Incentives for Investment in the Liberalised North and South Electricity Industries: the Necessity for Adequate Institutional Arrangements
Article from: OGEL 3 (2004), in Energy, Institutional Reforms and Development in Latin America
Summary
The investment stake is all too often underplayed in deregulation reforms focused on market rules and de-integration measures. This paper criticises first the optimistic approach of the theory of investment incentives through market signals when it is applied to deregulated electricity industries. The greater part of the investment in base-load and peak equipment should be made profitable by income from very high prices during peak and extreme peak periods. Next, there is a problem of political acceptability, as the wholesale prices may reach extremely high and often ...