Benchmarking in the energy sector: Implications for practice and policy

Efficiency benchmarking has become a cornerstone of energy sector regulation and management, providing tools to evaluate and compare the performance of utilities, power plants, and even national energy systems. Regulators use methods like Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA) to set performance targets, incentivize cost reduction, and guide policy. Yet, applying benchmarking in real-world contexts is challenging. Energy sector stakeholders – regulators, firms, and policymakers – often grapple with complex models, data limitations, and evolving policy goals (such as reliability and decarbonization) that benchmarking must address. This editorial reviews the contributions of papers in this Energy Economics special issue on “Benchmarking,” highlighting their implications for practical benchmarking in the energy sector. We synthesize what these studies reveal about pressing regulatory challenges, unresolved problems in implementation, and needed future developments to strengthen the use of benchmarking in policy and industry. The focus is on translating technical advances into insights for practitioners and decision-makers in the energy field.

Månsson, J., Månsson, K., & Söderberg, M. (2025). Benchmarking in the energy sector: Implications for practice and policy. Energy Economics, 152, 109034.