Electrifying integration: Electricity production and the South East Europe regional energy market

The paper provides an overview of the generation of electricity in 10 countries in South East Europe during 1995–2004. Using the latest available statistics, we explore the potential of the nascent integration of the electricity markets in South East Europe. We conduct a cross-country analysis of electricity production based on different types of fuel used. The region has a low level of gasification combined with few nuclear power generation facilities, while some countries heavily rely on hydro electric generation. Differences in countries' resource endowment and the possibility of intertemporal substitution between electricity generated from various fuels could stimulate a regional trade in electricity. As an alternative to nationally independent energy policy, regional trade could displace a proportion of the substantial investment in generation facilities required to avert serious supply shortages. Finally, we consider the environmental impact of electricity generation, and identify some of the key trade-offs between different policy objectives.     

The impact of electricity market reform on consumers

We examine the effect of electricity market reform on residential consumers, using hypothetical scenarios likely to be prompted by reform. These include raising tariffs to cost reflective levels and introducing a standing charge to recover 10% of the revenue to mirror cost reflective structures. For Albania and Bulgaria, where household expenditure surveys and electricity tariffs are available, we analyse the effects by expenditure decile and region. The impact of reforms varies considerably, depending on how far current tariffs reflect the long run marginal costs of supply, but likely reform scenarios will adversely affect low income households more than others.     

Lessons from deregulation: Understanding electricity markets in South America

South America has been the most progressive region in the developing world in terms of deregulating the electricity industry. In this paper we compare the evolution of deregulation, from initiation to the current state, in four South American countries: Argentina, Brazil, Chile, and Colombia. These four countries are similar in many dimensions, such as culture, language and macro-economic development. They are also all depending, to a large extent, on hydro-generated electricity. All four countries have implemented different deregulated systems, allowing a unique possibility to compare the performance of different implementations of deregulation on one continent. We describe the course undertaken by these countries and the results attained so far, and also compare and contrast the development of the different electricity industries. Finally, we discuss what can be learned from these countries and what they can learn from each other.     

Electricity transmission in the energy community of South East Europe

The paper presents the status of electricity transmission grids in the Energy Community of South East Europe (ECSEE): Albania, Bosnia–Herzegovina, Bulgaria, Croatia, Macedonia, Montenegro, Romania, Serbia, UNM in Kosovo. It overviews political and legal aspects of transmission, explaining the impact of the Energy Community Treaty and of the acquis communautaire on energy on the transmission sector. It summarizes the status and the capacity of the interconnections among countries and the current level of cross-border electricity trades. It discusses the need and criteria for electricity transmission investments in the ECSEE.     

South East Europe's electricity sector: Attractions,obstacles and challenges of Europeanisation

The Energy Community is a bold experiment in integration, creating a regional energy market between the European Union and nine South East European partners – Albania, Bosnia-Herzegovina, Bulgaria, Croatia, Montenegro, the Former Yugoslav Republic of Macedonia, Romania, Serbia and the United Nations Mission on behalf of Kosovo. This paper examines the challenges posed by the application of the EU model of energy regulation and the acquis communautaire, and the ability of States to meet those challenges.An investigation of governance in the countries of South East Europe (SEE), including analysis based on the World Bank's Worldwide Governance Indicators, suggests a lower overall performance of governing institutions in SEE, compared with countries of the EU 25. The paper, therefore, considers whether the EU energy model is appropriate in South East Europe at this stage. The EU model confers certain institutional resources, but at the same time imposes significant costs of compliance with the energy chapter of the acquis. It remains to be seen which of these two opposing factors will dominate, but the analysis suggests that for some countries in the region, regulatory reform alone may not be sufficient.     

Regional electricity markets in Europe: Focus on the Energy Community

Regional electricity markets (REM) are a natural step towards the creation of a single European electricity market. There are seven Electricity Regional Initiatives (ERI) launched by European Regulators Group for Electricity and Gas (ERGEG). This paper brings the focus to the eight REM covering the South East European (SEE) countries initiated by the European Commission. The congestion management and capacity allocation are used as an example to show that the SEE REM deals with the same priority issues as the other REMs do, and that the progress of this eight REM is great despite the short time of its existence. Given the EU membership perspective of the SEE countries and the expectation that the SEE REM shall become part of the internal electricity market, as well as the overlap between some members of the SEE REM and the other ERGEG ERI, the work of both initiatives shall be organized in a manner that uses the best practices and experience gained in each of them.     

