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on Energy Economics |
| By: | Tooraj Jamasb (University of Cambridge); David Newbery (University of Cambridge); Michael Pollitt (University of Cambridge) |
| Abstract: | Since the early 1990s, substantial resources and efforts have been spent on implementing market-oriented electricity reforms in developing countries. While there are important sectoral, economic, and social dimensions involved in electricity reform, empirical analysis and evaluation of reforms have been of limited use for testing the economic rationale of reforms and policy advice. This may partly be attributed to a lack of generally accepted and measured indicators for monitoring the progress, impacts, and performance of reforms. In this paper the authors propose a set of indicators as a first step toward filling this gap and developing a coherent framework for studying electricity reform in developing countries that covers resource and institutional endowments, key reform steps, market structure, performance, and various impacts. |
| Keywords: | Infrastructure, Industry, Private sector development |
| Date: | 2005–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3599&r=ene |
| By: | Tooraj Jamasb (University of Cambridge); Raffaella Mota (University of Cambridge); David Newbery (University of Cambridge); Michael Pollitt (University of Cambridge) |
| Abstract: | Driven by ideology, economic reasoning, and early success stories, vast amounts of financial resources and effort have been spent on reforming infrastructure industries in developing countries. It is therefore important to examine whether evidence supports the logic of reforms. The authors review the empirical evidence on electricity reform in developing countries. They find that country institutions and sector governance play an important role in the success and failure of reform. And reforms also appear to have increased operating efficiency and expanded access to urban customers. However, the reforms have to a lesser degree passed on efficiency gains to customers, tackled distributional effects, and improved rural access. Moreover, some of the literature is not methodologically robust and on par with general development economics literature. Further, findings on some issues are limited and inconclusive, while other important areas are yet to be addressed. Until we know more, implementation of reforms will be more based on ideology and economic theory rather than solid economic evidence. |
| Keywords: | Infrastructure |
| Date: | 2005–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3549&r=ene |
| By: | John Cubbin (City University); John Stern (London Business School) |
| Abstract: | The authors assess for 28 developing countries over the period 1980-2001 whether the existence of a regulatory law and higher quality regulatory governance are significantly associated with superior electricity outcomes. Their analysis draws on theoretical and empirical work on the impact of independent central banks and of developing country telecommunications regulators. The authors' empirical analysis concludes that a regulatory law and higher quality governance are positively and significantly associated with higher per capita generation capacity levels. In addition, this positive impact continues to increase for at least three years and probably for over 10 years as experience develops and regulatory reputation grows. The results are robust to alternative dynamic specifications and show no sign of any significant endogeneity. |
| Keywords: | Infrastructure, Governance |
| Date: | 2005–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3535&r=ene |
| By: | John Cubbin (City University); John Stern (London Business School) |
| Abstract: | The authors review a number of studies on the effectiveness of utility regulatory agency and governance arrangements for the electricity industry, particularly for developing countries. They discuss governance criteria and their measurement, both legal frameworks and surveys of regulatory practice. They also discuss the results from econometric studies of effectiveness for regulatory agencies in the electricity and telecommunications industries and compare these with the results from econometric studies of independent central banks and their governance. The authors conclude with a discussion of policy implications and of priorities for information collection to improve understanding of these issues. |
| Keywords: | Infrastructure, Governance |
| Date: | 2005–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3536&r=ene |
| By: | Frank A. Wolak (Stanford University) |
| Abstract: | This paper first describes those features of the electricity supply industry that make a prospective market monitoring process essential to a well-functioning wholesale market. Some of these features are shared with the securities industry, although the technology of electricity production and delivery make a reliable transmission network a necessary condition for an efficient wholesale market. These features of the electricity supply industry also make antitrust or competition law alone an inadequate foundation for an electricity market monitoring process. This paper provides examples of both the successes and failures of market monitoring from several international markets. More than 10 years of experience with the electricity industry restructuring process has shown that market failures are more likely and substantially more harmful to consumers than other market failures because of how electricity is produced and delivered and the crucial role it plays in the modern economy. Wholesale market meltdowns of varying magnitudes and durations have occurred in electricity markets around the world, and many of them could have been prevented if a prospective market monitoring process backed by the prevailing regulatory authority had been in place at the start of the market. |
| Keywords: | Infrastructure |
| Date: | 2005–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3691&r=ene |
| By: | Frank A. Wolak (Stanford University) |
| Abstract: | The author first describes those features of the electricity supply industry that make a prospective market monitoring process essential to a well-functioning wholesale market. Some of these features are shared with the securities industry, although the technology of electricity production and delivery make a reliable transmission network a necessary condition for an efficient wholesale market. These features of the electricity supply industry also make antitrust or competition law alone an inadequate foundation for an electricity market monitoring process. The author provides examples of both the successes and failures of market monitoring from several international markets. More than 10 years of experience with the electricity industry restructuring process has shown that market failures are more likely and substantially more harmful to consumers than other market failures because of how electricity is produced and delivered and the crucial role it plays in the modern economy. Wholesale market meltdowns of varying magnitudes and durations have occurred in electricity markets around the world, and many of them could have been prevented if a prospective market monitoring process backed by the prevailing regulatory authority had been in place at the start of the market. |
| Keywords: | Infrastructure |
| Date: | 2005–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3692&r=ene |
| By: | Antonio Estache (The World Bank); Ana Goicoechea (The World Bank) |
