'Core Indicators for Determinants and Performance of Electricity Sector in Developing Countries’

Since the early 1990s, substantial resources and effort have been spent on implementing market-oriented electricity reform in developing countries. Important sectoral, economic, and social dimensions are involved in electricity reform, but empirical analysis and evaluation have been of limited use for testing the economic rationale of reform and policy advice. This may partly be attributed to a lack of generally accepted and measured indicators for monitoring progress, impact and performance, unlike areas such as health, education, environment, sustainable development. In this paper we propose a set of indicators as a first step towards filling this gap and developing a coherent framework for studying electricity reform in developing countries covering resource and institutional endowments, key reform steps, market structure, performance, and various impacts.Electricity, Reform, developing countries

Questioning the EU Target Electricity Model – how should it be adapted to deliver the Trilemma?

Britain considers the energy-only EU Target Electricity Model (TEM) wanting in delivering the trilemma of reliability, sustainability and affordability and argues that a capacity auction with long-term contracts for new entrants is the least-cost solution compared to relying on expectations of future prices to deliver adequate generation and demand side response. The Energy Union argues against feed-in tariffs (FiTs) for renewables, pressing for premium FiTs (pFiTs), just as GB has abandoned PFiTs in favour of FiTs. This paper draws on the GB experience of Electricity Market Reform before and after the 2015 change of government, to highlight promising resolutions of the energy trilemma, and the problems that have arisen between the diagnosis of the problem and the delivery of solutions. It sets out the theory and practice of delivering capacity, energy and quality of supply, gives a brief history of GB electricity from the CEGB to its current unbundled, liberalized and privatized structure. That sheds light on the trilemma problem and discusses possible solutions. The island of Ireland Single Electricity Market reforms illustrate the problem and possible answer of how best to deliver quality of service with high intermittency

Pricing electricity and supporting renewables in Heavily Energy Subsidized Economies

Heavily Energy Subsidized Economies, defined as having budgetary subsidies above 1.5% of GDP, on average in 2014 spent 4% of GDP on subsidizing energy. Resource rents permit administratively undemanding transfers to citizens to maintain political support. Once in place, benefitting groups will resist their removal, despite the resulting inefficient consumption and the lock-in risk caused by sustained low energy prices. Collapsing energy prices that deliver severe fiscal shocks combined with growing concerns over climate change damage make carefully designed reforms both urgent and politically more acceptable. Understanding their political logic suggests designing reforms that compensate the most vocal interest groups and there is evidence that this is increasingly recognized. The paper presents evidence on the magnitude and impacts of oil gas and electricity subsidies, and discusses how the electricity sector can be weaned of subsidies while reducing its carbon emissions

‘Electricity Sector Reform in Developing Countries: A Survey of Empirical Evidence on Determinants and Performance’

This paper reviews the empirical evidence on electricity reform in developing countries. We find that country institutions and sector governance play an important role in success and failure of reform; reforms appear to have increased operating efficiency and expanded access to urban customers; they have to a lesser degree passed on efficiency gains to customers, tackled distributional effects, or improved rural access. Moreover, some of the literature is not methodologically robust or on a par with general development economics literature and findings on some issues are limited and inconclusive while some important areas are yet to be addressed. Until we know more, implementation of reforms will be more based on ideology and economic theory rather than solid economic evidence.Electricity, reform, developing countries

The Final Hurdle?: Security of supply, the Capacity Mechanism and the role of interconnectors

The UK Government has developed a carefully designed Capacity Mechanism to ensure security of supply in the GB electricity system. This paper criticises the methods used to determine the amount of capacity to procure, and argues that the amount finally proposed is likely to be excessive, particularly (but not exclusively) in ignoring the contribution from interconnectors. More broadly, there has been too little attention to either the political economy, or the option value aspects. Procuring too little is risky, but fear of'the lights going out' can easily become a catch-all argument for excessive procurement, and associated subsidy. The risk of over-procurement, particularly of new capacity on long-term contracts, is that it drives up the costs to consumers; undermines renewable energy by transferring capped resources from renewable to fossil fuel producers; and impedes the Single Market including by weakening the business case for future interconnectors. The paper argues that the development of technologies and markets, particularly on the demand- side and of potentially available – 'latent' – capacity - further lowers the risks and increases options. This implies greater potential to defer more capacity procurement – and enhances the value of a more appropriate treatment of interconnectors in security assessments

Plurality of tree species responses to drought perturbation in Bornean tropical rain forest

Drought perturbation driven by the El Niño Southern Oscillation (ENSO) is a principal stochastic variable determining the dynamics of lowland rain forest in S.E. Asia. Mortality, recruitment and stem growth rates at Danum in Sabah (Malaysian Borneo) were recorded in two 4-ha plots (trees≥10cm gbh) for two periods, 1986-1996 and 1996-2001. Mortality and growth were also recorded in a sample of subplots for small trees (10 to <50cm gbh) in two sub-periods, 1996-1999 and 1999-2001. Dynamics variables were employed to build indices of drought response for each of the 34 most abundant plot-level species (22 at the subplot level), these being interval-weighted percentage changes between periods and sub-periods. A significant yet complex effect of the strong 1997/1998 drought at the forest community level was shown by randomization procedures followed by multiple hypothesis testing. Despite a general resistance of the forest to drought, large and significant differences in short-term responses were apparent for several species. Using a diagrammatic form of stability analysis, different species showed immediate or lagged effects, high or low degrees of resilience or even oscillatory dynamics. In the context of the local topographic gradient, species' responses define the newly termed perturbation response niche. The largest responses, particularly for recruitment and growth, were among the small trees, many of which are members of understorey taxa. The results bring with them a novel approach to understanding community dynamics: the kaleidoscopic complexity of idiosyncratic responses to stochastic perturbations suggests that plurality, rather than neutrality, of responses may be essential to understanding these tropical forests. The basis to the various responses lies with the mechanisms of tree-soil water relations which are physiologically predictable: the timing and intensity of the next drought, however, is not. To date, environmental stochasticity has been insufficiently incorporated into models of tropical forest dynamics, a step that might considerably improve the reality of theories about these globally important ecosystem

