IDEAS home Printed from https://ideas.repec.org/a/eee/rensus/v70y2017icp83-95.html
   My bibliography  Save this article

An institutional framework for the development of sustainable and competitive power market in Pakistan

Author

Listed:
  • Qazi, Usama
  • Jahanzaib, Mirza
  • Ahmad, Wasim
  • Hussain, Salman

Abstract

Pakistan is continuously striving for sustainable and competitive power market. Under the comprehensive power sector reform program, Pakistan shifted its power market from monopoly model to single buyer model by unbundling Water and Power Development Authority (WAPDA) and establishing National Transmission and Dispatch Company (NTDC). Current severe power situation in the country is triggering the Government of Pakistan (GoP) to accelerate the implementation of intended reform program and to readily undertake next planned transformation i.e. from single buyer model to wholesale market model. This research endeavors the future dynamics of power market after the structural spin-off by pre-assessment of upcoming wholesale power market. Market power of both public and private electricity generators has been computed using 8-largest firm concentration ratio, Herfindahl-Hirschman Index (HHI) and Residual Supply Index (RSI). The findings suggest that future power market will function with non-existence of market power except in the periods of peak electricity demand and maximum hydro generation. Furthermore, insufficient installed capacities and underutilization of public thermal units may enable some players to exercise market power. For sustainable and competitive power market an empirically supported framework has been proposed based on the analysis. The framework proposes utilization of huge available renewable energy potential for future which will protect the whole infrastructure from market power. It recommends respective roles and responsibilities for the smooth transition among market models. The framework will be supportive in terms of successful and smooth transition from single buyer model to wholesale market model and potential of wind, solar, biogas to be properly explored and utilized to reduce energy gap.