Forward risk premia in long-term transmission rights: The case of electricity price area differentials (EPAD) in the Nordic electricity market

Hedging behaviour among players in derivatives markets have long been explained by forward risk premia. We provide new empirical evidence from the Nordic electricity market and explore the forward risk premia dynamics on power derivative contracts called electricity price area differentials (EPAD). This contract is critical for the market, but its efficiency has been questioned. The study investigates the significance, direction, and magnitude of forward risk premia in individual bidding areas and contract maturities during the period 2001–2013. We test the hypothesis of a negative relationship between forward risk premia and time-to-maturity, for which we find only partial support.     

An integrated model for electricity market coupling simulations: Evidence from the European power market crossroad

Motivated by the project of European Power Exchanges to develop a single price-coupling solution to calculate electricity prices across Europe that respects the cross-border capacity constraints on a day-ahead basis, we empirically examine and quantify market inefficiencies in non-coupled day-ahead electricity markets. These result from inefficient cross-border capacity allocation and its underlying effect on the market clearing prices. Efficient cross-border capacity allocation and new market clearing prices are simulated using a social welfare maximisation algorithm for the capacity of relevant network elements, whereas the order book generation process is reproduced by the econometrically estimated supply price elasticity functions. The estimated vector autoregression model and the underlying impulse response functions examine price shock transmission under different market regimes. The market coupling process is simulated on the historical non-coupled day-ahead market realisations at the junction of three regional power markets: Central Western Europe, Northern Italian, and South Eastern European markets. Simulation results confirm steady, efficient cross-border capacity utilisation, reduced price variance, improved overall price convergence and amplified price shock transmission in coupled electricity markets. Furthermore, in the simulated period, we have estimated an increase in the overall suppliers' and consumers’ surplus of almost EUR 16 million. The proposed simulation framework is a clear choice for applied simulation in coupled day-ahead electricity markets, offering valuable visual insights into the cross-border capacity allocation and its implications on electricity prices.     

The electricity balancing market: Exploring the design challenge

In the unbundled national electricity markets in Europe, the balancing market is the institutional arrangement that deals with the balancing of electricity demand and supply. This paper presents a framework for policy makers that identifies the relevant design variables and performance criteria that play a role in the design and analysis of European balancing markets. We outline the full extent of the design challenge through a discussion of trade-offs among performance criteria, uncertain effects of design variables, and the many inter-linkages between the balancing market and the electricity market at large. Policy makers can address the balancing market design challenge by adopting a structured approach in which design variables, performance criteria, market conditions, system developments, and resultant market incentives are explicitly considered.     

Revisiting electricity reform: The case for a sustainable development approach

Debates over reform and restructuring of the electricity sector worldwide are typically focused on technical and economic concerns. This paper argues for a wider perspective on electricity reforms, one that explicitly examines social and environmental outcomes. The paper shows how electricity reform in the developing world has been driven primarily by financial concerns. It then examines changes in the electricity sector in the context of larger globalization debates. This framing of the issue sets the stage for a discussion of the social and environmental considerations in electricity reform.     

Public-sector reform: Lessons from the privatisation experiment in Greece

This paper explores the process of public sector reform in Greece through the lens of privatisation. It is suggested that the transformation of the domestic post-war interventionist state into the current market-oriented paradigm has been disrupted and dependent on changing reform rationales. Along with the effect of historical dynamics on the direction and scale of change, the explanatory power of external determinants of reform is stressed. Findings reflect a direct linkage between the intensity of external pressure and the pace of reforms. The sustainability of gradual privatisation reforms seems more certain than the outcomes of fast-track privatisations under policy conditionality.     

Energy reform in Mexico: Imperfect unbundling in the electricity sector

Mexico is in the midst of enacting new energy market reform. After one year of presidential proposals, 21 laws were enacted in August, 2014. The analysis shows inconsistencies and lacunae in defining an open electricity market. According to the proposed reform, incumbent Comisión Federal de Electricidad (CFE) will keep transmission and distribution vertically integrated with newly created subsidiaries subject to third-party subcontracting, while private generation participants will compete in a wholesale market operated by Centro Nacional de Control de Energía (CENACE). Following an institutional economics approach and a framework to account for transition and coordination issues, the problem of misaligned incentives is analyzed along two governance dimensions: regulatory failure and market foreclosure. The research predicts negative effects of energy reform on grid investments and government coordination in Mexico.     

Effect of regulation on power-plant operation and investment in the South East Europe Market: An analysis of two cases

This paper analyses the differences between investment decisions for coal-fired power plants in Croatia and in Bosnia and Herzegovina (BiH). The long-run marginal cost (LRMC) of each plant is calculated based on a technical analysis that accounts for the important influences on overall project costs by combining a mathematical model and a simulation model. The former was used to calculate annual costs and the latter to predict power plant performance on the electricity market. This research offers insights about potential risks associated with power-plant investment with a particular focus on the regulatory framework and the relevance of participation in the European Union Emissions Trading Scheme (EU ETS) for costs, prices, and environmental impacts.     

