The Diversity of Design of TSOs

International audienceIt is puzzling today to explain diversity and imperfection of actual transmission monopoly designs in competitive electricity markets. We argue that transmission monopoly in competitive electricity markets has to be analysed within a Wilson (2002) modular framework. Applied to the management of electricity flows, at least three modules make the core of transmission design: 1° the short run management of network externalities; 2° the long run management of network investment; and 3° the coordination of neighboring Transmission System Operators for cross border trade. In order to tackle this diversity of designs of TSOs, we show that for each of these modules, three different basic ways of managing them are possible. Among the identified twenty seven options of organisation, we define an Ideal TSO. Second, we demonstrate that 1°monopoly design differs from this Ideal TSO and cannot handle these three modules irrespective of the “institutional” definition and allocation of property rights on transmission; while 2°definition and allocation of property rights on transmission cannot ignore the existing electrical industry and transmission network structure: they have to complement each other to be efficient. Some conclusions for regulatory issues of transmission systems operators are derived from this analysis of network monopoly organisation

A Typical Case of Weak Institutional Complementarity in Institution Building : The Design of Transmission Network Monopoly in Competitive Electricity Markets

In a “Weak institutional complementarity” type of institution building it is typically the less replaceable institutional characteristic which dictates the path of change for the institution as a whole. We will show it is exactly what explains the diversity and imperfection of actual transmission monopoly designs in competitive electricity markets. Firstly we argue that transmission monopoly in competitive electricity markets has to be analysed within an industry modular frame. Transmission is a set of several modules which have to be distinguished and separated in any design analysis and comparison. At least three modules make the core of transmission design: 1° the short run management of network externality; 2° the short run management of cross border trade; and 3° the long run management of network investment. Second in a new-institutional economics perspective we say that 1°monopoly design in a competitive policy cannot handle these three modules irrespective of the “institutional” definition and allocation of property rights on transmission; while 2°definition and allocation of property rights on transmission cannot ignore the existing electrical industry and transmission network structure: they basically have to complement each other. Third we apply this frame to compare PJM (USA) and NGC (UK) and we show it remarkably illuminates the reality.TSO; weak institutional complementarity; modular analysis

A Whitehall perspective on decentralisation in England’s emerging territories

Decentralisation is a key thread running through current UK policy making. The Coalition Government has abolished New Labour’s regional legacy in favour of a new set of strategies around growth and development that has tapped into the localist agenda. Drawing on a series of recent interviews conducted with civil servants, this article explores government initiatives aimed at enhancing local autonomy in England and provides new empirical insights into decentralisation from a Whitehall perspective. It examines departmental aspirations for decentralised structures and Whitehall perceptions of the capacity of local arrangements to successfully manage territorial development in an era of austerity. The article concludes that, in the fields of economic development, planning and transport, there are signs of enhanced local policy and fiscal autonomy. However, there are different levels of enthusiasm for decentralisation across and within Whitehall departments that continue to undermine a more cohesive approach. </jats:p

The diversity of design of TSOs

It is puzzling today to explain diversity and imperfection of actual transmission monopoly designs in competitive electricity markets. We argue that transmission monopoly in competitive electricity markets has to be analysed within a Wilson (2002) modular framework. Applied to the management of electricity flows, at least three modules make the core of transmission design: 1° the short run management of network externalities; 2° the long run management of network investment; and 3° the coordination of neighboring Transmission System Operators for cross border trade. In order to tackle this diversity of designs of TSOs, we show that for each of these modules, three different basic ways of managing them are possible. Among the identified twenty seven options of organisation, we define an Ideal TSO. Second, we demonstrate that 1°monopoly design differs from this Ideal TSO and cannot handle these three modules irrespective of the “institutional” definition and allocation of property rights on transmission; while 2°definition and allocation of property rights on transmission cannot ignore the existing electrical industry and transmission network structure: they have to complement each other to be efficient. Some conclusions for regulatory issues of transmission systems operators are derived from this analysis of network monopoly organisation.design of TSOs; management of power flows; governance structure of transmission

