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Deep-ISOs and Network Investment

Author

Listed:
  • D. Balmert
  • G. Brunekreeft

Abstract

Further unbundling measures are currently implemented in the European energy markets. One option is the "deep independent system operator" (deep-ISO). An ISO splits the system operator from transmission ownership, which can remain integrated with generation assets, if so desired. This construction avoids violation of constitutional law, but does not address the "strategic-investment-withholding" argument. Therefore, a deep-ISO receives the competence for transmission investment decision making and can if necessary order a transmission owner to make the investment. This construction creates an uneasy governance split between decision-maker and risk-bearer. In this paper, we discuss the scope of the deep-ISO and the role of third parties in decentralised transmission investment, in particular "tendered transmission investment", to address the above mentioned governance problem.

Suggested Citation

  • D. Balmert & G. Brunekreeft, 2010. "Deep-ISOs and Network Investment," Competition and Regulation in Network Industries, Intersentia, vol. 11(1), pages 27-50, March.
    • Handle: RePEc:sen:journl:v:11:i:1:y:2010:p:27-50
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    Citations

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    Cited by:

    1. Schmitt, Stephan & Kucsera, Denes, 2013. "The Impact of the Regulatory Reform Process on R&D Investment of European Electricity Utilities," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80035, Verein für Socialpolitik / German Economic Association.
    2. Gugler, Klaus & Liebensteiner, Mario & Schmitt, Stephan, 2017. "Vertical disintegration in the European electricity sector: Empirical evidence on lost synergies," International Journal of Industrial Organization, Elsevier, vol. 52(C), pages 450-478.
    3. Rebenaque, Olivier & Schmitt, Carlo & Schumann, Klemens & Dronne, Théo & Roques, Fabien, 2023. "Success of local flexibility market implementation: A review of current projects," Utilities Policy, Elsevier, vol. 80(C).
    4. Sajjad Solat & Farrokh Aminifar & Heidarali Shayanfar, 2023. "Changing the regulations for regulating the changes: From distribution system operator (DSO) to electricity distribution stakeholders’ organization (EDSO)," Energy & Environment, , vol. 34(4), pages 830-854, June.
    5. Christine Brandstätt & Gert Brunekreeft & Nele Friedrichsen, 2013. "The Need for More Flexibility in the Regulation of Smart Grids – Stakeholder Involvement," Bremen Energy Working Papers 0013, Bremen Energy Research.
    6. Gert Brunekreeft, 2011. "Vertical Relations and Energy Networks: Selected Issues," Chapters, in: Jean-Michel Glachant & Dominique Finon & Adrien de Hauteclocque (ed.), Competition, Contracts and Electricity Markets, chapter 5, Edward Elgar Publishing.
    7. Nele Friedrichsen & Christine Brandstätt & Gert Brunekreeft, 2014. "The need for more flexibility in the regulation of smart grids – stakeholder involvement," International Economics and Economic Policy, Springer, vol. 11(1), pages 261-275, February.
    8. Nele Friedrichsen, 2011. "Governing Smart Grids - the Case for an Independent System Operator," Bremen Energy Working Papers 0011, Bremen Energy Research.
    9. Gugler, Klaus & Rammerstorfer, Margarethe & Schmitt, Stephan, 2013. "Ownership unbundling and investment in electricity markets — A cross country study," Energy Economics, Elsevier, vol. 40(C), pages 702-713.
    10. Schmitt Stephan & Kucsera Denes, 2014. "The Impact of the Regulatory Reform Process on the R&D Investment of European Electricity Utilities," Review of Network Economics, De Gruyter, vol. 13(1), pages 35-67, March.
    11. Nele Friedrichsen, 2015. "Governing smart grids: the case for an independent system operator," European Journal of Law and Economics, Springer, vol. 39(3), pages 553-572, June.

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