Rahmat Poudineh

Senior Research Fellow & Director of Research, Electricity Programme

Rahmat joined the institute in November 2014 to design and setup the electricity research programme. He is Senior Research Fellow and, since 2019, Director of Research. Rahmat is an economist and engineer by training, with several years of experience in the economics and regulation of the electricity sector. He has published numerous peer-reviewed academic articles on a number of key issues relating to the energy  sector, including: network regulation, electricity market design, power system flexibility, renewable support schemes, gas and power interdependence,  power sector reform in developing countries, and the implications of the energy transition for oil companies. He has also co-authored a book on ‘The Economics of Offshore Wind Power: Challenges and Policy Considerations’. Rahmat’s main research interest lies in the design of markets and regulation for future decarbonised energy systems.

Rahmat has been involved in a number of policy oriented projects, including a European Commission funded project on developing a regulatory framework to ensure the security of the European power grid against natural, accidental and malicious damage. He also led a project on sustainable electricity pricing for Tanzania funded by International Growth Centre (IGC).

Rahmat holds a BSc in aerospace engineering from Amirkabir University of Technology (Tehran Polytechnic), a graduate diploma in economics from Queen Mary University of London, MSc in energy economics and policy from University of Surrey, and PhD in energy economics from Durham University, where he received the best thesis prize for his doctoral dissertation on economic regulation of electricity distribution networks.

Areas of Expertise
Energy sector reform and market liberalisation, Regulatory economics, Theoretical and applied microeconomics, Electricity market design, Electricity networks regulation, Renewable policy, Energy technology and Innovation

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The retail electricity market, as the key link between end users and the wider electricity system, play a significant role throughout the power sector. This paper argues that the reference design of the retail market in the post liberalization era has not only failed to achieve its original objectives but has also proved to be unfit to keep pace with technological change, consumer preference, and the energy transition. Measures to reduce barriers to entry for new suppliers have distorted competition, put consumers at risk through unsustainable retail business models, and led to an unfair distribution of system and public policy costs. Lack of consumer engagement has been one of the biggest weaknesses of retail electricity markets. The nature of issues that impede engagement – such as complexity of the market and electricity tariffs, transaction costs, perceived barriers, and behavioural biases – have made remedial proposals, based on individual switching, less effective for the most disengaged consumers. The growth of government wedge and policy costs has reduced the size of the competitive portion of the retail tariff. At the same time, the structure of end users’ tariffs bears little relationship to the actual cost structure of the electricity system. This lowers the ability of retailers to recover these costs from energy consumption in an equitable manner. The emergence of non-traditional business models, the rise of new players, and a change in the nature of end users’ interactions with the electricity system call into question the dominance of the vertical architecture of an electricity market in which retail suppliers act as the hub. This paper concludes that retail market design and regulations need to be rethought to enable innovation and deliver the decarbonised, resilient, and affordable electricity that all consumers need.

