Introducing Competition in the French Electricity Supply Industry: The Destabilisation of a Public Hierarchy in an Open Institutional Environment

The French electricity supply industry is characterized by a vertically integrated monopoly and public ownership and when the government introduced market rules, it was with the aim of preserving the integration of the public incumbent as a national champion. This had two paradoxical effects in favour of competition development and the building of safeguards for entrants

Introducing Competition in the French Electricity Supply Industry: The Destabilisation of a Public Hierarchy in an Open Institutional Environment

The French electricity supply industry is characterized by a vertically integrated monopoly and public ownership and when the government introduced market rules, it was with the aim of preserving the integration of the public incumbent as a national champion. This had two paradoxical effects in favour of competition development and the building of safeguards for entrants: 1/ the creation of a credible regulatory governance structure with effective power of control on network access which promoted market-rules, and the creation of a power exchange for balancing the incumbent’s dominant position; 2/ the credibility of the regulatory framework by the self-control of the incumbent in the use of its dominant position and on the capture of the regulator. These two effects result from the influence of the European institutional environment, in particular the intensive scrutiny of the European Commission, which is superposed on the national one.regulation, electricity

A Competitive Fringe in the Shadow of a State Owned Incumbent: The Case of France

We examine what kind of competitive fringe has been built in France around the State owned incumbent without destroying it or significantly weakening its dominant position; what impacts has this particular reform process on the market in which the incumbent monopolist is still overly dominant; and what more can be done to strengthen the opening of the market while staying in this typical French policy framework (no industrial restructuring and no forced divestiture by the monopolist). We wonder if a larger window of opportunity will open up at some later date for contesting the position of the monopolist, especially when investment in generation resumes

The failure of introducing market institutions in a rent sector into an economy in transition

Privatisation is at the heart of the structural reforms for economies in transition. In theory, the main aim of privatisation is to change the structures of corporate governance in order to improve the efficiency of the enterprises and to assure their long-term future in a competitive environment. The adoption of formal market institutions would be sufficient to secure the new property rights, in particular because the new holders of the rights to control assets would have a great incentive to encourage the definition of new judicial rules that would guarantee their rights of ownership. In Russia that didn't happen.privatisation;changement institutionnel;droits de propriété;industrie gazière;industrie pétrolière

The liberalisation of the European gas market and its consequences for Russia

Russia is the world's biggest natural gas producer, with output of 581 bn m3 in 2001, and is also a key supplier of the European gas market (around 30% of current EU gas imports). Therefore gas exports rank with oil exports as an essential variable of Russian economic policy, and any institutional evolution of its gas export markets is crucial for Russia's economy as well as its gas industry. Liberalisation of the European gas market will have major consequences for main suppliers, and therefore for Russia.LIBERALISATION ; EUROPE ; GAS MARKET ; RUSSIA

The liberalisation of the European gas market and its consequences for Russia

Russia is the world's biggest natural gas producer, with output of 581 bn m3 in 2001, and is also a key supplier of the European gas market (around 30% of current EU gas imports). Therefore gas exports rank with oil exports as an essential variable of Russian economic policy, and anyinstitutional evolution of its gas export markets is crucial for Russia's economy as well as its gas industry. Liberalisation of the European gas market will have major consequences for main suppliers, and therefore for Russia.LIBERALISATION ; MARCHE ; GAZ NATUREL ; RUSSIE ; EUROPE

The Static and Dynamic Efficiency of Instruments of Promotion of Renewables

This paper deals with a comparative analysis of the economic and social efficiency of the instruments used to promote renewable energy sources (RES), first from a static standpoint and then using dynamic criteria to assess their ability to stimulate technological progress and cost reduction. First, the instruments are analysed in relation to the classical discussion of environmental policy that opposes price-based instruments versus quantity-based instruments in an uncertain environment (feed-in tariffs as price based system on one hand, quotas + green certificates, competitive bidding as quantity-based instruments on the other hand). Next, the incentives to invest and innovate in the context of each framework are analysed in relation to the sharing of the surplus associated with each of them between producers/constructors and consumers or the public budget. Finally, the paper looks at the overall cost-efficiency of the policies on the basis of each instrument, by referring to factual evidence in European experiences. It concludes that if social preference is attached to climate change prevention and reflected in a high quantitative objective for renewables, sliding scale feed-in tariffs are a good compromise in order to promote technical progress and national RES industry also. The quota/certificate system also presents a number of advantages in terms of static efficiency, but its ability to stimulate innovation still has to be confirmed by experience.énergies renouvelables;progrès technologique;certificat vert

