniques and those methods using original data on bad
output, but relying on the assumption of weak dispos-
ability. In the first group, the values on bad outputs can
be (i) transformed to their reciprocals (Lovell, Pastor, and
Turner, 1995), and then treated as desirable outputs; (ii)
modeled as desirable outputs through a linear monotone
transformation (Seiford and Zhu, 2002); or (iii) directly
treated as inputs that are freely disposable (Hailu and
Veeman, 2001). In the second group, the modeling of bad
outputs is based on the joint production principle between
desirable outputs and undesirable outputs, and the weak
disposability assumption. This assumption implies that
any undesirable output decrease is necessarily associated
with the desirable output decrease. The directional distance
measures are the most commonly used techniques for the
modeling of undesirable output under weak disposability
(Färe et al., 1989; Färe, Grosskopf, and Hernandez-Sancho,
2004).
On the basis of the above two groups of DEA methods for
energy and environmental efficiency evaluation modeling
under total-factor framework, this article summarizes four
types of energy and environmental efficiency evaluation
methods and proposes several associated energy efficiency
index via DEA methods, which includes (i) traditional
DEA-based efficiency evaluation method and energy effi-
ciency index; (ii) weak disposability assumption-based DEA
method and energy efficiency index; (iii) range adjusted
measure-based method and energy efficiency index; and (iv)
multidirectional efficiency analysis approach and energy
efficiency index. These DEA-based methods are further
comparatively discussed in this article and applied in a case
Handbook of Clean Energy Systems, Online © 2015 John Wiley & Sons, Ltd.
This article is © 2015 John Wiley & Sons, Ltd.
This article was published in the Handbook of Clean Energy Systems in 2015 by John Wiley & Sons, Ltd.
DOI: 10.1002/9781118991978.hces083
study on energy and environmental efficiency evaluation of
clean energy system.
2 TRADITIONAL DEA-BASED
EFFICIENCY EVALUATION MODEL
AND ENERGY EFFICIENCY INDEX
We first briefly introduce the basic DEA method in the
following section. Consider that there are n regions (DMUs)
need to be evaluated, and each DMUj (j = 1,. . . ,n) utilizes m
inputs xij (i = 1,. . . ,m) to produce s outputs yrj (r = 1,. . . ,s),
then we have the following Model (1):
min 𝜃
𝜃,𝜆
∑
n
s.t. 𝜆j yrj ≥ yrj0 , r = 1, … , s
j=1
∑
n
𝜆j xij ≤ 𝜃xij0 , i = 1, … , m
j=1
∑
n
𝜆j = 1
j=1
𝜆j ≥ 0, j = 1, … , n (1)
in which, 𝜆j is intensity variable for connecting inputs and
outputs by a convex combination, 𝜃 is efficiency measure
and the optimal value 𝜃 * obtained through solving Model
(1) is the efficiency score for the j0 th DMU. 𝜃 satisfies the
constraint of 0 < 𝜃 ≤ 1, and the value of 1 indicates that the
related DMU is on the frontier, and thus, is an efficient
DMU. Model (1) is known as the variable returns to scale
(VRS) model (Banker, Charnes, and Cooper, 1984), and if
the third constraint in Model (1) is removed, it turns into the
constraint returns to scale (CRS) model (Charnes, Cooper,
and Rhodes, 1978). Returns to scale is an economic term
that explains the behavior of rate of increase in the output
to the subsequent increase in the inputs. In the long run,
all factors of outputs are variable and subject to change
because of a given increase in scale. The law of returns to
scale is a set of interrelated stages: increasing returns to
scale (IRS), constant returns to scale (CRS), and decreasing
returns to scale (DRS). If output increases with the same
proportion of the increase in input, then there are CRS;
if output increases less than the proportional increase in
input, then there are DRS; and if output increases more
than the proportional increase in inputs, then there are IRS.
Decreasing and IRS together are known as variable returns
to scale.
 Energy Efficiency Index via Data Envelopment Analysis (DEA): Methodology and Application 3

The CRS model identifies the overall technical efficiency undesirable outputs, respectively. The efficiency measure
of each DMU and the VRS model detects its pure technical 𝜃 for different types of inputs and undesirable outputs are
efficiency and scale efficiency. In addition, the overall tech- different, indicating that each DMU can contract its inputs
nical efficiency is the product of pure technical efficiency and undesirable outputs through different proportional
and scale efficiency. Model (1) is the input-oriented DEA adjustments. Furthermore, the introduction of different
model, which attempts to proportionally contract (through kinds of slacks in the DEA model allows each DMU further
the adjustment of 𝜃) the inputs of DMUj0 as much as decreases its consumption on a specific input or reduces its
possible while not decreasing the current level of the outputs emission or discharge of a specific undesirable output freely
of DMUj0 . Similarly, the DEA model also can be estab- beyond the proportional contraction. Similar to Model (1), all
lished based on the output-oriented formulation, in which the inputs and outputs in Model (2) are strongly disposable.
y+∗
the outputs of each DMU are proportionally expanded as Letting (𝜃 x∗ , 𝜃 e∗ , 𝜃 b∗ , 𝜆∗j , sx−∗
i
, se−∗
l
, sr , sb−∗
f
) be the
much as possible while the inputs of each DMU are not optimal solutions of Model (2), then we can define the
increasing. It should be emphasized that all the inputs and simple energy utilization efficiency index (EUEI) as:
outputs included in Model (1) are strongly or freely dispos-
able that all the inputs (or outputs) can be reduced (or ∑
k
𝜃 e∗ elj − se−∗
l
increased) without affecting the production of outputs (or the EUEI = 𝛼l (3)
elj
consumption of inputs). l=1

On the basis of the above Model (1), we further propose

the input-oriented CCR DEA model for total-factor Referring to the efficiency definition proposed in Hu and
energy efficiency evaluation, in which both the desir- Wang (2006), the value of 𝜃 e∗ elj − se−∗
l
in Equation (3) repre-
able and the undesirable outputs are included, and the sents the target energy input, which represents a theoret-
separation of energy inputs and nonenergy inputs are ical minimum level of energy input that a DMU should
considered. consume in order to perform at the efficiency frontier of
energy consumption. Since elj is the actual energy consump-
min 𝜃 x + 𝜃 e + 𝜃 b tion of a DMU, EUEI represents the ratio of target energy
𝜃,𝜆,s
consumption and actual energy consumption. If the amount
∑
n
of adjustments in energy input, that is, elj − (𝜃 e∗ elj − se−∗ ), is
s.t. 𝜆j xij + sx−
i = 𝜃 xij0 , i = 1, … , m
x l
j=1 regarded as the inefficient portion of actual energy consump-
tion, then, the more the amount of energy input adjustments,
∑
n
𝜆j elj + se− the less efficient the energy utilization. In addition, if there
l = 𝜃 elj0 , l = 1, … , k
e

j=1 does not exist any amount of energy input adjustments, then,
the energy utilization is efficient. Therefore, the index of
∑
n
y+
𝜆j yrj − sr = yrj0 , r = 1, … , s EUEI can represent the energy utilization efficiency within
j=1 the total-factor production framework. In Equation (3) al
is the normalized user specified weights associated with a
∑
n
𝜆j bfj + sb−
f = 𝜃 bf j0 , f = 1, … , h
b specific type of energy input el , which reflect the impor-
j=1 tance of each energy resource in the energy utilization effi-
ciency evaluation, and thus, EUEI also can be considered the
∑
n
𝜆j = 1 weighted arithmetic average of the specific energy resource
j=1 utilization efficiencies.
y+ If the impact of undesirable outputs and nonenergy inputs
𝜆j , sx−
i , sl , sr , sf ≥ 0, for all j, i, l, r, f
e− b−
(2)
are also considered in the total-factor energy utilization,
economic production and pollutant emission performance
In Model (2), the nonenergy inputs, energy input, desir-
evaluation, then, we can propose two extended energy effi-
able outputs and undesirable outputs for DMUj (j = 1,. . . ,n)
ciency indices, which are unified energy and emission effi-
are, respectively, denoted by x = (x1j ,. . . ,xmj ), e = (e1j, . . . ,ekj ),
ciency index (UEEEI) and total-factor energy efficiency
g = (g1j ,. . . ,gsj ), and b = (b1j ,. . . ,bhj ). 𝜆j is intensity variable.
index (TFEEI), as follows:
𝜃 x , 𝜃 e , 𝜃 b are efficiency measures associated with nonenergy
inputs, energy inputs, and undesirable outputs, respectively.
y+ ∑
k
𝜃 e∗ elj − se−∗ ∑
h 𝜃 b∗ bfj − sb−∗
In addition sx− i
(i = 1,. . . ,m), se−
l
(l = 1,. . . ,k), sr (r = 1,. . . ,s), UEEEI = w1 𝛼l l
+ w2 𝛽f
f
b− elj blj
and sf (f = 1,. . . ,h) are slack variables associated with l=1 f =1
nonenergy inputs, energy inputs, desirable outputs, and (4)

