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Energy policy and European utilities' strategy: Lessons from the liberalisation and privatisation of the energy sector in Romania

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  • Haar, Laura N.
  • Marinescu, Nicolae

Abstract

In the context of energy sector reforms pursued by Romanian government since 1990s, we compare and contrast the market outcomes of European utilities' investment with the host government policy objectives. We begin with energy market reform in Romania and review governments' efforts to attract foreign direct investment (FDI) and to gradually withdraw from the distribution and supply segments of electricity market. Subsequently, we illustrate the scope European utilities have had, market policy and design notwithstanding, for consolidating market power through regional dominance. We examine the extent to which these utilities have sought to enhance their positions through horizontal and vertical integration, counter to the EU plans for a competitive market structure. We find that the investments of European incumbents have not been resoundingly successful: although market entrance may have been justified on long-term strategic grounds, in the immediate term, segments acquired through competitive auctions have yielded modest regulated returns. Finally, we discuss the extent to which policy makers have achieved their goals. Although the short-term benefits of a competitive market structure have reached some consumers, a renewed interest in promoting 'national champions' reflect frustration with market mechanisms as a means of ensuring long-term strategic investments in the sector.

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  • Haar, Laura N. & Marinescu, Nicolae, 2011. "Energy policy and European utilities' strategy: Lessons from the liberalisation and privatisation of the energy sector in Romania," Energy Policy, Elsevier, vol. 39(5), pages 2245-2255, May.
  • Handle: RePEc:eee:enepol:v:39:y:2011:i:5:p:2245-2255
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    References listed on IDEAS

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    Cited by:

    1. Ionica Oncioiu & Alina Stanciu, 2017. "An Economic Perspective on Green Energy Market in Romania," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 3(3), pages 102-105, September.
    2. Zorana Božić & Dušan Dobromirov & Jovana Arsić & Mladen Radišić & Beata Ślusarczyk, 2020. "Power Exchange Prices: Comparison of Volatility in European Markets," Energies, MDPI, vol. 13(21), pages 1-15, October.
    3. Vasile Gherheș & Marcela Alina Fărcașiu, 2021. "Sustainable Behavior among Romanian Students: A Perspective on Electricity Consumption in Households," Sustainability, MDPI, vol. 13(16), pages 1-17, August.
    4. Zamfir, Andreea & Colesca, Sofia Elena & Corbos, Razvan-Andrei, 2016. "Public policies to support the development of renewable energy in Romania: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 87-106.
    5. Štefan Bojnec & Alan Križaj, 2021. "Electricity Markets during the Liberalization: The Case of a European Union Country," Energies, MDPI, vol. 14(14), pages 1-21, July.
    6. Nicolae Marinescu, 2020. "Changes in Renewable Energy Policy and Their Implications: The Case of Romanian Producers," Energies, MDPI, vol. 13(24), pages 1-16, December.

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