On the Road to a Unified Market for Energy Efficiency: The Contribution of White Certificates Schemes

White certificates schemes mandate competing energy companies to promote energy efficiency with flexibility mechanisms, including the trading of energy savings. So far, stylized facts are lacking and outcomes are mainly country-specific. By comparing results of British, Italian and French experiences, we attempt to identify the core determinants of their performances. We show that (i) white certificates schemes are depicted in theoretical works as mandatory subsidies on energy efficiency goods recovered by an end-use energy tax, whereby white certificates exchanges are not a central feature; (ii) at current stages, existing schemes are cost-effective and economically efficient, with large discrepancies though; (iii) the hybrid subsidy-tax mechanism seems valid but conditional to cost pass through permissions; otherwise, obliged energy companies merely promote information on the “downstream” side (i.e. at the consumer level); (iv) although white certificates exchange between different types of actors involved can be important as in Italy, trade among obliged companies is negligible; instead, flexibility sustains vertical relationships between obliged parties and “upstream” partners (i.e. installers, energy service companies). In this respect, we support the view that white certificates schemes are a policy instrument of multi-functional nature (subsidisation, information, technology diffusion), whose static and dynamic efficiency depends upon the consistency between a proper definition of long-term energy savings, the appropriate cost-recovery permission and a fine coordination with other instruments. We finally propose a four stages deployment pattern, along which fragmented markets for energy efficient technologies get closer to create a unified market delivering energy efficiency as a homogeneous good.White Certificates Schemes, Static Efficiency, Dynamic Efficiency, Vertical Organisation, Policy Coordination

Oil price cyclicity: a call for combining rather than adding energy and carbon policies Christophe de GOUVELLO (Energy Practice of the World Bank)

International audienc

Institutions and Electricity Systems Transition towards Decarbonisation : The hidden change of the market regime

Apart from the UK where it has been widely discussed in the 2011 Electricity Market Reform, energy experts communities are still unaware of the impacts that carbon policies directly focused on the development of low carbon technologies produce on the electricity market regime. Public co-ordination with long term arrangements needs to be introduced as a substitute to long term co-ordination by the market. Indeed, the current market co-ordination makes carbon prices ineffective at orienting investors towards low carbon technologies : fossil fuel generation technologies are preferred because their investment risks are much lower in the market regime. So, in order to avoid delayed investment aiming at the decarbonisation of electricity systems, a number of new market arrangements which lower the investment risk of these technologies are being selected by governments. But, as these low carbon equipments develop, long term co-ordination by the market for the other technologies (peaking units, CCGT) will fade away. That means that in the future, public co-ordination and planning will completely replace market players' decisions, not only for low carbon technologies, but for every capacity development.La communauté des économistes de l'énergie et du climat n'est pas encore complètement consciente des changements que les politiques climatiques focalisées sur les technologies bas carbone vont entraîner sur le régime de marché des industries électriques. De telles politiques doivent introduire une coordination publique forte, combinée avec des arrangements de long terme, coordination, qui se substitue à la coordination de long terme par le marché. Cette coordination par le marché est actuellement inefficace car elle ne permet pas au prix du carbone d'orienter les investisseurs vers les technologies bas carbone à coût fixe élevé. On montre que les technologies émettrices sont préférées à ces dernières car la gestion du risque d'investissement est beaucoup plus aisée avec elles et que ce critère prend le pas sur celui du moindre coût marginal de long terme. Aussi, afin d'éviter de retarder la décarbonation des systèmes électriques, les pays doivent adopter rapidement de nouveaux arrangements de marché qui diminuent radicalement le risque d'investissement en technologies bas carbone. Mais, au fur et à mesure que les équipements bas carbone tirés artificiellement dans le marché occupent la majorité du système, les autres technologies flexibles (CCGT) et de pointe à combustibles fossiles et dont on a besoin ne peuvent plus se développer par le marché. En conséquence, à long terme, coordination publique et planification vont complètement remplacer les décisions d'investissement des agents décentralisées pour tous les équipements et pas seulement les équipements bas carbone, reléguant le marché dans une simple fonction de coordination horaire dans l'exploitation des équipements électriques