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.The World Bank Electricity Research Programme and the CMI Electricity Project (IR-45

Electricity transmission: an overview of the current debate

Electricity transmission has emerged as critical for successfully liberalising power markets. This paper surveys the issues currently under discussion and provides a framework for the remaining papers in this issue. We conclude that signalling the efficient location of generation investment might require even a competitive LMP system to be complemented with deep connection charges. Although a Europe-wide LMP system is desirable, it appears politically problematic, so an integrated system of market coupling, possibly evolving by voluntary participation, should have high priority. Merchant investors may be able to increase interconnector capacity, although this is not unproblematic and raises new regulatory issues. A key issue that needs further research is how to better incentivize TSOs, especially with respect to cross-border issues.Electricity, Transmission, Regulation, Prices, Merchant Investment

Long-term Framework for Electricity Distribution Access Charges

In order to achieve overall economic efficiency, incentive regulation of electricity distribution utilities must address two important and inter-related issues. First, the utilities’ allowed revenues need to be set at correct levels. Second, the access charging mechanism by which the utilities recover the allowed revenues must give the correct economic signals to generation and load connected to the network. This paper is concerned with the latter aspect of regulation. The paper discusses the main economic principles that should form the basis on which a distribution access charging model is developed. The charging model should have a number of attributes: be calibrated to each existing network; contain an asset register; be able to determine assets needed to meet new demand; find least-cost system expansion; compute network losses and handle ancillary services; estimate incremental operating and maintenance costs; be available to users; and be simple enough for external users to understand

The political economy of carbon pricing: a panel analysis

In virtually all jurisdictions that explicitly price carbon, its average (emissions-weighted) price remains low. Our analysis focuses on the political economy of its introduction as well as its stringency in an international panel of national and North American subnational jurisdictions. Results suggest that political economy factors primarily a ected the former and that policy stringency is a highly persistent process. This has two important policy implications. First, successful passage of carbon pricing legislation will either come with contemporaneous compensation of incumbent, CO2-intensive, sectors or occur after their relative weakening. Second, if political economy constraints continue to prevail, a robust rationale for the design of climate change mitigation strategies with multiple instruments exists.ESRC PhD studentshi

The benefits of integrating European electricity markets

The European Commission's Target Electricity Model (TEM) aims to integrate EU electricity markets. This paper estimates the potential benefit of coupling interconnectors to increase the efficiency of trading day-ahead, intra-day and balancing services across borders. Further gains are possible by eliminating unscheduled flows and avoiding the curtailment of renewables with better market design. In the short run the gains could be as high as €3.9 billion/yr, more than 100% of the current gains from trade. About one-quarter of this total comes from day-ahead coupling and another third from shared balancing. If shared balancing is so valuable, completing the TEM becomes more urgent, and regulators should ensure these gains are paid to interconnectors to make the needed investment in the cross-border links more commercially profitable.This paper builds on and extends work under contract ENER/B1/491-1/2012, published as Newbery et al. (2013).This is the author accepted manuscript. The final version is available from Elsevier via http://dx.doi.org/10.1016/j.enpol.2016.03.04

The Theory of Commodity Price Stabilization Rules: Welfare Impacts and Supply Responses

It is the aim of this paper to suggest an alternative framework for the analysis of commodity stabilisation schemes, based on more secure micro-economic foundations. We begin with what might be termed the general theory of partial (or incomplete) price stabilisation. This meets objection (vi) above, and shows how the shape of the demand schedule and the source and specification of risk influence the size and distribution of welfare gains. It therefore allows the reader to appreciate the importance of the more detailed model specification which is required to investigate the remaining questions. This new model allows one to distinguish between the short run and long run impact of stabilisation, and to examine the importance of risk aversion and individual supply elasticity on the distribution of gains and losses from partial stabilisation. In particular, we do not discuss the dynamics of price stabilisation in the paper (price expectations, learning, the stochastic nature of buffer stocks, etc.), nor do we model demand uncertainty, the macro-economic impact of risk and stabilisation, market imperfections, interactions with future markets, private speculators, with other commodities, and a host of other important issues. For these, and for a more detailed exposition of some of the key concepts presented here, the interested reader is referred to our forthcoming book (Newbery and Stiglitz, 1980). Finally, we should point out that the buffer stock rules analysed here are not optimal rules, which can only be derived from complete dynamic analysis, as derived and discussed in the book 1 Turnovsky (1978a) examines a simple parameterisation of a partial stabilisation scheme, but restricts the analysis to the linear Waugh-Oi-Massell case