面向气候变化的绿色雨水基础设施设计——来自欧洲北部的经验

【目的】世界各国城市都面临着众多可能因气候变化而加剧的水问题。【方法/过程】聚焦丹麦、英国、荷兰3个受气候变化（尤其是洪水）强烈影响的欧洲北部国家,重点分析4个不同空间尺度的绿色雨水基础设施（green stormwater infrastructure, GSI）项目。这些项目是应对未来城市自然灾害和宜居性挑战的韧性解决方案的典范。之所以选择这些项目,是因为它们具有独特的创新性：如将主要机动车交通走廊更新为宜居、可步行的街区,在区域尺度创建多功能GSI以提供社会福利,利用分层种植、密集种植和生态美学的力量来产生生态系统服务等。【结果/结论】除分析项目设计外,进一步讨论促成这些项目实施及提升的关键因素,以及建成后提升公众认同和环境社会效益的关键因素。这些因素包括：对宜居性的重视、将城市更新和气候适应相结合的设计方法、跨机构合作、多重资金来源的利用,以及以扎实的公众参与获得对城市气候适应举措的支持。     

Failures in water reform: Lessons from the Buenos Aires's concession

This paper examines the performance, until the cancellation of the contract, of the Buenos Aires sanitation concession in relation to privatization objectives of expanding coverage, reducing consumers’ tariffs and increasing service standards. The evidence shows that, despite a noteworthy increase, coverage rates remained significantly behind goals and that several contract renegotiations came along with significant tariff changes that turned an initial access problem into an affordability one. The analysis indicates that the concession's high profits originated almost exclusively from tariff increases, as the contribution of total factor productivity improvements and of changes of input prices have been negligible. A good number of the concession's failures seem to have been explained by the presence of a weak and inexpert regulator. The evidence also points out that regulators should consider protecting the interests of consumers by setting capital requirements.     

Electricity market reform in Argentina: assessing the impact for the poor in Buenos Aires

Following an economic crisis in the late 1980s, Argentina became one of the first developing countries to fully implement policies of the ‘Washington Consensus’, including the liberalisation and privatisation of public utilities. However, the reform and economic growth that followed in the 1990s was eventually undermined by long-term recession and an economic collapse in late 2001, marked by national debt default and currency devaluation in early 2002. In the context of urban poverty and poverty reduction, this paper examines electricity market reform in Argentina, analysing the strengths, weaknesses and distributional impacts. The article raises some of the concerns local actors have of reform, including disproportionate costs to low-income consumers, and the legitimacy of the process itself as a possible barrier to the delivery of more equitable social benefits.     

A plausible congestion management scheme for the internal electricity market of the European Union

This paper proposes a scheme for the management of network congestion in the Internal Electricity Market (IEM) of the European Union. This scheme tries to combine the rigor in the treatment of the energy and transmission capacity transactions with the flexibility and pragmatism that are necessary to make the scheme compatible with the current diversity of regulatory approaches and market structures in the Member States participating in the IEM. First, a reference scheme is presented with a complete formulation that jointly deals with the energy and capacity markets. Because of the implementation difficulties of this conceptually ideal approach, a more pragmatic scheme is proposed instead. The core of this scheme is an explicit auction mechanism that must be run prior to any short-term (daily, typically) energy markets. In this auction, where only transmission capacity is traded, both bilateral contracts and energy bids to Power Exchanges can participate in order to acquire the capacity that is necessary to carry out their transactions. Some technical issues related to the practical implementation of the proposed approach are also examined; these include market liquidity, the financial or physical nature of the long-term contracts, the potential problems of “slicing” transmission capacity and the allocation of congestion rents. Market power issues are ignored.     

Testing Home Ownership as the Cornerstone of Welfare: Lessons from East Asia for the West

In recent years, one driver behind the promotion of home ownership in Western countries has been the belief that owner-occupied housing assets provide a means to build up individual welfare security, potentially offsetting pension shortfalls in retirement. In contrast, many developed East Asian societies have both long focussed on advancing ‘asset’ or ‘property-based welfare’ systems as well as experienced the late-1990s Asian Financial Crisis which forced changes in housing and welfare practices. This paper examines how home ownership and asset-based welfare fared in these contexts and the lessons to be learned. It begins by considering the role of owner-occupied housing assets in different welfare regimes before empirically examining how asset-based welfare systems have been realized. It then considers how East Asian home ownership and asset-based welfare systems have stood-up to economic crises. The final section considers what the East Asian experiences contribute to an understanding of the housing assets–welfare relationship.