Handbook of Clean Energy Systems, Online © 2015 John Wiley & Sons, Ltd.
This article is © 2015 John Wiley & Sons, Ltd.
This article was published in the Handbook of Clean Energy Systems in 2015 by John Wiley & Sons, Ltd.
DOI: 10.1002/9781118991978.hces083
4 Sustainability Indicators, Evaluation Criteria, and Reporting
∑
k
𝜃 e∗ elj − se−∗ ∑
h 𝜃 b∗ bfj − sb−∗
l f
TFEEI = w1 𝛼l + w2 𝛽f
l=1
elj f =1
blj
∑
h
𝜃 x∗ xij − sx−∗
i
+ w3 𝜌i
f =1
xij
In Equation (4), w1 and w2 are the normalized user
specified weights associated with total energy input and
total undesirable output, which reflect the importance
of energy utilization and pollutant emission in the eval-
uation. Similarly, w1 , w2 , and w3 in Equation (5) are
the normalized user specified weights associated with
total energy input, total undesirable output, and total
nonenergy input, which reflect the importance of each
of them in the total-factor energy efficiency evaluation.
Furthermore, both in Equations 4 and 5, al , 𝛽 f and 𝜌i are,
respectively, normalized user specified weights associated
with a specific type of energy input el , a specific type of
undesirable output bf , and a specific type of nonenergy input
xi .
The values of all the above three energy efficiency indices
are in the range of (0,1], and the value of 1 indicates the
related DMU is on the efficiency frontier and evaluated as
efficient one compared with other DMUs.
In Model (2) the undesirable outputs are essentially treated
as freely disposable inputs, and this treatment is reason-
able if the production and emission of undesirable outputs
is considered a right for each DMU under the emission
constraint or environmental protection regulation and each
DMU have to pay a cost to obtain this emission right or space.
However, this treatment is not consistent with the actual
production process of a DMU that the undesirable outputs are
the byproducts of production process of desirable outputs,
and a DMU will not produce any pollutant outputs until the
energy inputs are utilized to produce desirable outputs. Thus,
an alternative undesirable output treatment technique is also
commonly used in energy efficiency evaluation studies, in
which the undesirable outputs are firstly converted through
a linear monotone transformation (Seiford and Zhu, 2002)
and then are treated as desirable outputs. The transformation
process is: the value on each undesirable output is multiplied
by −1, and then, a proper translation value v is added to the
negative undesirable output value to make it positive. That
is bfj = −bfj + vf > 0, f = 1,. . . ,h, which could be achieved
by choosing vf = maxj {bfj } + 1, f = 1,. . . ,h. After the above
transformation, bfj can be treated as desirable outputs in DEA
model. For the energy efficiency evaluation model with the
undesirable output transformation technique, and the asso-
ciated energy efficiency index, see Wang, Wei, and Zhang
(2012).
Handbook of Clean Energy Systems, Online © 2015 John Wiley & Sons, Ltd.
This article is © 2015 John Wiley & Sons, Ltd.
This article was published in the Handbook of Clean Energy Systems in 2015 by John Wiley & Sons, Ltd.
DOI: 10.1002/9781118991978.hces083
3 WEAK DISPOSABILITY
ASSUMPTION-BASED DEA MODEL
AND ENERGY EFFICIENCY INDEX
(5) In traditional DEA method, the inputs and outputs are
assumed to be strongly disposable, that is, its reference tech-
nology Ts = {(x,y): x can produce y} satisfies: if (x,y)∈Ts and
x′ ≥ x (or y′ ≤ y) then (x′ , y)∈Ts (or (x, y′ )∈Ts ). Strong dispos-
ability indicates that the values on all the inputs or outputs
can be freely diminished or increased without affecting any
other inputs or outputs factors. This strong disposability
assumption may not always be satisfied in the actual produc-
tion process when the measure of undesirable outputs is
included, that is, the generation of desirable outputs may
always be accompanied by the production and emission of
bad outputs, and thus, the reduction of such bad outputs will
not be free but costly. Therefore, in such condition, the appli-
cation of strong disposability assumption will not be appro-
priate. To solve this problem, another DEA-based concept
of weak disposability was proposed in Färe et al. (1989)
and Färe, Grosskopf, and Hernandez-Sancho (2004). The
weak disposability reference technology Tw = {(x,g,b):x can
produce (g,b)} satisfies that if (x,g,b)∈Tw and 𝜃∈[0,1] then
(𝜃g, 𝜃b)∈Tw , in which b stands for bad outputs. Weak dispos-
ability on undesirable output implies that any reduction on
bad output will also lead a decreasing in good output. In
addition, the null-jointness condition also should be satisfied
that if (x,g,b)∈Tw and b = 0 then g = 0. This null-jointness
property implies that the good output cannot be produced
without the production of bad output, that is, the only way
to eliminate all the bad outputs is to stop the good output
production. The weak disposability assumption is consid-
ered a better representation of the actual production process
if both the desirable and undesirable outputs are simulta-
neously considered in the production efficiency evaluation,
and thus is widely accepted and utilized in the energy and
environmental efficiency studies (e.g., Färe, Grosskopf, and
Pasurka, 2001; Zhou, Ang, and Poh, 2008b; Wang, Yu, and
Zhang, 2011).
When evaluating the energy and environmental efficiency
under the weak disposability assumption, the directional
distance function (DDF) efficiency measure is one of the
most commonly used techniques (Färe and Grosskopf,
2004), which allows each DMU to simultaneously expand
desirable outputs and contract inputs and/or undesirable
outputs along a specific pre-given direction. The traditional
radial efficiency evaluation DEA Model (1) is considered a
specific case of the DDF efficiency model. Combined with
the DDF technique, the weak disposability assumption-based
DEA model for energy efficiency is given as follows:
 Energy Efficiency Index via Data Envelopment Analysis (DEA): Methodology and Application 5

max 𝛿 ∑
h bf j0 − 𝛿 ∗ dfb ∑
s
grj
𝛿,𝜆,𝜙 WTEEI = w1 𝜙 + w2 ∗
𝛽f + w3 𝜏r g
bfj grj + 𝛿 ∗ dr
∑
n
g
f =1 r=1
s.t. 𝜆j grj ≥ grj0 + 𝛿dr , r = 1, … , s (9)
j=1 In Equation (8), w1 and w2 are the normalized user
∑
n specified weights associated with energy input and total
𝜆j bfj = bf j0 − 𝛿dfb , f = 1, … , h undesirable output. Similarly, in Equation (9), w1 , w2 , and
j=1 w3 are the normalized user specified weights associated
∑
n with total energy and nonenergy input, total undesir-
𝜆j xij ≤ 𝜙xij0 , i = 1, … , m able output, and total desirable output, which reflect the
j=1 importance of each of them in the weakly disposable
∑
n total-factor energy efficiency evaluation. In addition, both
𝜆j elj ≤ 𝜙elj0 , l = 1, … , k in Equations 8 and 9, 𝛽 f and 𝜏 r are, respectively, normalized
j=1 user-specified weights associated with a specific type of
∑
n undesirable output bf , and a specific type of desirable output
𝜆j = 𝜙 gr .
j=1 The values on WEEI, WEEEI, and WTEEI are all between
𝜆j ≥ 0, j = 1, … , n 0 and 1. Especially, the value of 1 for WTEEI indicates
the related DMU is efficient in energy utilization, economic
0≤𝜙≤1 (6) production, and pollutant emission, compared with other
DMUs within the weak disposability reference technology,
In Model (6), the nonenergy inputs, energy inputs, desir- and based on the chosen direction for desirable output expan-
able outputs and undesirable outputs for DMUj (j = 1,. . . ,n) sion and undesirable output contraction so as to reach the
are respectively indicated by x = (x1j ,. . . ,xmj ), e = (e1j, . . . ,ekj ), efficient frontier.
g = (g1j ,. . . ,gsj ) and b = (b1j ,. . . ,bhj ), and 𝜆j is intensity vari- An additional question is the choosing of the directional
ables. 𝜙 together with the fifth constraint are used to model distance function, which could be defined as follows:
g
the VRS assumption. d = (dr , dfb ) (r = 1,. . . ,s; f = 1,. . . ,h) is →
−
the given direction vector, and 𝛿 is the efficiency measure of D(x, e, g, b; dg , db ) = max{𝛿 ∶ (g + 𝛿dg , b − 𝛿db ) ∈ T w }
both desirable and undesirable outputs associated with the (10)
chosen direction. It should be noticed that the undesirable
outputs related constraint, that is, the second constraint of The value 𝛿 represents the distance between the obser-
Model (6) is an equation constraint, which represents the vation (y, b) under evaluation and one corresponding point
weak disposability and null-jointness property. (g + 𝛿dg , b−𝛿db ) on the efficiency frontier. The direction
In Model (6), the DMU under evaluation is measured as vector (dg , −db ) determines the direction along which
efficient in the utilizing of energy and nonenergy inputs, the energy and environmental efficiency is measured
producing of both desirable and undesirable outputs, if the (Figure 1).
optimized objective 𝛿 * = 0. If the DMU under evaluation As shown in Figure 1, the directional distance function
is inefficient (𝛿 * > 0), then its efficiency can be promoted yields the maximum feasible expansion of desirable output
through reducing the energy input and nonenergy input and the maximum feasible contraction of undesirable
excesses and fulfilling the desirable output shortages, as
well as reducing the undesirable output excesses. Thus, the
weakly disposable energy efficiency index (WEEI), weakly Desirable output
disposable energy and environmental efficiency index (g) (g + 𝛿dg, b − 𝛿db)
(WEEEI), and the weakly disposable total-factor energy
efficiency index (WTEEI) can be, respectively, defined as
follow:
(dg, −db) (g,b)
WEEI = 𝜙∗ (7)
Undesirable output
0 (b)
∑
h bfj − 𝛿 ∗ dfb
WEEEI = w1 𝜙 + w2 ∗
𝛽f (8)
f =1
bfj Figure 1. Direction distance function and efficiency measure.

