This is a Free article. You will receive access to the full text.

What future(s) for liberalized electricity markets: efficient, equitable or innovative?

Free Article

Well-designed electricity liberalization has delivered effciency gains, but political risks of decarbonizing the sector have undermined investment incentives in en-ergy-only markets, while poorly designed regulated tariffs have increased the cost of accommodating renewables. The paper sets out principles from theory and public economics to guide market design, capacity remuneration, renewables support and regulatory tariff setting, with an illustration from a high capital cost low variable cost electricity system. Such characteristics are likely to become more prevalent with increasing renewables penetration, where poor regulation is already threatening current utility business models. The appendix develops and applies a method for determining the subsidy justifed by learning spillovers from solar PV.

Download Executive Summary Download PDF

Energy Specializations: Electricity – Markets and Prices ; Renewables – Policy and Regulation; Electricity – Policy and Regulation

JEL Codes: Q42: Alternative Energy Sources, Q40: Energy: General, Q54: Climate; Natural Disasters and Their Management; Global Warming

Keywords: Electricity market design, Tariffs, Renewables support, Utilities

DOI: 10.5547/01956574.39.1.dnew

References: Reference information is available for this article. Join IAEE, log in, or purchase the article to view reference data.

Published in Volume 39, Number 1 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


© 2024 International Association for Energy Economics | Privacy Policy | Return Policy