| Abstract: | This note provides a snapshot as of 2004 of the share of countries with an independent regulatory agency and with at least some private sector financing of its sectoral investment needs for electricity, water and sanitation, and telecommunications. Among other things, they show that: For respectively, electricity, water and sanitation, and telecommunications, 51 percent, 21 percent, and 66 percent of the developing countries in the sample have an independent regulator, that is, an agency separate from a ministry and from the operator. For respectively, electricity generation, electricity distribution, water and sanitation, and telecommunications, 47 percent, 36 percent, 35 percent, and 59 percent of the developing countries in the sample have at least some private sector financing. The shares of both agencies and private sector involvement tend to increase with income levels. Latin and Central America and Eastern Europe are outliers among regions as almost systematically they have among the highest shares for both indicators across sectors (except water). |
| Keywords: | Infrastructure, Private sector development |
| Date: | 2005–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3595&r=ene |
| By: | Mukami Kariuki (The World Bank); Jordan Schwartz (The World Bank) |
| Abstract: | This paper summarizes the key findings and conclusions of a literature review of small-scale private service providers (SPSPs) of water supply and electricity conducted over a six-month period in 2003. It draws on more than 400 documents-including journals, articles, reports, case studies and project reports-which have been disaggregated and referenced in a publicly available database. SPSPs appear most prevalent in countries with low coverage levels, ineffective public utilities that provide inadequate or partial services, and remote, difficult-to-access regions. SPSPs are especially prevalent in post-conflict countries and others with weak or failed states. Of the countries for which evidence of SPSPs was available, at least half fall into this category. SPSP provision of networked services appears to be significantly higher for electricity than for water supply. Most SPSPs identified through the literature are single-purpose entities established for the express purpose of delivering water supply or electricity. SPSPs take a variety of organizational forms, both for-profit and non-profit. As such, they are established for a variety of reasons, including: to meet consumer demand, respond to crises, or as part of larger business ventures. The technology used may extend upstream from distribution services to the means for producing or generating water supply or electricity, so capital needs vary accordingly. The majority of SPSPs have fewer than 50 employees and usually fewer than 10. A lack of affordable financing is a constraint for most SPSPs, which fund investments mainly through their own earnings and savings, loans from friends and family, and money borrowed from formal and informal lenders. |
| Keywords: | Infrastructure, Private sector development |
| Date: | 2005–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:3727&r=ene |
| By: | Mohan Lal Kolhe |
| Abstract: | The use of pay-back period analysis for economic evaluation of solar photovoltaic (PV) system reinforces the importance of the duration of the system. In a dynamic economic environment, the cost of energy increases at a faster rate than the common inflation rate. A time can be ascertained at which the market entry of the PV system will be profitable, i.e. at which the pay-back time drops below a value considered as the market threshold, provided the parameters describing the dynamic economic system remain unchanged. The market penetration of the PV system has been determined in Indian economic conditions and found to depend mainly on PV array costs and energy income reinvestment rate. The low PV array cost, high-energy income reinvestment rate, high solar cell reference efficiency and high battery efficiency have a substantial effect on the reduction of the energy price and pay-back period with early market penetration by the PV system. Keywords: photovoltaic (PV) system; pay-back period; market penetration; renewable energy economics. |
| Keywords: | renewable energy economics, pay-back period, market penetration, solar photovoltaic (PV) system. |
| JEL: | A |
| Date: | 2005–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpgt:0512004&r=ene |
| By: | Paul Castillo (Central Bank of Peru & London School of Economics); Carlos Montoro (Central Bank of Peru & London School of Economics); Vicente Tuesta (Central Bank of Peru) |
| Abstract: | In this paper we establish a link between the volatility of oil price shocks and a positive expected value of inflation in equilibrium (inflation premium). In doing so, we implement the perturbation method to solve up to second order a benchmark New Keynesian model with oil price shocks. In contrast with log linear approximations, the second order solution relaxes certainty equivalence providing a link between the volatility of shocks and inflation premium. First, we obtain analytical results for the determinants of the level of inflation premium. Thus, we find that the degree of convexity of both the marginal cost and the phillips curve is a key element in accounting for the existence of a positive inflation premium. We further show that the level of inflation premium might be potentially large even when a central bank implements an active monetary policy. Second, we evaluate numerically the second order solution of the model to explain the episode of high and persistent inflation observed in the US during the 70's. We find, in contrast with Clarida, Gali and Gertler (QJE, 2000), that even when there is no difference in the monetary policy rules between the pre-Volcker and post-Volcker periods, oil price shocks can generate high inflation levels during the 70's through a positive high level of inflation premium. As by product, our analysis shows that oil price shocks along with a distorted steady state can generate a time- varying endogenous trade-off between inflation and deviations of output from its efficient level. The previous trade-off, once uncertainty is taking into account, implies that a positive level of inflation premium is an optimal response to oil price shocks. |
| Keywords: | Phillips Curve, Second Order Solution, Oil Price shocks, Endogenous Trade off |
| JEL: | E52 E42 E12 C63 |
| Date: | 2005–12–07 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpma:0512004&r=ene |
| By: | Smulders,Sjak; Werf,Edwin van der (Tilburg University, Center for Economic Research) |
| Abstract: | We study how restricting CO2 emissions affcts resource prices and depletion over time. We use a Hotelling-style model with two nonrenewable fossil fuels that differ in their carbon content (e.g. coal and natural gas) and that are imperfect substitutes in final good production. We study both an unexpected constraint and an anticipated constraint. Both shocks induce intertemporal substitution of resource use. When emissions are unexpectedly restricted, it is cost-effective to use high-carbon resources relatively more (less) intensively on impact if this resource is relatively scarce (abundant). If the emission constraint is anticipated, it is cost-effective to use relatively more (less) of the low-carbon input before the constraint becomes binding, in order to conserve relatively more (less) of the high-carbon input for the period when climate policy is active in case the high-carbon resource is relatively scarce (abundant). |
| Keywords: | noon-renewable resources;input substitution; climate |
| JEL: | O13 Q31 Q43 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2005119&r=ene |