Handbook of Clean Energy Systems, Online © 2015 John Wiley & Sons, Ltd.
This article is © 2015 John Wiley & Sons, Ltd.
This article was published in the Handbook of Clean Energy Systems in 2015 by John Wiley & Sons, Ltd.
DOI: 10.1002/9781118991978.hces083
6 Sustainability Indicators, Evaluation Criteria, and Reporting

output. As the direction is not fixed, it is possible to
measure the energy and environmental efficiency in different
directions through changing the value of the direction
vector.
4 RANGE ADJUSTED MEASURE-BASED
DEA MODEL AND ENERGY
EFFICIENCY INDEX
The DEA-based energy efficiency evaluation models
proposed earlier are essentially radial DEA models, no
matter they rely on strong or weak disposability assump-
tions, in which all the under evaluated DMUs yield a
unified proportional abatement on all energy inputs or a
unified proportional reduction on all undesirable output
through, respectively, using the same efficiency measure
of 𝜃 in Model (2) or 𝛿 in Model (6). However, in a certain
sense, this concept of radial adjustment is not sufficient
because the contraction potentials on different types of
energy inputs may different, and the reduction potentials
for different pollutant outputs may also various. Therefore,
in this section we present another DEA-based model, the
range-adjusted measure-based DEA (RAM-DEA) method
(Cooper, Park, and Pastor, 1999), for energy efficiency
evaluation modeling and related energy efficiency index
designing.
According to Sueyoshi and Goto (2012), there are two
concerns on the definition of strong and weak disposability.
The first one is that, these two concepts are proposed for
radial DEA-based efficiency evaluation with undesirable
outputs, in which a single efficiency measure is incorpo-
rated, and thus, the assumption of weak disposability is
necessary. However, for nonradial DEA-based efficiency
to improve the effects on energy utilization and conser-
vation, greenhouse gas emission and pollutant emission
reduction, and environment protection (Wang, Lu, and Wei,
2013a).
We first give the interpretation of two concepts proposed
in Sueyoshi and Goto (2012) and applied in Wang, Lu, and
Wei (2013a), which are natural disposability and managerial
disposability. Natural disposability indicates that a DMU
can decrease its inputs along a specific direction so as to
decrease the bad outputs. Then, given a decreased inputs, the
DMU tries to increase its good outputs as much as possible
along another specific direction. Managerial disposability, as
an opposite concept to the natural disposability, indicates
that a DMU increases its directional inputs to decrease the
directional bad outputs. Then, given the increased inputs, the
DMU tries to increase the directional good outputs as much
as possible.
Then, we present two RAM-DEA-based energy efficiency
evaluation models under the natural disposability and
managerial disposability, respectively, in the following two
subsections.
4.1 Natural disposability-based energy efficiency
evaluation model and index
Similar to the definition in Models 2 and 6, we consider
n DMUs, and each of them uses m inputs xj = (x1j ,. . . ,xmj ),
including energy and nonenergy resources, to produce s
desirable outputs gj = (g1j ,. . . ,gsj ) and f undesirable outputs
bj = (b1j ,. . . ,bfj ). The following RAM-DEA model can eval-
uate the energy efficiency for each DMU under natural
disposability:
∑
m
∑
s
g g
∑
h

evaluation with undesirable outputs, there is no necessity max Rxi sxi + Rr sr + Rbf sbf
s,𝜆
to distinguish between weak and strong disposability, as i=1 r=1 f =1

the incorporating of a single efficiency measure in the ∑n

nonradial model is not necessary. The second one is that s.t. xij 𝜆j + sxi = xij0 , i = 1, … , m
within radial DEA model, although the directional vector j=1

for desirable and undesirable outputs can be pre-given, the ∑

n
g
direction for inputs is not specified, which can be further grj 𝜆j − sr = grj0 , r = 1, … , s
j=1
defined under the RAM-DEA model, and thus, several new
concepts on disposability can be proposed from opera- ∑
n

tional and environmental strategy point of view, and these bfj 𝜆j + sbf = bf j0 , f = 1, … , h
j=1
concepts provide deeper insight into energy and environ-
mental efficiency measures. These new concepts include ∑
n

slack adjustment (instead of radial adjustment)-based energy 𝜆j = 1

j=1
efficiency, types of returns to scale (RTS) and damages
to scale (DTS), and natural disposability and managerial 𝜆j ≥ 0, j = 1, … , n sxi ≥ 0, i = 1, … , m
disposability, which are all considered valuable and mean- g
sr ≥ 0, r = 1, … , s sbf ≥ 0, f = 1, … , h (11)
ingful for researchers and policy makers regarding how

Handbook of Clean Energy Systems, Online © 2015 John Wiley & Sons, Ltd.
This article is © 2015 John Wiley & Sons, Ltd.
This article was published in the Handbook of Clean Energy Systems in 2015 by John Wiley & Sons, Ltd.
DOI: 10.1002/9781118991978.hces083
 Energy Efficiency Index via Data Envelopment Analysis (DEA): Methodology and Application 7

In Model (11), 𝜆j is intensity variables associated with
g g
each DMUj. sxi , sr , and sbf are all slack variables. Rxi , Rr , Rbf are
ranges determined by the upper and lower bounds of inputs,
desirable outputs and undesirable outputs, respectively. The
upper and lower bounds of the ith inputs, for example, are
obtained as xi = maxj {xij } and xi = minj {xij }. The range
for the ith input then becomes Rxi = 1∕[(m + s + h)(xi − xi )].
Similarly, the ranges for the rth desirable output and the
g
fth undesirable output become Rr = 1∕[(m + s + h)(gr − g )]
r
and Rbf = 1∕[(m + s + h)(bf − bf )].
It can be seen that, in Model (11), the undesirable outputs
If a DMU is measured as efficient in Models 11 or
14, then its type of returns to scale can be determined by
solving the following Model (15); and if a DMU is inef-
ficient, then its type of returns to scale can be determined
through solving Model (16). Returns to scale is a microeco-
nomic concept that represents the marginal and proportional
change of desirable output owing to a unit increase in an
input.
max∕min 𝜎
s,𝜆,v,u,𝜎

are treated as inputs, which has no essential difference with ∑

n
∑
n
g
strong disposability assumption. On the basis of Model s.t. xij 𝜆j + sxi = xij0 grj 𝜆j − si = grj0
j=1 j=1
(11), an energy efficiency index under natural disposability
(EEIND) and an associated production efficiency index (PEI) ∑n
∑ m
∑
s

could be defined as: 𝜆j = 1 vi xij − ur grj + 𝜎 ≥ 0

(m ) j=1 i=1 r=1
∑ ∑s
g g∗
∑h
∑
m
∑
s
∑
m
∑
s
x x∗ b b∗
EEIND = 1 − Ri si + Rr sr + Rf sf (12) Rxi sxi +
g g
Rr sr = vi xij0 − ur grj0 + 𝜎
i=1 r=1 f =1
i=1 r=1 i=1 r=1
( ) g g
∑
m
∑
s vi ≥ Rxi sxi ≥ 0ur ≥ Rr sr ≥ 0 𝜆j ≥ 0
g g∗
PEI = 1 − Rxi sx∗ + Rr sr (13)
i=1
i
r=1 i = 1, … , m r = 1, … , s j = 1, … , n (15)

