From state to market : essays on electricity sector reforms

Abstract

The 1980s marked the beginning of market driven reforms in the electricity sector based on the standard textbook model. More than half of the economies around the world have initiated power sector reforms since late 1980s irrespective of the sector size, resource endowments, institutional capacity and economic development. Hence, this thesis qualitatively and quantitatively assesses the process and outcomes of market-based reforms evolving the electricity sector across the developing, transition and developed economies where reforms are on-going at various stages. Deriving relevant and feasible reform options and policy for the electricity sector based on the lessons learnt after considering more than two decades of reforms remains the major contribution of this thesis. Chapter one is the introductory chapter and provides an outline of the motivation and context of the thesis. Chapter two is a literature review of the experiences to date with the performance of electricity reforms across the reforming countries. The chapter identifies the knowledge gaps in the literature and sets the scene for the three substantial chapters of the thesis to follow. The third chapter assesses the issues and options in reforming small electricity sectors considering the twin complicating factors of political instability and increasing electricity demand. The reform in the small electricity sector of Nepal is cited as a specific case. Chapter four empirically investigates the often poorly explored link between power sector reforms and wider institutional reforms in the economy across different groups of transition countries. The transition countries include the countries of Central and Eastern Europe and the Former Soviet Union. Chapter five examines the degree of market integration between the relatively small all-island Irish electricity market and other wholesale electricity markets in Europe. The chapter focuses on the role of interconnections and increased cross-border trade of electricity in the creation of an integrated market for electricity in Europe. Chapter six concludes the thesis by highlighting the policy implications and areas for future research. The chapter establishes that electricity sector reform is prone to chronic political, market and regulatory failures in many reforming countries.