IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v62y2013icp821-829.html

Financing investment in the European electricity transmission network: Consequences on long-term sustainability of the TSOs financial structure

Author

Listed:
  • Henriot, Arthur

Abstract

This article focuses on the ability of European TSOs to meet the demand for substantial investments in the electricity transmission grid over the next two decades. We employ quantitative analysis to assess the impact of the required capital expenditures under a set of alternative financing strategies. We consider a best-case scenario of full cooperation between the European TSOs. It appears that under current trends in the evolution of transmission tariffs, only half the volumes of investment currently planned could be funded. A highly significant increase in transmission tariffs will be required to ensure the whole-scale investments can be delivered. Finally, alternative strategies can dampen the impact on tariffs but they can only partially substitute for this increase in charges paid by network users.

Suggested Citation

  • Henriot, Arthur, 2013. "Financing investment in the European electricity transmission network: Consequences on long-term sustainability of the TSOs financial structure," Energy Policy, Elsevier, vol. 62(C), pages 821-829.
    • Handle: RePEc:eee:enepol:v:62:y:2013:i:c:p:821-829
    DOI: 10.1016/j.enpol.2013.07.011
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S030142151300654X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2013.07.011?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 look for a different version below or

    for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Neuhoff, Karsten & Boyd, Rodney & Glachant, Jean-Michel, 2012. "European Electricity Infrastructure: Planning, Regulation, and Financing," EconStor Research Reports 65878, ZBW - Leibniz Information Centre for Economics.
    2. Graeme Guthrie, 2006. "Regulating Infrastructure: The Impact on Risk and Investment," Journal of Economic Literature, American Economic Association, vol. 44(4), pages 925-972, December.
    3. J-M- Glachant & H. Khalfallah & Y. Perez & V. Rious & M. Saguan, 2013. "Implementing Incentive Regulation and Regulatory Alignment with Resource Bounded Regulators," Competition and Regulation in Network Industries, Intersentia, vol. 14(3), pages 265-291, September.
    4. Henriot, Arthur, 2013. "Financing investment in the European electricity transmission network: Consequences on long-term sustainability of the TSOs financial structure," Energy Policy, Elsevier, vol. 62(C), pages 821-829.
    5. Dieter Helm, 2009. "Infrastructure investment, the cost of capital, and regulation: an assessment," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 25(3), pages 307-326, Autumn.
    6. Graeme Guthrie, 2006. "Regulating Infrastructure: The Impact on Risk and Investment," Journal of Economic Literature, American Economic Association, vol. 44(4), pages 925-972, December.
    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. Jean Michel Glachant & Arthur Henriot, 2013. "Melting-pots and salad bowls: the current debate on electricity market design for RES integration," Cambridge Working Papers in Economics 1354, Faculty of Economics, University of Cambridge.
    2. Gert Brunekreeft & Mika Goto & Roland Meyer & Masahiro Maruyama & Toru Hattori, 2014. "Unbundling of Electricity Transmission System Operators in Germany – An Experience Report," Bremen Energy Working Papers 0016, Bremen Energy Research.
    3. Carfora, Alfonso & Romano, Antonio A. & Ronghi, Monica & Scandurra, Giuseppe, 2017. "Renewable generation across Italian regions: Spillover effects and effectiveness of European Regional Fund," Energy Policy, Elsevier, vol. 102(C), pages 132-141.
    4. Romano, Antonio A. & Scandurra, Giuseppe & Carfora, Alfonso & Fodor, Mate, 2017. "Renewable investments: The impact of green policies in developing and developed countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 68(P1), pages 738-747.
    5. Glachant, Jean-Michel & Ruester, Sophia, 2014. "The EU internal electricity market: Done forever?," Utilities Policy, Elsevier, vol. 30(C), pages 1-7.
    6. Jean-Michel Glachant & Sophia Ruester, 2013. "The EU Internal Electricity Market: Done Forever?," RSCAS Working Papers 2013/66, European University Institute.
    7. Henriot, Arthur, 2013. "Financing investment in the European electricity transmission network: Consequences on long-term sustainability of the TSOs financial structure," Energy Policy, Elsevier, vol. 62(C), pages 821-829.
    8. Polzin, Friedemann, 2017. "Mobilizing private finance for low-carbon innovation – A systematic review of barriers and solutions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 77(C), pages 525-535.
    9. Nico Keyaerts & Leonardo Meeus, 2015. "The experience of Italy and the US with exceptional regulatory incentives for exceptional electricity transmission investments," RSCAS Working Papers 2015/44, European University Institute.
    10. F.H.J. Polzin & M.W.J.L. Sanders & Florian Täube, 2017. "A diverse and resilient financial system for investments in the energy transition," Working Papers 17-03, Utrecht School of Economics.
    11. Glachant, Jean-Michel & Ruester, Sophia, 2014. "The EU internal electricity market: Done forever?," Utilities Policy, Elsevier, vol. 31(C), pages 221-228.
    12. Blyth, William & McCarthy, Rory & Gross, Robert, 2015. "Financing the UK power sector: Is the money available?," Energy Policy, Elsevier, vol. 87(C), pages 607-622.
