Challenges when electricity markets face the investment phase

D. Finon, Ta Johnsen and A Midttun
Additional contact information
D. Finon: CIRED - centre international de recherche sur l'environnement et le développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique
Ta Johnsen: Norwegian Sch Management - affiliation inconnue
A Midttun: Norwegian Sch Management - affiliation inconnue

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Abstract: Deregulation of electricity industry in Europe has tended to start with a grace period of energy surplus inherited from the previously expansive coordinated economies and further amplified by better resource utilisation from extended international trade. The regulatory challenge has therefore primarily been to allocate existing generation to consumers in an efficient way. However, as energy demand increases, due to economic growth, the challenge of providing new capacity surfaces. The Nordic region, which has been a pioneer in internationalising and deregulating electricity, is now approaching this stage, ahead of most of the rest of Europe. While the Nordic case is characterised by specificities related to hydropower it also raises the more general challenge of capacity expansion under a deregulated market economy. The article therefore discusses how the Nordic investment challenges of today shed light on more generic challenges that may become more general European challenges of tomorrow. In a final section, the article discusses policy options available to address the investment/price-hike challenge. The argument is put forward that recursion to some degree of coordinated governance might seem necessary if solutions are confined within large-scale technical systems. However, within the context of a small-scale decentralised technological development, one may be more confident of competitive solutions. (C) 2003 Elsevier Ltd. All rights reserved.

Date: 2004
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Citations: View citations in EconPapers (5)

Published in Energy Policy, 2004, 32 (12), pp.1355. ⟨10.1016/j.enpol.2003.12.017⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00716551

DOI: 10.1016/j.enpol.2003.12.017

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