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Ownership versus legal unbundling of electricity transmission network: Evidence from renewable energy investment in Germany

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  • Sugimoto, Kota

Abstract

There are concerns that transmission network companies owned by incumbent vertically integrated energy utilities may conduct anti-competitive discrimination to prevent entry into the electricity market. Different level of transmission network unbundling is implemented in European countries to create competitive electricity market, however, there is little empirical analysis regarding the effects, especially on renewable energy investment. The purpose of this paper is to offer the first causal evidence of the effect of ownership unbundling of a transmission network company from the vertically integrated utility on renewable energy investment, relative to legal unbundling. My geographic quasi-experiment approach exploits the fact that two transmission network firms in Germany have undergone ownership unbundling, while another two firms chose the Independent Transmission Operator model. Constructing panel data of renewable energy power plant capacity installed per municipality from 2008 to 2015, I use difference-in-difference regression and the Tobit random-effects model to identify the impact of ownership unbundling relative to legal unbundling. I find strong evidence that ownership unbundling has little effect on photovoltaics power, onshore wind power, and biomass power capacity increases relative to the Independent Transmission Operator model. This result implies that ownership unbundling and legal unbundling with stronger regulations are both effective for creating independent transmission network companies and for enabling entrants to invest in renewable energy.

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  • Sugimoto, Kota, 2021. "Ownership versus legal unbundling of electricity transmission network: Evidence from renewable energy investment in Germany," Energy Economics, Elsevier, vol. 99(C).
    • Handle: RePEc:eee:eneeco:v:99:y:2021:i:c:s014098832100195x
    DOI: 10.1016/j.eneco.2021.105290
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    More about this item

    Keywords

    Vertical unbundling; Transmission network; Renewable energy; Natural experiment;
    All these keywords.

    JEL classification:

    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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