The optimized slacks in Equations 12 and 13 are deter-

mined through solving Model (11). As the optimized objec- ∑
h
tive value of Model (11) indicates the level of inefficiency max∕min 𝜇 = 𝜎 + wf bfj
under natural disposability, the values on EEIND and PEI s,𝜆,v,u,w,𝜎 f =1
represent the total-factor energy and production efficiencies
∑
m
∑
s
∑
h
under natural disposability, which are between 0 and 1, and s.t. Rxi sxi +
g g
Rr sr + Rbf sbf
the value of 1 indicates that the related DMU is an effi- i=1 r=1 f =1
cient one. It is notable that the efficiency measure of EEIND
incorporates the inputs and both the desirable and undesir- ∑m
∑ s
∑
h
= vi xij0 − ur grj0 + wf bf j0 + 𝜎
able outputs, but PEI does not incorporate the undesirable i=1 r=1 f =1
outputs. Therefore, the latter mainly measures the energy
inputs utilization and desirable output production efficiency, all constraints in Models (11) and (14). (16)
but ignores the undesirable outputs and omits the emission or
environmental impact. This is the major difference between The optimizations of Models 15 and 16 give the upper
EEIND and PEI. bounds and the lower bound of 𝜎 and 𝜇, respectively, and
Model (11) has the following dual programming, in which the returns to scale regarding each DMU can be deter-
vi (i = 1,. . . ,m), ur (r = 1,. . . ,s), wf (f = 1,. . . ,h), and 𝜎 are dual mine based on these optimized upper and lower bounds as
variables that need to be optimized, and 𝜎 is an unrestricted follow:
variable.
∗ ∗
(a) 𝜇 ∗ ≤ 𝜇 < 0 or 𝜎 ∗ ≤ 𝜎 < 0: DMU under IRS;
∑
m
∑
s
∑
h
∗ ∗
min vi xij0 − ur grj0 + wf bf j0 + 𝜎 (b) 𝜇 ∗ ≤ 0 ≤ 𝜇 or 𝜎 ∗ ≤ 0 ≤ 𝜎 : DMU under CRS;
v,u,w ∗ ∗
i=1 r=1 f =1 (c) 𝜇 ≥ 𝜇 ∗ > 0 or 𝜎 ≥ 𝜎 ∗ > 0: DMU under DRS.
∑
m
∑
s
∑
h
s.t. vi xij − ur grj + wf bfj + 𝜎 ≥ 0, j = 1, … , n Under natural disposability, IRS indicates that one unit
i=1 r=1 f =1 increase in input will produce desirable output more propor-
g
vi ≥ Rxi , i = 1, … , m ur ≥ Rr , r = 1, … , s tionally than the input increase and vice versa; CRS means
that increasing or decreasing input will result in the same
wf ≥ Rbf , f = 1, … , h (14) percentage increase or decrease in desirable output; and DRS

Handbook of Clean Energy Systems, Online © 2015 John Wiley & Sons, Ltd.
This article is © 2015 John Wiley & Sons, Ltd.
This article was published in the Handbook of Clean Energy Systems in 2015 by John Wiley & Sons, Ltd.
DOI: 10.1002/9781118991978.hces083
8 Sustainability Indicators, Evaluation Criteria, and Reporting

under natural disposability implies that increases in inputs The optimized slacks in Equations 18 and 19 are deter-
will bring less percentage increase in desirable output and mined through solving Model (17), and the values on EEIMD
vice versa. and EEI represent the total-factor energy and environmental
efficiencies under managerial disposability assumption. It is
notable that the efficiency measure of EEIMD incorporates
4.2 Managerial disposability-based energy the inputs and both the desirable and undesirable outputs,
efficiency evaluation model and index but EEI does not incorporate the desirable outputs. There-
fore, the latter mainly measures the energy inputs utilization
The managerial disposability is an opposite concept to the and pollutant emission efficiency, and focus on the environ-
natural disposability, and the following programming gives mental impact of energy consumption, but ignores the desir-
the RAM-DEA-based energy efficiency evaluation model able outputs production. This is the major difference between
under managerial disposability: EEIMD and EEI.
Model (17) has the following dual programming, in which
∑
m
∑
s
g g
∑
h
definitions of variables and parameters are same with Model
max Rxi sxi + Rr sr + Rbf sbf
s,𝜆 (14). The only difference between Models (20) and (14) is
i=1 r=1 f =1
the sign of variable vi within the inputs related constraint.
∑n
s.t. xij 𝜆j − sxi = xik , i = 1, … , m
j=1 ∑
m
∑
s
∑
h
min − vi xik − ur grk + wf bfk + 𝜎
∑
n
g
v,u,w,𝜎
i=1 r=1 f =1
grj 𝜆j − sr = grk , r = 1, … , s
j=1 ∑
m
∑
s
∑
h
s.t. − vi xij − ur grj + wf bfj + 𝜎 ≥ 0, j = 1, … , n
∑
n
i=1 r=1 f =1
bfj 𝜆j + sbf = bfk , f = 1, … , h
g
j=1 vi ≥ Rxi , i = 1, … , m ur ≥ Rr , r = 1, … , s
∑
n
wf ≥ Rbf , f = 1, … , h (20)
𝜆j = 1
j=1
If a DMU is measured as efficient in Models 17 or 20, then
𝜆j ≥ 0, j = 1, … , n, sxi ≥ 0, i = 1, … , m
its type of damages to scale can be determined by solving
g
dr ≥ 0, r = 1, … , s, sbf ≥ 0, f = 1, … , h (17) the following Model (21); and if a DMU is inefficient, then
its type of damages to scale can be determined through
The definitions of variables and parameters in Model solving Model (22). The concept of damages to scale is
(17) are same with Model (11), and the formulations of corresponds to the concept of returns to scale in the case
these two models are similar. The only difference between of undesirable outputs, which represents the marginal and
them is the sign of slack sxi within the inputs related proportional change of a undesirable output because of a unit
constraint, that is, the first constrain in Model (11) and increase in an input.
the first constrain in Model (17), respectively, and this
difference indicates that the undesirable outputs are treated max∕min 𝜎
like freely disposable inputs, whereas the inputs are treated s,𝜆,v,w,𝜎
like freely disposable outputs in mathematics in Model (17). ∑
n
∑
n
Similarly, based on Model (17), an energy efficiency index s.t. xij 𝜆j − sxi = xik bfj 𝜆j + sbf = bfk
under managerial disposability (EEIMD) and an associated j=1 j=1
environmental efficiency index (EEI) could be defined ∑ n
∑ m
∑
h
as: 𝜆j = 1 − vi xij − wf bfj + 𝜎 ≥ 0
( ) j=1 i=1 f =1
∑
m
∑
s
∑
h
EEIMD = 1 − Rxi dix∗ +
g g∗
Rr dr + Rbf dfb∗ (18) ∑
m
∑
s
∑
m
∑
h
Rxi sxi + Rbf sbf = − vi xik − wf bfk + 𝜎
i=1 r=1 f =1
i=1 r=1 i=1 f =1
(m ) vi ≥ Rxi sxi ≥ 0 wf ≥ Rbf sbf ≥ 0 𝜆j ≥ 0
∑ ∑
h
EEI = 1 − Rxi dix∗ + Rbf dfb∗ (19)
i = 1, … , m f = 1, … , h j = 1, … , n (21)
i=1 f =1

Handbook of Clean Energy Systems, Online © 2015 John Wiley & Sons, Ltd.
This article is © 2015 John Wiley & Sons, Ltd.
This article was published in the Handbook of Clean Energy Systems in 2015 by John Wiley & Sons, Ltd.
DOI: 10.1002/9781118991978.hces083
 Energy Efficiency Index via Data Envelopment Analysis (DEA): Methodology and Application 9

Input
X
B5 Frontier for
desirable output
B4

B3 xij + si
x
Frontier for G5
undesirable output xij DMUj
B2
DMUj G4

B1 xij − sxi
G3

G2
Undesirable output G1 Desirable output
B G
bfj bfj − sbf 0 grj grj + sgr

Figure 2. Efficiency measure under natural and managerial disposability and frontiers for desirable and undesirable output.