Transmission Capacity as a Common-Pool Resource: The Case of Gas Interconnector Capacity

We investigated the very real problem of congestion at gas interconnectors. Instead of suggesting further incremental change to the European regulation in force to remedy congestion problems, we took a step back and consider gas interconnectors as a Common-Pool Resource (CPR). We suggest to wait and see what institutions the shippers let emerge to govern and manage interconnector capacity. To explore this idea, we developed a model to simulate the possible emergence of institutions that would coordinate the shippers and help overcome congestion. We simulate 40 shippers at the Dutch and Belgian interconnectors and allow them to autonomously book capacity. Agents can learn over time to improve their behaviour and coordinate with each other to collectively define a new institution in the system. The main simulator indicators are the observed booking behaviour, agent profits and emerging institutions. We present and discuss preliminary results from a set of simulation runs

Electricity Internal Market in the European Union: What to do next?

Like in the US, the EU “internal electricity market” remains unfinished and its construction can stall, fracturing into “national blocks” separated by permanent “border effects”. This is exactly what this paper seeks to avoid in the expected life of the current European Commission (2005-2009). It identifies the critical factors: national and EU market designs, industry structure and competition policy, deeper regional cooperation between TSOs and Regulators. It suggests 8 priority actions and 12 secondary improvements to sustain the dynamics of the construction of an EU set of open r egional markets with limited “border effects”, and explains the rationale for these recommendations

Local flexibility market design for aggregators providing multiple flexibility services at distribution network level

This paper presents a general description of local flexibility markets as a market-based management mechanism for aggregators. The high penetration of distributed energy resources introduces new flexibility services like prosumer or community self-balancing, congestion management and time-of-use optimization. This work is focused on the flexibility framework to enable multiple participants to compete for selling or buying flexibility. In this framework, the aggregator acts as a local market operator and supervises flexibility transactions of the local energy community. Local market participation is voluntary. Potential flexibility stakeholders are the distribution system operator, the balance responsible party and end-users themselves. Flexibility is sold by means of loads, generators, storage units and electric vehicles. Finally, this paper presents needed interactions between all local market stakeholders, the corresponding inputs and outputs of local market operation algorithms from participants and a case study to highlight the application of the local flexibility market in three scenarios. The local market framework could postpone grid upgrades, reduce energy costs and increase distribution grids’ hosting capacity.Postprint (published version

Provider diversity in the English NHS: a study of recent developments in four local health economies

Objectives: The overall objective of the research was to assess the impact of provider diversity on quality and innovation in the English NHS. The aims were to map the extent of diverse provider activity, identify the differences in performance between Third Sector Organisations (TSOs), for-profit private enterprises, and incumbent organisations within the NHS, and the factors that affect the entry and growth of new private and TSOs. Methods: Case studies of four Local Health Economies (LHEs). Data included: semi-structured interviews with 48 managerial and clinical staff from NHS organizations and providers from the private and Third Sector; some documentary evidence; a focus group with service users; and routine data from the Care Quality Commission and Companies House. Data collection was mainly between November 2008 and November 2009. Results: Involvement of diverse providers in the NHS is limited. Commissioners’ local strategies influence degrees of diversity. Barriers to the entry for TSOs include lack of economies of scale in the bidding process. Private providers have greater concern to improve patient pathways and patient experience, whereas TSOs deliver quality improvements by using a more holistic approach and a greater degree of community involvement. Entry of new providers drives NHS Trusts to respond by making improvements. Information sharing diminishes as competition intensifies. Conclusions: There is scope to increase the participation of diverse providers in the NHS, but care must be taken not to damage public accountability, overall productivity, equity and NHS providers (especially acute hospitals, which are likely to remain in the NHS) in the process