Suggested Citation

  • Qazi, Usama & Jahanzaib, Mirza & Ahmad, Wasim & Hussain, Salman, 2017. "An institutional framework for the development of sustainable and competitive power market in Pakistan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 70(C), pages 83-95.
    • Handle: RePEc:eee:rensus:v:70:y:2017:i:c:p:83-95
    DOI: 10.1016/j.rser.2016.11.152
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1364032116309236
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.rser.2016.11.152?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Terrapon-Pfaff, Julia & Dienst, Carmen & König, Julian & Ortiz, Willington, 2014. "A cross-sectional review: Impacts and sustainability of small-scale renewable energy projects in developing countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 40(C), pages 1-10.
    2. Lise, Wietze & Hobbs, Benjamin F. & Hers, Sebastiaan, 2008. "Market power in the European electricity market--The impacts of dry weather and additional transmission capacity," Energy Policy, Elsevier, vol. 36(4), pages 1331-1343, April.
    3. Gabriel, Cle-Anne, 2016. "What is challenging renewable energy entrepreneurs in developing countries?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 64(C), pages 362-371.
    4. Emodi, Nnaemeka Vincent & Boo, Kyung-Jin, 2015. "Sustainable energy development in Nigeria: Current status and policy options," Renewable and Sustainable Energy Reviews, Elsevier, vol. 51(C), pages 356-381.
    5. Shahbaz, Muhammad & Loganathan, Nanthakumar & Zeshan, Mohammad & Zaman, Khalid, 2015. "Does renewable energy consumption add in economic growth? An application of auto-regressive distributed lag model in Pakistan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 44(C), pages 576-585.
    6. Tanrisever, Fehmi & Derinkuyu, Kursad & Jongen, Geert, 2015. "Organization and functioning of liberalized electricity markets: An overview of the Dutch market," Renewable and Sustainable Energy Reviews, Elsevier, vol. 51(C), pages 1363-1374.
    7. Green, Richard, 2006. "Market power mitigation in the UK power market," Utilities Policy, Elsevier, vol. 14(2), pages 76-89, June.
    8. Shaikh, Faheemullah & Ji, Qiang & Fan, Ying, 2015. "The diagnosis of an electricity crisis and alternative energy development in Pakistan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 1172-1185.
    9. Petinrin, J.O. & Shaaban, Mohamed, 2015. "Renewable energy for continuous energy sustainability in Malaysia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 50(C), pages 967-981.
    10. Helman, Udi, 2006. "Market power monitoring and mitigation in the US wholesale power markets," Energy, Elsevier, vol. 31(6), pages 877-904.
    11. Simona Bigerna, Carlo Andrea Bollino and Paolo Polinori, 2016. "Renewable Energy and Market Power in the Italian Electricity Market," The Energy Journal, International Association for Energy Economics, vol. 0(Bollino-M).
    12. Weigt, Hannes & Hirschhausen, Christian von, 2008. "Price formation and market power in the German wholesale electricity market in 2006," Energy Policy, Elsevier, vol. 36(11), pages 4227-4234, November.
    13. Ghafoor, Abdul & Rehman, Tanzeel ur & Munir, Anjum & Ahmad, Manzoor & Iqbal, Muhammad, 2016. "Current status and overview of renewable energy potential in Pakistan for continuous energy sustainability," Renewable and Sustainable Energy Reviews, Elsevier, vol. 60(C), pages 1332-1342.
    14. Wolak, Frank A., 2015. "Measuring the competitiveness benefits of a transmission investment policy: The case of the Alberta electricity market," Energy Policy, Elsevier, vol. 85(C), pages 426-444.
    15. Rabindra Nepal & Antonio Carvalho & John Foster, 2016. "Revisiting electricity liberalization and quality of service: empirical evidence from New Zealand," Applied Economics, Taylor & Francis Journals, vol. 48(25), pages 2309-2320, May.
    16. Rchard Schmalensee, 2004. "Sunk Costs and Antitrust Barriers to Entry," American Economic Review, American Economic Association, vol. 94(2), pages 471-475, May.
    17. Chang, Youngho, 2007. "The New Electricity Market of Singapore: Regulatory framework, market power and competition," Energy Policy, Elsevier, vol. 35(1), pages 403-412, January.
    18. Nepal, Rabindra, 2012. "Roles and potentials of renewable energy in less-developed economies: The case of Nepal," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(4), pages 2200-2206.
    19. Bhutto, Abdul Waheed & Bazmi, Aqeel Ahmed & Zahedi, Gholamreza, 2011. "Greener energy: Issues and challenges for Pakistan--Biomass energy prospective," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(6), pages 3207-3219, August.
    20. Zakaria, Muhammad & Noureen, Rabia, 2016. "Benchmarking and regulation of power distribution companies in Pakistan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 1095-1099.
    21. Jamasb,Tooraj & Nepal,Rabindra & Timilsina,Govinda R., 2015. "A quarter century effort yet to come of age : a survey of power sector reforms in developing countries," Policy Research Working Paper Series 7330, The World Bank.
    22. Rauf, Omer & Wang, Shujie & Yuan, Peng & Tan, Junzhe, 2015. "An overview of energy status and development in Pakistan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 48(C), pages 892-931.