∑
s disposability are illustrated in Figure 2, in which two
max∕min 𝜏 = 𝜎 − ur grk frontiers are identified. The frontier on the right quadrant
s,𝜆,v,u,w,𝜎 r=1 is frontier for desirable output, and the one on the left
∑
m
∑s
g g
∑
h quadrant is frontier for undesirable output. We consider an
s.t. Rxi sxi + Rr sr + Rbf sbf inefficient DMU, located at the DMUj point in Figure 2,
i=1 r=1 f =1 which consumes xij input. For virtual convenience, we
∑
m
∑
s
∑
h ignore the nonenergy inputs in xij , and the vertical axis only
= − vi xik − ur grk + wf bfk + 𝜎 depicts the energy input. The right directional horizontal
i=1 r=1 f =1 axis indicates the desirable output, and the left directional
all constraints in Models (17) and (20) (22) horizontal axis indicates the undesirable output. The associ-
ated desirable output and undesirable output for DMUj are
The optimizations of Models 21 and 22 give the upper grj and bfj .
bounds and the lower bound of 𝜎 and 𝜏, respectively, and If the inefficient DMU attempt to improve its energy
the damages to scale regarding each DMU can be deter- efficiency through increasing the amount of the desirable
g
mine based on these optimized upper and lower bounds as output by sr , and/or through decreasing the amount of the
x
follow: input by si , then, a projection toward point G3 on the
desirable output frontier can be identified, and a piece-
∗ ∗
(a) 𝜏 ∗ ≤ 𝜏 < 0 or 𝜎 ∗ ≤ 𝜎 < 0: DMU under decreasing wise linear curve, denoted by G2–G3–G4, indicates the
damages to scale (DDS); desirable output efficient frontier on which DMUj can be
∗ ∗
(b) 𝜏 ∗ ≤ 0 ≤ 𝜏 or 𝜎 ∗ ≤ 0 ≤ 𝜎 : DMU under constant projected. The direction of this possible projection for DMUj
damages to scale (CDS); on G2–G3–G4 is represented by the signs of slacks of sxi
∗ ∗ g
(c) 𝜏 ≥ 𝜏 ∗ > 0 or 𝜎 ≥ 𝜎 ∗ > 0: DMU under increasing on energy input and sr on desirable output in the first and
damages to scale (IDS). second constraints in Model (11). On the contrary, if the
inefficient DMU attempt to improve its environmental effi-
Under managerial disposability, DDS implies that the ciency through decreasing the amount of the undesirable by
undesirable outputs are yielded less proportionally than the sbf , and/or through increasing the amount of the input by
unit increase in inputs; CDS under managerial disposability sxi , then, a projection toward point B3 on the undesirable
means that increasing or decreasing inputs will result in the output frontier can be identified, and a piecewise linear curve,
same percentage increase or decrease in undesirable outputs; denoted by B2–B3–B4, indicates the undesirable output effi-
and IDS under managerial disposability indicates that the cient frontier on which DMUj can be projected. The direction
undesirable outputs are produced more proportionally than of this possible projection for DMUj on B2–B3–B4 is repre-
the unit increase in inputs. sented by the signs of slacks of sxi on energy input and sbf on
To sum up, the energy and environmental efficiency undesirable output in the first and third constraints in Model
measures under natural disposability and managerial (17).

Handbook of Clean Energy Systems, Online © 2015 John Wiley & Sons, Ltd.
This article is © 2015 John Wiley & Sons, Ltd.
This article was published in the Handbook of Clean Energy Systems in 2015 by John Wiley & Sons, Ltd.
DOI: 10.1002/9781118991978.hces083
10 Sustainability Indicators, Evaluation Criteria, and Reporting

5 MULTIDIRECTIONAL EFFICIENCY each of the input, desirable output and undesirable output
ANALYSIS MODEL AND ENERGY need to be solved, respectively. As the reduction potentials
EFFICIENCY INDEX on the energy inputs, desirable outputs, and undesirable
outputs are all assumed to be exist in the evaluation, both the
The multidirectional efficiency analysis (MEA) approach input-oriented MEA (Models 23 and 25) and output-oriented
(Bogetoft and Hougaard, 1999) is considered an alternative MEA (Model 24) models are utilized.
of the traditional DEA approach for efficiency evaluation.
When applying the MEA method, the input reduction min dij0
𝜆,d
benchmark and/or output expansion benchmark are selected ∑
n
proportionally according to the efficiency improvement s.t. 𝜆j xij ≤ dij0 ,
potential, and then, the efficiency of each DMU is identified j=1
by considering the improvement potential separately in ∑
n
each input and output of the DMU. If both the desirable 𝜆j x−ij ≤ x−ij0 , −i = 1, … , i − 1, i + 1, … , m
outputs and the undesirable outputs are included in the j=1
MEA framework, then, all the adjustments on inputs, ∑
n
desirable and undesirable outputs are further combined in a 𝜆j bfj ≤ df j0 , f = 1, … , h
jointed optimization when calculating the integrated MEA j=1
efficiency, thus, the jointness of desirable and undesirable ∑
n
outputs is satisfied and explicitly modeled (Asmild et al., 𝜆j grj ≥ grj0 , r = 1, … , s
2003; Wang, Wei, and Zhang, 2013b). j=1

Considering the above-mentioned properties, the MEA 𝜆j ≥ 0, j = 1, … , n (23)

approach is more appropriate for not only estimating the inte-
grated energy and environmental efficiency levels, but inves-
max drj0
tigating the energy and environmental efficiency patterns, 𝜆,d
that is, the specific energy utilization efficiency, pollutant ∑
s.t. 𝜆j grj ≥ drj0
emission or discharge efficiency, and economic production j
efficiency of each DMU. Furthermore, MEA is appropriate ∑
in the situations that the aim of each DMU in efficiency 𝜆j g−rj ≥ g−rj0 , −r = 1, … , r − 1, r + 1, … , s
j
evaluation is to simultaneously reduce the consumption of
∑
energy and other resource inputs, reduce the discharge of 𝜆j xij ≤ xij0 , i = 1, … , m
undesirable pollutant outputs, and increase the production of j
economic desirable outputs, without presetting the priorities ∑
𝜆j bfj ≤ bf j0 , f = 1, … , h
on improvements of some variables over other variables.
j
In addition, since the MEA method specifies the effi-
ciency measures of each DMU relative to the benchmarks 𝜆j ≥ 0, j = 1, … , n (24)
denoted by the potential of improvement on each of the input
and/or output, the MEA efficiency measure is considered min df j0
𝜆,d
not restricted to the radial adjustment on inputs, desirable
and undesirable outputs as in the traditional radial DEA ∑
n

approach. Therefore, both the variable-specific energy input s.t. 𝜆j bfj ≤ df j0 ,

j=1
efficiency index and the variable-specific pollutant undesir-
able output efficiency index, as well as the integrated energy ∑
n
𝜆j b−fj ≤ b−f j0 , −f = 1, … , f − 1, f + 1, … , h
and environmental efficiency index, can be designed and
j=1
measured based on the evaluation process of MEA.
In this section, we consider there are n DMUs in the ∑
n
𝜆j xij ≤ xij0 , i = 1, … , m
evaluation data set observed. The jth DMU utilizes m inputs j=1
of xij (i = 1,. . . ,m), including energy and nonenergy inputs,
to produces s desirable outputs of grj (r = 1,. . . ,s) and h ∑
n
𝜆j grj ≥ grj0 , r = 1, … , s
undesirable outputs of bfj as byproduct. In order to find j=1
the ideal reference point for the under evaluated DMUj0
(xij0 , grj0 , bf j0 ), the following three Models 23, 24, and 25 for 𝜆j ≥ 0, j = 1, … , n (25)

Handbook of Clean Energy Systems, Online © 2015 John Wiley & Sons, Ltd.
This article is © 2015 John Wiley & Sons, Ltd.
This article was published in the Handbook of Clean Energy Systems in 2015 by John Wiley & Sons, Ltd.
DOI: 10.1002/9781118991978.hces083
 Energy Efficiency Index via Data Envelopment Analysis (DEA): Methodology and Application 11

In Model (23), the subscript –i denotes all input dimen- and undesirable output in the MEA-based energy and envi-
sions except the ith dimension of the inputs. In Model ronmental efficiency evaluation. ai and 𝜌f are, respectively,
(24), the subscript –r denotes all desirable dimensions normalized user specified weights associated with a specific
except the rth dimension of the desirable outputs. And type of input xi and a specific type of undesirable output
in Model (25), the subscript –f denotes all undesirable bf .
dimensions except the fth dimension of the undesirable. In addition, based on the individual variable-specific effi-
In all three models, 𝜆j is intensity variable associated ciencies above, an integrated multidirectional energy effi-
with each DMU to connect inputs and outputs. dij0 , df j0 , ciency index (IMEEI) can be defined as follows:
and drj0 are the target values for the ith input reduc-
tion, the fth undesirable output reduction and the rth m 𝛽 ∗ (x − d ∗ ) h 𝛽 ∗ (b − dij∗ )
1
∑ j0 ij0 ij0 1
∑ j0 f j0
desirable output expansion. The ideal reference point 1 − m+h − 0

for DMUj0 could be obtained at (dij∗ , drj∗ , df∗j ) through i=1

xijt m+h
f =1
btf j
0 0
0 0 0
optimizing Models 23–25, and then, the following model IMEEI =
1
∑ 𝛽j∗0 (drj∗ 0 −
s grj0 )
gives the jointed optimization of the integrated MEA 1+
efficiency.
s
r=1
gtrj
0
(29)
max 𝛽
𝜆,𝛽
∑
s.t. 𝜆j xij ≤ xij0 − 𝛽(xij0 − dij∗ ), i = 1, … , m
0
j
∑ 6 COMPARISON AND APPLICATION OF
𝜆j bfj ≤ bf j0 − 𝛽(bf j0 − df∗j ), f = 1, … , h REGIONAL ENERGY EFFICIENCY
0
j
∑ INDEX VIA DEA
𝜆j grj ≥ grj0 + 𝛽(drj∗ − grj0 ), r = 1, … , s
0
j 6.1 Comparison of DEA-based models for energy
𝜆j ≥ 0, j = 1, … , n (26) and environmental efficiency evaluation

