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No Barriers to Investment in Electricity and Gas Distribution Grids through Incentive Regulation

Author

Listed:
  • Astrid Cullmann
  • Nicola Dehnen
  • Maria Nieswand
  • Ferdinand Pavel

Abstract

Since early 2009, electricity and gas distribution in Germany has been subject to incentive regulation designed to ensure greater efficiency in electricity and gas grid operation. However, it remains to be seen how changes to the regulatory framework will affect the investment behavior of distribution system operators. Against this background, the present study empirically analyzes the investment activities of distribution system operators for the period from 2006 to 2012. The key questions are whether the introduction of incentive regulation in 2009 has had an empirically demonstrable impact on investment and whether this effect is due to the introduction of incentive regulation per se, or to its specific design. The findings show a positive effect on investment since the introduction of incentive regulation which, in particular, is determined by the specific design of regulation.

Suggested Citation

  • Astrid Cullmann & Nicola Dehnen & Maria Nieswand & Ferdinand Pavel, 2015. "No Barriers to Investment in Electricity and Gas Distribution Grids through Incentive Regulation," DIW Economic Bulletin, DIW Berlin, German Institute for Economic Research, vol. 5(6), pages 82-87.
    • Handle: RePEc:diw:diwdeb:2015-6-3
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    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.496372.de/diw_econ_bull_2015-06-3.pdf
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    More about this item

    Keywords

    Investments; Regulation; Network Industries;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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