    23. Amorim, F. & Vasconcelos, J. & Abreu, I.C. & Silva, P.P. & Martins, V., 2013. "How much room for a competitive electricity generation market in Portugal?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 18(C), pages 103-118.
    24. Stökler, Steffen & Schillings, Christoph & Kraas, Birk, 2016. "Solar resource assessment study for Pakistan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 1184-1188.
    25. Komal, Rabia & Abbas, Faisal, 2015. "Linking financial development, economic growth and energy consumption in Pakistan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 44(C), pages 211-220.
    26. Sultana, U. & Khairuddin, Azhar B. & Aman, M.M. & Mokhtar, A.S. & Zareen, N., 2016. "A review of optimum DG placement based on minimization of power losses and voltage stability enhancement of distribution system," Renewable and Sustainable Energy Reviews, Elsevier, vol. 63(C), pages 363-378.
    27. Shakeel, Shah Rukh & Takala, Josu & Shakeel, Waqas, 2016. "Renewable energy sources in power generation in Pakistan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 64(C), pages 421-434.
    28. Ahn, Nam-sung & Niemeyer, Victor, 2007. "Modeling market power in Korea's emerging power market," Energy Policy, Elsevier, vol. 35(2), pages 899-906, February.
    29. Shami, Sajjad Haider & Ahmad, Jameel & Zafar, Raheel & Haris, Muhammad & Bashir, Sajid, 2016. "Evaluating wind energy potential in Pakistan's three provinces, with proposal for integration into national power grid," Renewable and Sustainable Energy Reviews, Elsevier, vol. 53(C), pages 408-421.
    30. Garcia, Alfredo & Arbelaez, Luis E., 2002. "Market power analysis for the Colombian electricity market," Energy Economics, Elsevier, vol. 24(3), pages 217-229, May.
    31. Raheem, Abdur & Hassan, Mohammad Yusri & Shakoor, Rabia, 2016. "Bioenergy from anaerobic digestion in Pakistan: Potential, development and prospects," Renewable and Sustainable Energy Reviews, Elsevier, vol. 59(C), pages 264-275.
    32. Nayyar, Zeeshan Alam & Zaigham, Nayyer Alam & Qadeer, Abdul, 2014. "Assessment of present conventional and non-conventional energy scenario of Pakistan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 31(C), pages 543-553.
    33. Siddique, Samreen & Wazir, Rashid, 2016. "A review of the wind power developments in Pakistan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 57(C), pages 351-361.
    34. Ijlal Naqvi, 2016. "Pathologies of Development Practice: Higher Order Obstacles to Governance Reform in the Pakistani Electrical Power Sector," Journal of Development Studies, Taylor & Francis Journals, vol. 52(7), pages 950-964, July.
    35. Hellmer, Stefan & Wårell, Linda, 2009. "On the evaluation of market power and market dominance--The Nordic electricity market," Energy Policy, Elsevier, vol. 37(8), pages 3235-3241, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Abdullah, Fahad Bin & Iqbal, Rizwan & Hyder, Syed Irfan & Jawaid, Mohammad, 2020. "Energy security indicators for Pakistan: An integrated approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 133(C).
    2. Reeko Watanabe & Tsunemi Watanabe, 2020. "The Development of Straw-Based Biomass Power Generation in Rural Area in Northeast China—An Institutional Analysis Grounded in a Risk Management Perspective," Sustainability, MDPI, vol. 12(5), pages 1, March.
    3. Jamil, Muhammad Hamza & Ullah, Kafait & Saleem, Noor & Abbas, Faisal & Khalid, Hassan Abdullah, 2022. "Did the restructuring of the electricity generation sector increase social welfare in Pakistan?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 157(C).
    4. Ullah, Kafait & Raza, Muhammad Shabbar & Mirza, Faisal Mehmood, 2019. "Barriers to hydro-power resource utilization in Pakistan: A mixed approach," Energy Policy, Elsevier, vol. 132(C), pages 723-735.
    5. Aized, Tauseef & Shahid, Muhammad & Bhatti, Amanat Ali & Saleem, Muhammad & Anandarajah, Gabrial, 2018. "Energy security and renewable energy policy analysis of Pakistan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 84(C), pages 155-169.
    6. Wajahat Ullah Khan Tareen & Zuha Anjum & Nabila Yasin & Leenah Siddiqui & Ifzana Farhat & Suheel Abdullah Malik & Saad Mekhilef & Mehdi Seyedmahmoudian & Ben Horan & Mohamed Darwish & Muhammad Aamir &, 2018. "The Prospective Non-Conventional Alternate and Renewable Energy Sources in Pakistan—A Focus on Biomass Energy for Power Generation, Transportation, and Industrial Fuel," Energies, MDPI, vol. 11(9), pages 1-49, September.
    7. Luo, Zongwei & Dubey, Rameshwar & Gunasekaran, Angappa & Childe, Stephen J. & Papadopoulos, Thanos & Hazen, Benjamin & Roubaud, David, 2017. "Sustainable production framework for cement manufacturing firms: A behavioural perspective," Renewable and Sustainable Energy Reviews, Elsevier, vol. 78(C), pages 495-502.
    8. Jan, Muhammad Zain & Ullah, Kafait & Abbas, Faisal & Khalid, Hassan Abdullah & Bajwa, Tariq M., 2023. "Barriers to the adoption of social welfare measures in the electricity tariff structure of developing countries: A case of Pakistan," Energy Policy, Elsevier, vol. 179(C).
    9. Ashfaq, Asad & Ianakiev, Anton, 2018. "Features of fully integrated renewable energy atlas for Pakistan; wind, solar and cooling," Renewable and Sustainable Energy Reviews, Elsevier, vol. 97(C), pages 14-27.