In Models 26, 𝛽 is the MEA efficiency measure. The In the above Sections 2–5, we briefly introduce four
optimal solution of Model (26) is (𝜆∗j , 𝛽0t∗ ), and the relative commonly used DEA-based methods for energy and envi-
variable-specific MEA efficiency measures for DMUj0 can ronmental efficiency evaluation and propose several related
be obtained as follows: energy efficiency indices derived from the frontier-based
( ) efficiency measurement and calculated based on the tradi-
⎛ tional or expanded DEA models. Table 1 further provides
x
⎜ ij0 − 𝛽 ∗
j0
x ij0 − d ∗
ij0 grj0
(𝜃 x , 𝜃 g , 𝜃 b ) = ⎜ , , a comprehensive comparison of these models and indices
⎜ xij0 grj0 + 𝛽j (drj − grj0 )
∗ ∗
from the perspective of model feature.
⎝
0 0
Firstly, these four models can be classified it to three
bf j0 − 𝛽j∗ (bf j0 − df∗j ) groups according to the orientation of model, that, the tradi-
0 0
) (27) tional DEA-based energy efficiency evaluation model is
bf j0
input-oriented only, but the MEA-based model is both input-
On the basis of the definition of specific MEA efficiency, and output-oriented. In addition, the weak disposability and
we further propose the multidirectional energy and environ- RAM-based models are nonoriented.
mental specific efficiency index (MEEEI) as: Secondly, the traditional DEA-based model is a radial
model that all the input and undesirable outputs of the under
∑
m xij0 − 𝛽j∗ (xij0 − dij∗ ) evaluated DMU need to be proportionally adjusted when
MEEEI = w1 𝛼i 0 0

xij0 searching the efficiency frontier; however, the other three

i=1
models are all nonradial models that the input excess and
∑
h bf j0 − 𝛽j∗ (bf j0 − df∗j ) output insufficient can be adjusted through different ways as
+ w2 𝜌f 0 0
(28)
f =1
bf j0 slack adjustment, multidirectional adjustment, or directional
distance adjustment.
In Equation (28), w1 and w2 are the normalized user spec- Thirdly, for the disposability assumption on undesirable
ified weights associated with total energy input and total outputs, the traditional DEA-based model and the MEA-
undesirable output, which reflect the importance of input based model rely on strong disposability assumption; and the

Handbook of Clean Energy Systems, Online © 2015 John Wiley & Sons, Ltd.
This article is © 2015 John Wiley & Sons, Ltd.
This article was published in the Handbook of Clean Energy Systems in 2015 by John Wiley & Sons, Ltd.
DOI: 10.1002/9781118991978.hces083
12 Sustainability Indicators, Evaluation Criteria, and Reporting

Table 1. DEA-based energy efficiency evaluation models and their features.

Models and Traditional DEA- Weak Disposability- Range Adjusted Measure- Multidirectional Efficiency
Their Features based Model based DEA Model based Model Analysis-based Model
Orientation Input-oriented Nonoriented; On the basis of Nonoriented; Use Both input- and
directional distance slacks-based measure output-oriented for
function variable-specific
efficiency measure;
Nonoriented for integrated
efficiency measure
Radial or Radial adjustment on input Nonradial; Simultaneously Nonradial; Slack adjustment Nonradial Multidirectional
nonradial and undesirable output adjustment on desirable on all input and output adjustment on all input
type and undesirable outputs and output
Disposability Strong disposability on input Weak disposability on Natural disposability for Strong disposability on all
assumption and desirable output undesirable output desirable output frontier; input and output for
Managerial disposability variable-specific
for undesirable output efficiency; Jointness
frontier restrict on all input and
output for integrated
efficiency
Undesirable Directly treated as input or Treated as weak disposable Treated as strong disposable Treated as strong disposable
output as desirable output after undesirable output with input input or jointness restrict
treatment transformation null-jointness input
Returns to Variable returns to scale Variable returns to scale Variable returns to scale Constant returns to scale
scale type
Core model Model (2); Equation (5); Model (6); Equation (9); Models (11) & (17); Model (26); Equation (29);
and UEEEI & TFEEI WEEEI & WTEEI Equations (12) & (18); MEEEI & IMEEI
efficiency EEIND & EEIMD
measure
Publication Hu and Wang (2006); Wang Zhou et al. (2008a, b); Wang Sueyoshi and Goto (2012); Asmild et al. (2003); Wang
et al. (2012) et al. (2011) Wang et al. (2013a) et al. (2013b)

RMA-based model measures the energy efficiency mainly
through the natural disposability setting but measures the
environmental efficiency mainly through the managerial
disposability setting.
Fourthly, these four models can be classified into two
groups for modeling undesirable outputs, namely the
models treat the undesirable output as (freely disposable)
inputs or based on data transformation, and the models
using the original data as undesirable output but relying
on weak disposability. The traditional DEA-based model,
RAM-based model, and MEA-based model belong to the
first group, and the directional distance function-based DEA
model belongs to the second group.
Fifthly, only the MEA-based model introduced in this
article has the constant returns to scale setting, but the other
three models all satisfy variable returns to scale assump-
tion. The last two rows of Table 1 present the core model
and efficiency measure (energy efficiency index) of each
DEA-based model and the published references in which
the detailed interpretations and applications of these methods
can be obtained.
6.2 Application of DEA-based energy and
environmental efficiency index to clean energy
system
Nowadays, fossil fuels continue to be the main energy source
in the world, and the increasing demand of fossil fuels, as
well as the inefficient utilization of them, is causing more
and more serious environmental damage such as the rapidly
increased emissions of greenhouse gas and other air pollu-
tants. Renewable energy sources, such as wind power, hydro
energy, and solar energy, are considered the substitutions of
traditional energy sources and may play leading roles in the
future clean energy system, in which wind power is consid-
ered to be the major way toward reducing the dependence on
fossil fuels and mitigating the environmental impact from the
combustion of fossil fuels. The wind turbines are developed
to transform wind mechanical energy into electric energy,
and wind turbines are usually constructed together in wind
farms in specific areas that are rich in wind power. Wind
resources itself is one of the clean energies, but the use of