On the detection of dynamic responses in a drought-perturbed tropical rainforest in Borneo

The dynamics of aseasonal lowland dipterocarp forest in Borneo is influenced by perturbation from droughts. These events might be increasing in frequency and intensity in the future. This paper describes drought-affected dynamics between 1986 and 2001 in Sabah, Malaysia, and considers how it is possible, reliably and accurately, to measure both coarse- and fine-scale responses of the forest. Some fundamental concerns about methodology and data analysis emerge. In two plots forming 8ha, mortality, recruitment, and stem growth rates of trees ≥10cm gbh (girth at breast height) were measured in a ‘pre-drought' period (1986-1996), and in a period (1996-2001) including the 1997-1998 ENSO-drought. For 2.56ha of subplots, mortality and growth rates of small trees (10-<50cm gbh) were found also for two sub-periods (1996-1999, 1999-2001). A total of c. 19K trees were recorded. Mortality rate increased by 25% while both recruitment and relative growth rates increased by 12% for all trees at the coarse scale. For small trees, at the fine scale, mortality increased by 6% and 9% from pre-drought to drought and on to ‘post-drought' sub-periods. Relative growth rates correspondingly decreased by 38% and increased by 98%. Tree size and topography interacted in a complex manner with between-plot differences. The forest appears to have been sustained by off-setting elevated tree mortality by highly resilient stem growth. This last is seen as the key integrating tree variable which links the external driver (drought causing water stress) and population dynamics recorded as mortality and recruitment. Suitably sound measurements of stem girth, leading to valid growth rates, are needed to understand and model tree dynamic responses to perturbations. The proportion of sound data, however, is in part determined by the drought itsel

UK Electricity Market Reform and the Energy Transition: Emerging Lessons

The 2013 Electricity Market Reform (EMR) was a response to problems of delivering reliability with a growing share of renewables in its energy only market. Four EMR instruments combined to revolutionise the sector; stimulating unprecedented technological and structural change. Competitive auctions for both firm capacity and renewable energy have seen prices far lower than predicted and the entry of unexpected new technologies. A carbon price floor displaced coal, whose share fell from 46% in 1995 to 7% in 2017, halving CO2. Renewables grew from under 4% in 2008 to 22% by 2017, projected at 30+% by 2020 despite a political ban on onshore wind. Neither the technological nor regulatory transitions are complete, and the results to date highlight other challenges, notably to transmission pricing and locational signals. EMR is a step forwards, not backwards; but it is not the end of the story

Reforming Electricity Markets for the Transition: Emerging Lessons from the UK's Bold Experiment

Until 1990, the UK - like many other countries - had an electricity system that was centralised, state-owned, and dominated almost entirely by coal and nuclear power generation. The privatisation of the system that year and its creation of a competitive electricity market attracted global interest, helping to set a path which many have followed. Two decades later, however, the UK government embarked on a radical reform which some critics described as a return to central planning. The UK's Electricity Market Reform (EMR), enacted in 2013, has correspondingly been a topic of intense debate and global interest in the motivations, components, and consequences. This report summarises the evolution of UK electricity policy since 1990 and explains the EMR in context: its origins, rationales, characteristics, and results to date. We explain why the EMR is a consequence of fundamental and growing problems with the form of liberalisation adopted, particularly after 2000, combined with the growing imperative to maintain system security and cut CO2 emissions, whilst delivering affordable electricity prices. The fifteen years after privatisation, coinciding with the era of low fossil fuel prices, had seen mostly falling electricity bills; from about 2004 they started to rise sharply, for multiple reasons including increasing fossil fuel prices, the need for new investment in both generation and transmission, and inefficient renewables policies. The four instruments of the EMR have indeed combined to revolutionise the sector; they have also both drawn on, and helped to spur, a period of unprecedented technological and structural change. Competitive auctions for both firm capacity and renewable energy have seen prices far lower than predicted, with the fixed-price auctions for renewable sources estimated to save over £2bn/yr in the cost of financing the projected renewables investments, compared to the previous support system. A minimum carbon price level has brought cleaner gas to the fore, displacing coal. Electricity prices may have peaked from 2015, with energy efficiency helping to lower overall consumer bills. New forms of generation have expanded rapidly at all scales of the system. Renewable electricity in particular has grown from under 5% of generation in 2010, to almost 25% by 2016, and is projected to reach over 30% by 2020 despite a political de-facto ban on the cheapest bulk renewable, of onshore wind energy. The environmental consequences overall have been dramatic: coal generation has shrunk from about 2/3rd of generation in 1990, to 35% in 2000, to 10% in 2016, halving CO2 emissions from power generation over the quarter century. Neither the technological nor regulatory transitions are complete, and the results to date highlight other challenges. The Capacity Mechanism has proved ill-suited to encouraging demand-side response, and in combination with the growing share of renewables, has underlined problems in transmission pricing. As the share of variable renewables grows further, the associated contracts will require reform to improve siting efficiency and avoid adverse impacts on the wholesale market. The results to date show that EMR is a step forwards, not backwards; but it is not the end of the story