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Transmission network unbundling and grid investments: Evidence from the UCTE countries

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  • Nardi, Paolo

Abstract

The European Commission's proposal to unbundle electricity transmission network encouraged a great debate among involved players. Mainstream economists suggest that unbundling of both the transmission network and the interconnections can be seen as a structural solution to the problem of low investments in the grid and consequent high concentration of markets in favour of incumbents (among others, Léautier, 2001). Other scholars point out that benefits have to be compared to costs of unbundling (Kwoka, 2002). Recent literature underlines that net effect is ambiguous; more empirical evidence is needed (Pollitt, 2008). This paper proposes an empirical analysis to evaluate whether, and to what extent, unbundling measures are related to the increase of grid investments, focussing on 14 UCTE countries between 2001 and 2010. Results are twisted: legal and ownership unbundling show higher investments in the network, although, only for ownerhip unbundling, a substantial lack of quality emerges, confirming the risks of diseconomies of coordination in ownership unbundled systems and the need of incentive regulation.

Suggested Citation

  • Nardi, Paolo, 2012. "Transmission network unbundling and grid investments: Evidence from the UCTE countries," Utilities Policy, Elsevier, vol. 23(C), pages 50-58.
  • Handle: RePEc:eee:juipol:v:23:y:2012:i:c:p:50-58
    DOI: 10.1016/j.jup.2012.05.002
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    Cited by:

    1. Tomaso Duso & Florian Szücs & Veit Böckers, 2017. "Abuse of Dominance and Antitrust Enforcement in the German Electricity Market," Discussion Papers of DIW Berlin 1685, DIW Berlin, German Institute for Economic Research.
    2. Egerer, Jonas & Kunz, Friedrich & Hirschhausen, Christian von, 2013. "Development scenarios for the North and Baltic Seas Grid – A welfare economic analysis," Utilities Policy, Elsevier, vol. 27(C), pages 123-134.
    3. Baek, Chulwoo & Jung, Euy-Young & Lee, Jeong-Dong, 2014. "Effects of regulation and economic environment on the electricity industry׳s competitiveness: A study based on OECD countries," Energy Policy, Elsevier, vol. 72(C), pages 120-128.
    4. Poudineh, Rahmatallah & Jamasb, Tooraj, 2016. "Determinants of investment under incentive regulation: The case of the Norwegian electricity distribution networks," Energy Economics, Elsevier, vol. 53(C), pages 193-202.
    5. Bastianin, Andrea & Castelnovo, Paolo & Florio, Massimo, 2017. "The empirics of regulatory reforms proxied by categorical variables: recent findings and methodological issues," MPRA Paper 78256, University Library of Munich, Germany.
    6. repec:eee:juipol:v:50:y:2018:i:c:p:13-25 is not listed on IDEAS
    7. 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.

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