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Electricity investment: an evaluation of the new British energy policy and its implications for the European Union

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  • Chiara F. DEL BO
  • Massimo FLORIO

Abstract

Traditionally, the electricity market has been characterized by vertically integrated monopolies due to the special features of this commodity, such as non-storability in the longer term, the physical laws requiring instant equation of supply and demand and the need for a complex and integrated network, controlled by a system operator. Despite these features, however, a wave of reforms promoting competition has been initiated in most markets, including the US and Europe, accompanied by regulation. In this paper we offer an overview of the current electricity policy debate taking place in the UK, which may pose the basis for a rethinking of the dominant policy paradigm. We review the technological and economic features of electricity markets, focusing on the rationales underlying the reforms put in place in the European Union and highlighting the impacts and potentially problematic consequences of liberalization in terms of investment and infrastructure, related to overarching economic, social and policy goals, focusing on the implications of environmental and climate-change mitigation policies as well as poverty reduction issues. The paper analyses the possible consequences, in terms of reforms and regulation of the electricity industry, of these new goals, suggesting that they may be relevant for the electricity industry in the EU.

Suggested Citation

  • Chiara F. DEL BO & Massimo FLORIO, 2012. "Electricity investment: an evaluation of the new British energy policy and its implications for the European Union," Departmental Working Papers 2012-15, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  • Handle: RePEc:mil:wpdepa:2012-15
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    File URL: http://wp.demm.unimi.it/files/wp/2012/DEMM-2012_015wp.pdf
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    References listed on IDEAS

    as
    1. Laura M. Platchkov & Michael G. Pollitt, 2011. "The Economics of Energy (and Electricity) Demand," Working Papers EPRG 1116, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    2. Thomas, Steve, 2003. "The Seven Brothers," Energy Policy, Elsevier, vol. 31(5), pages 393-403, April.
    3. Andrew Sweeting, 2007. "Market Power In The England And Wales Wholesale Electricity Market 1995-2000," Economic Journal, Royal Economic Society, vol. 117(520), pages 654-685, April.
    4. Fiorio, Carlo V. & Florio, Massimo, 2011. "«Would you say that the price you pay for electricity is fair?» Consumers' satisfaction and utility reforms in the EU15," Energy Economics, Elsevier, vol. 33(2), pages 178-187, March.
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    Cited by:

    1. Laura DELPONTE & Maddalena SORRENTINO & Matteo TURRI & Daniela VANDONE, 2013. "The transformation of Milan's city energy enterprise in a leading national industrial group," CIRIEC Working Papers 1303, CIRIEC - Université de Liège.
    2. Michael L. Polemis & Thanasis Stengos, 2019. "Does competition prevent industrial pollution? Evidence from a panel threshold model," Business Strategy and the Environment, Wiley Blackwell, vol. 28(1), pages 98-110, January.
    3. Michael L. Polemis & Thanasis Stengos, 2017. "Electricity Sector Performance: A Panel Threshold Analysis," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).

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    More about this item

    Keywords

    Electricity market; Energy policy; Investment;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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