Costs of electricity deregulation

Chi-Keung WOO, M. King*, A. Tishler, L. C.H. Chow

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    38 Citations (Scopus)

    Abstract

    The last decade has witnessed efforts throughout the world to deregulate the electricity industry, with varied results. While there have been a few qualified success stories, many challenges of deregulation have come to light. These challenges can lead to negative, even disastrous, outcomes. Based on a comprehensive literature review, this paper catalogues problems experienced in various deregulation efforts, and considers the application of the lessons learned from this history to Israel, which is considering deregulation. Failings of deregulation are found to center around the following problems: high set-up cost; complicated market design; inevitable spot price volatility; market power abuse; inefficient investment; difficulty in reducing generation cost; dysfunctional input markets; stranded cost; unequal distribution of benefits. We find that many of these problems are exacerbated by the particular circumstances faced by Israel, and advise any country or region considering deregulation to carefully consider these obstacles to success.

    Original languageEnglish
    Pages (from-to)747-768
    Number of pages22
    JournalEnergy
    Volume31
    Issue number6-7
    DOIs
    Publication statusPublished - 2006

    Scopus Subject Areas

    • Civil and Structural Engineering
    • Building and Construction
    • Pollution
    • Mechanical Engineering
    • Industrial and Manufacturing Engineering
    • Electrical and Electronic Engineering

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