Handbook of Clean Energy Systems, Online © 2015 John Wiley & Sons, Ltd.
This article is © 2015 John Wiley & Sons, Ltd.
This article was published in the Handbook of Clean Energy Systems in 2015 by John Wiley & Sons, Ltd.
DOI: 10.1002/9781118991978.hces083
 Energy Efficiency Index via Data Envelopment Analysis (DEA): Methodology and Application
wind power is not a guarantee of energy utilization efficient
and environmental friendly. Iribarren, Martı́n-Gamboa, and
Dufour (2013) pointed out that the environmental impacts of
wind farms are partly caused by the operational inefficiency.
In this case study, we apply the above-mentioned DEA-
based energy efficiency evaluation models and related
indices to measure the operational efficiencies and the
related environmental consequences of wind farms in
Spain. A sample of 25 Spanish wind farms is used, and
the input and output selections, as well as the data of
each wind farm are obtained from the study of Iribarren,
Martı́n-Gamboa, and Dufour (2013). Table 2 presents the
input and output data of the selected 25 sample wind farms
in 1 year of operation. The inputs include concrete (t/year),
steel (t/year), epoxy resin (t/year), lubricating oil (kg/year),
and working hours (h/year). The desirable output is elec-
tricity (MWh/year) generated. Five environmental impact
potentials are included as undesirable outputs: (i) Global
warming, GWP (t CO2 eq); (ii) Ozone layer depletion,
ODP (g CFC-11 eq); (iii) Photochemical oxidant formation,
POFP (kg C2 H4 eq); (iv) Acidification, AP (kg SO2 eq); (v)
Eutrophication, EP (kg PO4 3− eq). The efficiency evaluation
results from different DEA-based models and the values
on different energy and environmental efficiency indices of
the sample wind farms are reported in Table 3 and further
illustrated in Figures 3 and 4.
Table 3 presents the efficiency values on five different
energy and environmental efficiency indices proposed in the
earlier sections based on four different DEA-based models.
As reported in Table 3 and illustrated in Figure 3, the average
efficiency measure from EEIMD are highest, followed by
those from WTEEI and EEIND. The average efficiency
measure from TFEEI is lowest. Four wind farms (DMUs
4, 10, 22, and 25) are evaluated as comparatively effi-
cient wind farms (benchmarks) for others to further promote
their operational and environmental performance. Table 3
together with Figure 4 additionally indicates that the discrim-
inating power on efficiency measure of EEIND is the highest
followed by that of TFEEI, and that of the EEIMD is the
lowest. The evaluation rank of each wind farm under five
different energy and environmental efficiency indices are
also reported in Table 3. Except for the results under EEIMD
(which has the worst discriminating power), most of the
wind farms have similar rankings, which indicates that the
evaluation results from these four DEA-based models are
stable.
According to the EEIND, the top 5 best performed wind
farms are DMU 4, 10, 22, 25, and 5, while the worst
performed 5 wind farms are DMU 15, 11,13, 19, and
21. The largest efficiency gap between the best and the
worst performed unit is 0.73. On average, there is a 25%
efficiency increase potential for all wind farms through
Handbook of Clean Energy Systems, Online © 2015 John Wiley & Sons, Ltd.
This article is © 2015 John Wiley & Sons, Ltd.
This article was published in the Handbook of Clean Energy Systems in 2015 by John Wiley & Sons, Ltd.
DOI: 10.1002/9781118991978.hces083
13
naturally decrease their input consumption and reduce
their undesirable output production. Similarly, according
to TFEEI, WTEEI, and IMEEI, there are, respectively,
30%, 14%, and 26% efficiency increase potentials on
average for all wind farms, if they could perform like the
benchmark wind farms, and these potentials are all iden-
tified based on the average scores of the above-efficiency
indices.
7 CONCLUSION
In this study, we introduced four types of DEA-based
energy and environmental efficiency evaluation method
and provided five energy efficiency indices. As the five
indices of TFEEI, WTEEI, EEIND, EEIMD, and IMEEI
are all calculated within the total factor energy effi-
ciency evaluation framework and both the energy input
and pollutant undesirable output are included in the
evaluation, the efficiency values on them are compa-
rable.
TFEEI provide the joint efficiency measure of input and
undesirable output through both the radial adjustment and
the slack adjustment on each type of the energy consump-
tion and each type of the pollutant emission. WTEEI
measures the joint efficiency of economic production
and pollutant emission along a chosen direction that the
desirable output and the undesirable output are radially
adjusted. An appropriate choosing of the direction distance
function (e.g., d = (dg , −df ) = (1, −1)) can guarantee the
simultaneous extension on desirable output and contraction
on undesirable output. Instead of the relying on weak
disposability, EEIND and EEIMD, respectively, measure
the integrated energy and environmental efficiency under
natural and managerial disposability, and thus, the efficiency
promotion potentials through different energy manage-
ment strategies can be further identified. The efficiency
measure under IMEEI is realized through considering all
the improvement potentials on all the energy inputs and
pollutant undesirable outputs of each DMU, and then a
joint constrained efficiency measure is utilized to adjust
all the above-mentioned potentials so as to provide a
comprehensive and moderate integrated efficiency measure
for each DMU.
Each of the energy efficiency evaluation model and
associated energy efficiency index via DEA proposed
in this study provides an efficiency measure from a
specific efficiency evaluation perspective. Therefore,
they can be used for different efficiency measures with
various evaluation purposes and under specific evaluation
conditions.
 14

Table 2. Inputs and outputs data for sample wind farms.

DMU Inventory and Labor/Inputs Outputs Environmental Characterization/Undesirable Outputs
Concrete Tower-steel Blade-epoxy Resin Lubricating Oil Working Hours Electricity GWP CED ODP POFP AP EP
DMU1 875 208.10 16.50 1684.85 21690 85947 929.98 32.71 348.53 4102.87 2275.25 929.98
DMU2 980 209.16 15.12 1509.62 18798 101930 928.77 32.28 361.68 4106.96 2438.91 928.77

DOI: 10.1002/9781118991978.hces083
DMU3 700 166.48 13.20 1347.88 15906 47162 738.60 25.42 194.67 3201.51 1812.74 738.60

This article is © 2015 John Wiley & Sons, Ltd.

DMU4 1155 274.69 20.36 1516.36 18798 123541 1172.59 39.81 456.25 5140.03 2987.45 1172.59
DMU5 665 135.85 11.40 1280.48 15906 86961 643.81 22.22 242.44 2856.38 1638.03 643.81
DMU6 665 158.15 12.11 1280.48 15906 26177 390.08 13.45 150.70 1731.12 986.16 390.08
DMU7 1610 263.59 16.13 1125.48 13014 82268 1288.40 45.02 509.35 5800.79 3559.96 1288.40
DMU8 630 146.09 10.68 1019.33 10122 44014 643.35 22.01 261.35 2872.15 1613.31 643.35
DMU9 665 162.21 10.69 960.36 10122 60634 679.10 24.25 263.44 3027.27 1728.62 679.10
DMU10 875 178.75 14.63 1684.85 21690 123285 854.22 32.53 321.39 3833.53 2165.33 854.22

Handbook of Clean Energy Systems, Online © 2015 John Wiley & Sons, Ltd.
DMU11 2625 424.20 25.31 1668.00 21690 96612 2109.09 76.22 839.52 9520.16 5779.15 2109.09
DMU12 1155 281.73 18.56 1668.00 21690 100857 1148.74 40.06 460.12 5168.00 2978.03 1148.74
DMU13 2030 340.43 21.75 1661.26 21690 94777 1664.22 56.87 655.43 7471.47 4559.64 1664.22
DMU14 840 199.77 15.30 1617.45 21690 93086 865.86 30.77 330.29 3832.15 2179.90 865.86
Sustainability Indicators, Evaluation Criteria, and Reporting

DMU15 2240 375.64 23.04 1617.45 21690 73297 1843.61 65.15 724.50 8314.13 5018.85 1843.61
DMU16 1855 311.08 19.88 1518.05 18798 94077 1509.06 52.27 599.50 6798.26 2969.41 1509.06

This article was published in the Handbook of Clean Energy Systems in 2015 by John Wiley & Sons, Ltd.
DMU17 1715 287.60 18.38 1403.48 18798 88010 1403.39 48.65 551.28 6321.30 3830.84 1403.39
DMU18 735 150.15 12.76 1415.27 18798 73977 716.20 25.07 265.17 3110.27 1807.73 716.20
DMU19 1995 322.39 19.24 1267.01 15906 83797 1566.86 54.70 634.11 7193.09 4394.01 1566.86
DMU20 1540 234.78 18.48 1260.27 15906 84007 1235.90 42.47 483.62 5665.87 3335.84 1235.90
DMU21 1960 316.73 18.90 1245.44 13014 81411 1545.43 53.82 621.95 6988.27 4289.62 1545.43
DMU22 595 141.51 10.84 1145.70 13014 86220 613.77 21.32 231.01 2643.24 1514.34 613.77
DMU23 1295 217.17 15.54 1059.77 13014 69436 738.14 36.84 419.85 4865.59 2933.99 738.14
DMU24 1645 265.83 15.86 1045.28 10122 61153 1311.78 45.86 520.33 5918.90 3642.50 1311.78
DMU25 525 124.86 9.56 1010.91 10122 71233 534.13 18.80 203.75 2370.97 1305.51 534.13
Source: Created by author using data from Iribarren et al., 2013.
 Table 3. Efficiency indices and efficiency values for sample wind farms.
DMU Traditional DEA- Weak Disposability- Range Adjusted Measure- Range Adjusted Measure- Multidirectional Efficiency
based Model based DEA Model based Model (Natural) based Model (Managerial) Analysis-based Model
TFEEI Rank WTEEI Rank EEIND Rank EEIMD Rank IMEEI Rank
DMU1 0.6566 13 0.8371 16 0.7176 14 1.0000 9.5 0.6822 18
DMU2 0.7925 9 0.9210 9 0.8678 9 0.9701 19 0.8535 6
DMU3 0.7636 10 0.7590 21 0.8300 10 1.0000 9.5 0.5648 23

DOI: 10.1002/9781118991978.hces083
DMU4 1.0000 3.5 1.0000 3.5 1.0000 4 1.0000 9.5 1.0000 2.5
DMU5 1.0000 3.5 1.0000 3.5 1.0000 4 1.0000 9.5 0.9785 5

This article is © 2015 John Wiley & Sons, Ltd.