    10. Muhammad U. Khan & Muhammad Ahmad & Muhammad Sultan & Ihsanullah Sohoo & Prakash C. Ghimire & Azlan Zahid & Abid Sarwar & Muhammad Farooq & Uzair Sajjad & Peyman Abdeshahian & Maryam Yousaf, 2021. "Biogas Production Potential from Livestock Manure in Pakistan," Sustainability, MDPI, vol. 13(12), pages 1-17, June.
    11. Rehman, Obaid ur & Ali, Yousaf & Sabir, Muhammad, 2022. "Risk assessment and mitigation for electric power sectors: A developing country's perspective," International Journal of Critical Infrastructure Protection, Elsevier, vol. 36(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aized, Tauseef & Shahid, Muhammad & Bhatti, Amanat Ali & Saleem, Muhammad & Anandarajah, Gabrial, 2018. "Energy security and renewable energy policy analysis of Pakistan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 84(C), pages 155-169.
    2. Asgari, Mohammad Hossein & Monsef, Hassan, 2010. "Market power analysis for the Iranian electricity market," Energy Policy, Elsevier, vol. 38(10), pages 5582-5599, October.
    3. Fazal, Rizwan & Rehman, Syed Aziz Ur & Bhatti, M. Ishaq, 2022. "Graph theoretic approach to expose the energy-induced crisis in Pakistan," Energy Policy, Elsevier, vol. 169(C).
    4. Iqbal, Jamshed & Khan, Zeashan Hameed, 2017. "The potential role of renewable energy sources in robot's power system: A case study of Pakistan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 75(C), pages 106-122.
    5. Mirjat, Nayyar Hussain & Uqaili, Mohammad Aslam & Harijan, Khanji & Valasai, Gordhan Das & Shaikh, Faheemullah & Waris, M., 2017. "A review of energy and power planning and policies of Pakistan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 79(C), pages 110-127.
    6. Kamran, Muhammad & Fazal, Muhammad Rayyan & Mudassar, Muhammad, 2020. "Towards empowerment of the renewable energy sector in Pakistan for sustainable energy evolution: SWOT analysis," Renewable Energy, Elsevier, vol. 146(C), pages 543-558.
    7. Syed Aziz Ur Rehman & Yanpeng Cai & Rizwan Fazal & Gordhan Das Walasai & Nayyar Hussain Mirjat, 2017. "An Integrated Modeling Approach for Forecasting Long-Term Energy Demand in Pakistan," Energies, MDPI, vol. 10(11), pages 1-23, November.
    8. Wajahat Ullah Khan Tareen & Zuha Anjum & Nabila Yasin & Leenah Siddiqui & Ifzana Farhat & Suheel Abdullah Malik & Saad Mekhilef & Mehdi Seyedmahmoudian & Ben Horan & Mohamed Darwish & Muhammad Aamir &, 2018. "The Prospective Non-Conventional Alternate and Renewable Energy Sources in Pakistan—A Focus on Biomass Energy for Power Generation, Transportation, and Industrial Fuel," Energies, MDPI, vol. 11(9), pages 1-49, September.
    9. Abdullah, Fahad Bin & Iqbal, Rizwan & Hyder, Syed Irfan & Jawaid, Mohammad, 2020. "Energy security indicators for Pakistan: An integrated approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 133(C).
    10. Kamiński, Jacek, 2012. "The development of market power in the Polish power generation sector: A 10-year perspective," Energy Policy, Elsevier, vol. 42(C), pages 136-147.
    11. Ashfaq, Asad & Ianakiev, Anton, 2018. "Features of fully integrated renewable energy atlas for Pakistan; wind, solar and cooling," Renewable and Sustainable Energy Reviews, Elsevier, vol. 97(C), pages 14-27.
    12. Tahir, Z.R. & Asim, Muhammad, 2018. "Surface measured solar radiation data and solar energy resource assessment of Pakistan: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P2), pages 2839-2861.
    13. Gianfreda, Angelica & Grossi, Luigi, 2012. "Forecasting Italian electricity zonal prices with exogenous variables," Energy Economics, Elsevier, vol. 34(6), pages 2228-2239.
    14. Khan, Muhammad Arshad & Abbas, Faisal, 2016. "The dynamics of electricity demand in Pakistan: A panel cointegration analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 65(C), pages 1159-1178.
    15. Ullah, Kafait & Raza, Muhammad Shabbar & Mirza, Faisal Mehmood, 2019. "Barriers to hydro-power resource utilization in Pakistan: A mixed approach," Energy Policy, Elsevier, vol. 132(C), pages 723-735.
    16. Maqbool, Rashid, 2018. "Efficiency and effectiveness of factors affecting renewable energy projects; an empirical perspective," Energy, Elsevier, vol. 158(C), pages 944-956.
    17. Leezna Saleem & Imran Ahmad Siddiqui & Intikhab Ulfat, 2021. "The prioritization of renewable energy technologies in Pakistan: An urgent need," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2021(1), pages 81-103.
    18. Jabeen, Gul & Yan, Qingyou & Ahmad, Munir & Fatima, Nousheen & Jabeen, Maria & Li, Heng & Qamar, Shoaib, 2020. "Household-based critical influence factors of biogas generation technology utilization: A case of Punjab province of Pakistan," Renewable Energy, Elsevier, vol. 154(C), pages 650-660.
    19. Syed Aziz Ur Rehman & Yanpeng Cai & Nayyar Hussain Mirjat & Gordhan Das Walasai & Izaz Ali Shah & Sharafat Ali, 2017. "The Future of Sustainable Energy Production in Pakistan: A System Dynamics-Based Approach for Estimating Hubbert Peaks," Energies, MDPI, vol. 10(11), pages 1-24, November.
    20. Syed Ahsan Ali Shah & Gordhan Das Valasai & Asif Ali Memon & Abdul Nasir Laghari & Nabi Bux Jalbani & Jody L. Strait, 2018. "Techno-Economic Analysis of Solar PV Electricity Supply to Rural Areas of Balochistan, Pakistan," Energies, MDPI, vol. 11(7), pages 1-19, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:rensus:v:70:y:2017:i:c:p:83-95. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/600126/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.