Regulation and Regulatory Risk in the Face of Large Transmission Investment

Gert Brunekreeft and Roland Meyer

No 5, Bremen Energy Working Papers from Bremen Energy Research

Abstract: Most transmission systems in Europe are currently in need of large network expansions, in particular to cope with increasing shares of load remote renewable energy sources. Given that the scope for further cost reductions is largely exhausted, we observe a paradigm shift into the direction of implementing more cost-pass-through elements into price-based regulation to strengthen the necessary investment incentives. Regulatory emphasis is shifting from cost-reductions to promoting investment. Obstacles to investments arise in particular from regulatory risk and efficiency risk. Addressing these topics, we recommend a move towards more cost-based approaches, with ex-ante investment approval and less reliance on ex-post benchmarking.

Keywords: regulation; regulatory risk; network investments (search for similar items in EconPapers)
Pages: 22 pages
Date: 2011-02
New Economics Papers: this item is included in nep-ene and nep-reg
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Citations: View citations in EconPapers (1)

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