DMU6 1.0000 3.5 0.6284 24 1.0000 4 1.0000 9.5 0.4426 25
DMU7 0.5669 16 0.9823 7 0.6892 16 0.8724 22 0.8026 7
DMU8 0.8674 7 0.7182 23 0.9264 8 0.8167 23 0.5804 22
DMU9 0.8380 8 1.0000 3.5 1.0000 4 0.8107 25 0.8014 8
DMU10 1.0000 3.5 1.0000 3.5 1.0000 4 1.0000 9.5 1.0000 2.5
DMU11 0.4130 24 0.7698 20 0.2786 24 1.0000 9.5 0.5877 21

Handbook of Clean Energy Systems, Online © 2015 John Wiley & Sons, Ltd.
DMU12 0.6439 14 0.8310 17 0.7100 15 1.0000 9.5 0.7356 12
DMU13 0.4724 23 0.7500 22 0.4618 23 1.0000 9.5 0.6262 20
DMU14 0.7479 12 0.8947 11 0.7979 12 1.0000 9.5 0.7702 9
DMU15 0.3553 25 0.5590 25 0.2700 25 1.0000 9.5 0.4840 24
DMU16 0.5332 18 0.8132 18 0.5853 20 1.0000 9.5 0.6864 15
DMU17 0.5155 20 0.7731 19 0.5873 19 0.9433 21 0.6858 16

This article was published in the Handbook of Clean Energy Systems in 2015 by John Wiley & Sons, Ltd.
DMU18 0.7590 11 0.8628 13 0.8144 11 0.9498 20 0.7441 11
DMU19 0.4773 22 0.8540 15 0.5264 22 1.0000 9.5 0.6736 19
DMU20 0.5587 17 0.8630 12 0.6720 17 1.0000 9.5 0.7288 14
DMU21 0.4910 21 0.9246 8 0.5537 21 1.0000 9.5 0.7479 10
DMU22 1.0000 3.5 1.0000 3.5 1.0000 4 1.0000 9.5 1.0000 2.5
DMU23 0.5979 15 0.9122 10 0.7481 13 1.0000 9.5 0.7310 13
DMU24 0.5326 19 0.8620 14 0.6508 18 0.8113 24 0.6843 17
DMU25 1.0000 3.5 1.0000 3.5 1.0000 4 1.0000 9.5 1.0000 2.5
Mean 0.7033 0.8606 0.7475 0.9670 0.7437
St. Dev. 0.2135 0.1208 0.2232 0.0648 0.1596
Mini. 0.3553 0.5590 0.2700 0.8107 0.4426
Maxi. 1.0000 1.0000 1.0000 1.0000 1.0000
Energy Efficiency Index via Data Envelopment Analysis (DEA): Methodology and Application
15
16 Sustainability Indicators, Evaluation Criteria, and Reporting

TFEEI EEIND
1 IMEEI WTEEI

0.8
Efficiency value

0.6

0.4

0.2
5

3
18

14

D 3
1

D 2
7
20

24

17

16

21

19

13

11

15
U

2
U

1
U
U

U
M

M
M

M
D

D
D

D
Figure 3. Efficiency values on efficiency indices for selected sample wind farms. Source: Created by author using data from Iribarren,
Martı́n-Gamboa, and Dufour, 2013.

1 REFERENCES
0.8 Ang, B.W. (2006) Monitoring changes in economy-wide energy
Efficiency value

efficiency: from energy–GDP ratio to composite efficiency index.

0.6
0.4
0.2
0 ment analysis. Management science, 30 (9), 1078–1092.
TFEEI WTEEI
Efficiency index
Figure 4. Boxplot of efficiency indices for sample wind farms.
ACKNOWLEDGMENT
We acknowledge the financial support from the National
Natural Science Foundation of China (71101011), the Basic
Scientific Research Foundation (20122142015), and the
Outstanding Young Teachers Foundation (2013YR2119) of
Beijing Institute of Technology.
RELATED ARTICLES
Energy Efficiency of Municipal Energy Systems: An
Introduction
Energy Efficiency Improvement in Office Buildings by
Benchmarking Models
Thermal Energy Efficiency in Industrial Processes
Sustainability Assessment for Energy Technologies
Sustainable Energy Indicator System and Its Application in
China
Modeling Energy Efficiency and CO2 Emissions Reduction
Energy Policy, 34 (5), 574–582.
Asmild, M., Hougaard, J.L., Kronborg, D., and Kvist, H.K. (2003)
Measuring inefficiency via potential improvements. Journal of
Productivity Analysis, 19 (1), 59–76.
Banker, R.D., Charnes, A., and Cooper, W.W. (1984) Some models
for estimating technical and scale inefficiencies in data envelop-
EEIND EEIMD IMEEI
Bogetoft, P. and Hougaard, J.L. (1999) Efficiency evaluations based
on potential (non-proportional) improvements. Journal of Produc-
tivity Analysis, 12 (3), 233–247.
Charnes, A., Cooper, W.W., and Rhodes, E. (1978) Measuring the
efficiency of decision making units. European Journal of Opera-
tional Research, 2 (6), 429–444.
Cooper, W.W., Park, K.S., and Pastor, J.T. (1999) RAM: a range
adjusted measure of inefficiency for use with additive models,
and relations to other models and measures in DEA. Journal of
Productivity Analysis, 11 (1), 5–42.
Cooper, W.W., Seiford, L.M., and Zhu, J. (eds) (2004) Handbook
on Data Envelopment Analysis, Kluwer Academic Publishers,
Boston, pp. 1–39.
Färe, R. and Grosskopf, S. (2004) Modeling undesirable factors in
efficiency evaluation: comment. European Journal of Operational
Research, 157 (1), 242–245.
Färe, R., Grosskopf, S., and Hernandez-Sancho, F. (2004) Environ-
mental performance: an index number approach. Resource and
Energy Economics, 26 (4), 343–352.
Färe, R., Grosskopf, S., Lovell, C.K., and Pasurka, C. (1989) Multilat-
eral productivity comparisons when some outputs are undesirable:
a nonparametric approach. The Review of Economics and Statis-
tics, 7 (1), 90–98.
Färe, R., Grosskopf, S., and Pasurka, C.A., Jr, (2001) Accounting
for air pollution emissions in measures of state manufacturing
productivity growth. Journal of Regional Science, 41 (3), 381–409.

Handbook of Clean Energy Systems, Online © 2015 John Wiley & Sons, Ltd.
This article is © 2015 John Wiley & Sons, Ltd.
This article was published in the Handbook of Clean Energy Systems in 2015 by John Wiley & Sons, Ltd.
DOI: 10.1002/9781118991978.hces083
 Energy Efficiency Index via Data Envelopment Analysis (DEA): Methodology and Application
Hailu, A. and Veeman, T.S. (2001) Non-parametric productivity anal-
ysis with undesirable outputs: an application to the Canadian pulp
and paper industry. American Journal of Agricultural Economics,
83 (3), 605–616.
Hu, J.L. and Wang, S.C. (2006) Total-factor energy efficiency of
regions in China. Energy policy, 34 (17), 3206–3217.
Iribarren, D., Martı́n-Gamboa, M., and Dufour, J. (2013) Environ-
mental benchmarking of wind farms according to their operational
performance. Energy, 61, 589–597.
Lovell, C.A.K., Pastor, J.T., and Turner, J.A. (1995) Measuring
macroeconomic performance in the OECD: a comparison of Euro-
pean and non-European countries. European Journal of Opera-
tional Research, 87 (3), 507–518.
Sahoo, B.K., Luptacik, M., and Mahlberg, B. (2011) Alternative
measures of environmental technology structure in DEA: an
application. European Journal of Operational Research, 215 (3),
750–762.
Seiford, L.M. and Zhu, J. (2002) Modeling undesirable factors in
efficiency evaluation. European Journal of Operational Research,
142 (1), 16–20.
Sueyoshi, T. and Goto, M. (2012) Returns to scale and damages to
scale under natural and managerial disposability: strategy, effi-
Handbook of Clean Energy Systems, Online © 2015 John Wiley & Sons, Ltd.
This article is © 2015 John Wiley & Sons, Ltd.
This article was published in the Handbook of Clean Energy Systems in 2015 by John Wiley & Sons, Ltd.
DOI: 10.1002/9781118991978.hces083
View publication stats
17
ciency and competitiveness of petroleum firms. Energy Economics,
34 (3), 645–662.
Wang, K., Lu, B., and Wei, Y.M. (2013a) China’s regional energy and
environmental efficiency: a range-adjusted measure based analysis.
Applied Energy, 112, 1403–1415.
Wang, K., Wei, Y.M., and Zhang, X. (2012) A comparative analysis
of China’s regional energy and emission performance: which is the
better way to deal with undesirable outputs? Energy Policy, 46,
574–584.
Wang, K., Wei, Y.M., and Zhang, X. (2013b) Energy and emissions
efficiency patterns of Chinese regions: a multi-directional effi-
ciency analysis. Applied Energy, 104, 105–116.
Wang, K., Yu, S., and Zhang, W. (2011) China’s regional energy
and environmental efficiency: a DEA window analysis based
dynamic evaluation. Mathematical and Computer Modelling, 58,
1117–1127.
Zhou, P., Ang, B.W., and Poh, K.L. (2008a) A survey of data envel-
opment analysis in energy and environmental studies. European
Journal of Operational Research, 189 (1), 1–18.
Zhou, P., Ang, B.W., and Poh, K.L. (2008b) Measuring environmental
performance under different environmental DEA technologies.
Energy Economics, 30 (1), 1–14.