    13. Corsatea, Teodora Diana & Giaccaria, Sergio & Covrig, Catalin-Felix & Zaccarelli, Nicola & Ardelean, Mircea, 2016. "RES diffusion and R&D investments in the flexibilisation of the European electricity networks," Renewable and Sustainable Energy Reviews, Elsevier, vol. 55(C), pages 1069-1082.
    14. Morano, Pierluigi & Tajani, Francesco & Locurcio, Marco, 2017. "GIS application and econometric analysis for the verification of the financial feasibility of roof-top wind turbines in the city of Bari (Italy)," Renewable and Sustainable Energy Reviews, Elsevier, vol. 70(C), pages 999-1010.
    15. Polzin, Friedemann & Migendt, Michael & Täube, Florian A. & von Flotow, Paschen, 2015. "Public policy influence on renewable energy investments—A panel data study across OECD countries," Energy Policy, Elsevier, vol. 80(C), pages 98-111.
    16. Sergey V. Bogachov & Sergey I. Kravchenko, 2022. "Financial and Tax Regulation of the Housing and Utilities Sector: Foreign Experience," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 3, pages 102-115, June.
    17. Husain, Shaiara & Sohag, Kazi & Wu, Yanrui, 2024. "Proven reserve oil and renewable energy nexus: Efficacy of policy stringency," Resources Policy, Elsevier, vol. 90(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. Glachant, Jean-Michel & Ruester, Sophia, 2014. "The EU internal electricity market: Done forever?," Utilities Policy, Elsevier, vol. 31(C), pages 221-228.
    2. Anna Pechan, 2014. "Which Incentives Does Regulation Give to Adapt Network Infrastructure to Climate Change? - A German Case Study," Working Papers V-365-14, University of Oldenburg, Department of Economics, revised May 2014.
    3. Arve, Malin & Zwart, Gijsbert, 2023. "Optimal procurement and investment in new technologies under uncertainty," Journal of Economic Dynamics and Control, Elsevier, vol. 147(C).
    4. Hahn, Robert & Evans, Lewis, 2010. "Regulating Dynamic Markets: Progress in Theory and Practice," Working Paper Series 4052, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    5. Nykamp, Stefan & Andor, Mark & Hurink, Johann L., 2012. "‘Standard’ incentive regulation hinders the integration of renewable energy generation," Energy Policy, Elsevier, vol. 47(C), pages 222-237.
    6. repec:vuw:vuwscr:19314 is not listed on IDEAS
    7. Briglauer, Wolfgang & Gugler, Klaus & Haxhimusa, Adhurim, 2016. "Facility- and service-based competition and investment in fixed broadband networks: Lessons from a decade of access regulations in the European Union member states," Telecommunications Policy, Elsevier, vol. 40(8), pages 729-742.
    8. Peter Broer & Gijsbert Zwart, 2013. "Optimal regulation of lumpy investments," Journal of Regulatory Economics, Springer, vol. 44(2), pages 177-196, October.
    9. Vitor Miguel Ribeiro, 2014. "Long-term regulatory orientation and the ideal timing of quality investment," FEP Working Papers 552, Universidade do Porto, Faculdade de Economia do Porto.
    10. Simona Benedettini & Federico Pontoni, "undated". "Electricity distribution investments: no country for old rules? A critical overview of UK and Italian regulations," IEFE Working Papers 50, IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy.
    11. João Vareda, 2011. "Quality upgrades and bypass under mandatory access," Journal of Regulatory Economics, Springer, vol. 40(2), pages 177-197, October.
    12. Guthrie, Graeme, 2020. "Regulation, welfare, and the risk of asset stranding," The Quarterly Review of Economics and Finance, Elsevier, vol. 78(C), pages 273-287.
    13. Keizo Mizuno & Ichiro Yoshino, 2015. "Overusing a bypass under cost-based access regulation: underinvestment with spillovers," Journal of Regulatory Economics, Springer, vol. 47(1), pages 29-57, February.
    14. repec:vuw:vuwscr:19155 is not listed on IDEAS
    15. David E. M. Sappington & Dennis L. Weisman, 2024. "40 Years of Incentive Regulation: What Have We Learned, and What Questions Remain?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 65(2), pages 361-373, September.
    16. Worch, Hagen & Truffer, Bernhard & Kabinga, Mundia & Eberhard, Anton & Markard, Jochen, 2013. "A capability perspective on performance deficiencies in utility firms," Utilities Policy, Elsevier, vol. 25(C), pages 1-9.
    17. Howell, Bronwyn, 2008. "The End or the Means? The Pursuit of Competition in Regulated Telecommunications Markets," Working Paper Series 4002, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    18. Avenali, Alessandro & Matteucci, Giorgio & Reverberi, Pierfrancesco, 2010. "Dynamic access pricing and investment in alternative infrastructures," International Journal of Industrial Organization, Elsevier, vol. 28(2), pages 167-175, March.
    19. Inderst, Roman & Peitz, Martin, 2012. "Network investment, access and competition," Telecommunications Policy, Elsevier, vol. 36(5), pages 407-418.
    20. repec:vuw:vuwscr:19104 is not listed on IDEAS
    21. Brito, Duarte & Pereira, Pedro & Vareda, João, 2010. "Can two-part tariffs promote efficient investment on next generation networks?," International Journal of Industrial Organization, Elsevier, vol. 28(3), pages 323-333, May.
    22. Dogan, Pinar & Bourreau, Marc & Manant, Matthieu, 2010. "A Critical Review of the “Ladder of Investment†Approach," Scholarly Articles 4777447, Harvard Kennedy School of Government.

    More about this item

    Keywords

    ;
    ;
    ;

    Statistics

    Access and download statistics

    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:enepol:v:62:y:2013:i:c:p:821-829. 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/locate/enpol .

    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.