[post_title] => Liberalized retail electricity markets: What we have learned after two decades of experience? [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => liberalized-retail-electricity-markets-what-we-have-learned-after-two-decades-of-experience [to_ping] => [pinged] => [post_modified] => 2019-12-02 11:44:06 [post_modified_gmt] => 2019-12-02 11:44:06 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33372 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [1] => WP_Post Object ( [ID] => 33453 [post_author] => 111 [post_date] => 2019-10-01 14:36:36 [post_date_gmt] => 2019-10-01 13:36:36 [post_content] => Resource adequacy challenges in energy-only markets have often led to the adoption of centralized capacity mechanisms. However, centralized approaches are problematic due to misalignment of incentives in central agency decision-making, difficulty inferring consumer preferences for reliability, lack of economic protection for consumers against reliability outages, and the challenge of allocating reliability costs through volumetric tariffs. This paper proposes a new model, the insurer-of-last-resort that works as a risk overlay on existing energy-only design. It unbundles energy and reliability, incorporates insurance-based risk management concepts to align incentives for centralized decisions, and allows revealed consumer preferences to guide new capacity deployment. Billimoria, F. and Poudineh, R. (2019). ‘Market design for resource adequacy: an insurance overlay on energy-only electricity markets’, Utilities Policy, 59, 100935. [post_title] => Market design for resource adequacy: an insurance overlay on energy-only electricity markets [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => market-design-for-resource-adequacy-an-insurance-overlay-on-energy-only-electricity-markets [to_ping] => [pinged] => [post_modified] => 2019-12-05 14:38:52 [post_modified_gmt] => 2019-12-05 14:38:52 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33453 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [2] => WP_Post Object ( [ID] => 33482 [post_author] => 111 [post_date] => 2019-08-06 11:43:38 [post_date_gmt] => 2019-08-06 10:43:38 [post_content] => Investment in renewable energy sources is a no-regret strategy for hydrocarbon-exporting economies of the Middle East and North Africa. It is also in line with some of the pre-renewable energy-sector reforms in the region. Indeed, much of the ongoing energy-sector reforms—such as the removal of fossil fuel subsidies—complement the move to a strong renewables policy. But the region’s electricity markets, which are currently skewed in favour of hydrocarbons, will need to be carefully designed to support renewables. A holistic approach to energy policy—including establishing stable regulatory frameworks, robust independent institutions, and effective risk mitigation measures—will be critical to advancing renewables in the region. Poudineh, R., Sen, A., and Fattouh, B. (2019). ‘Creating an enabling environment for renewable energy in resource-rich MENA countries’, The World Financial Review. [post_title] => Creating an enabling environment for renewable energy in resource-rich MENA countries’ [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => creating-an-enabling-environment-for-renewable-energy-in-resource-rich-mena-countries [to_ping] => [pinged] => [post_modified] => 2019-12-06 11:44:35 [post_modified_gmt] => 2019-12-06 11:44:35 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33482 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [3] => WP_Post Object ( [ID] => 31401 [post_author] => 111 [post_date] => 2019-02-11 10:14:48 [post_date_gmt] => 2019-02-11 10:14:48 [post_content] => The contract for difference (CfD) auctions are the cornerstone of the UK electricity sector’s decarbonization policy and were introduced as part of the Electricity Market Reform in 2013. The CfD auctions appear to have been successful in achieving low bids for low-carbon technologies, especially offshore wind power. However, the design of the auction increases the probability of speculative bidding, while the one-shot nature of the auction prevents bidders from learning and from utilizing information efficiently. We show that implementing a stringent non-delivery penalty to induce truth telling can improve deployment rate without increasing support costs. Moreover, by holding regularly scheduled (annual, for example) auctions, information on technology cost decreases can be better incorporated into the bids, lowering investor uncertainty and thus having a positive effect on support costs. [post_title] => Auctions for allocation of offshore wind contracts for difference in the UK [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => auctions-allocation-offshore-wind-contracts-difference-uk [to_ping] => [pinged] => [post_modified] => 2019-02-11 10:14:48 [post_modified_gmt] => 2019-02-11 10:14:48 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=31401 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [4] => WP_Post Object ( [ID] => 31363 [post_author] => 111 [post_date] => 2019-01-24 12:26:30 [post_date_gmt] => 2019-01-24 12:26:30 [post_content] => Energy transition risk is often viewed as a long-term risk, the impacts of which will not be felt for decades to come. However, this view is an imprecise presentation of reality. This is because although completion of transition might take decades, the increased uncertainty around the transition impacts the energy markets on a much shorter time scale than the transition itself. This article presents the results of a survey of institutional investors on hurdle rates for new energy projects and compares it with information available in the public domain about discount rates on completed projects.  The survey shows that uncertainties associated with energy transition have already started to alter the risk preferences of investors in fossil fuel projects. Investors are demanding a much higher hurdle rate in order to invest in long cycle oil and coal projects. We contend that such changes in risk preferences will have several key implications for fossil fuel markets. First, the payback period of discounted investment costs is extended dis-incentivising long cycle projects, therefore concentrating upstream investment around short-term projects with shorter payback periods. Second, it impacts asset valuation of fossil fuel companies with consequences for firms' cash flows and asset payoffs. Third, it encourages the oil and gas companies to adopt a low risk operation model, focus on the harvesting phase of their oil assets, and move away from exploration, appraisal and development. Fourth, it could affect the volume of available supplies if there is not enough investment into the sector with potential consequences on prices depending on demand projections. Fifth, it could affect the long-term price of oil when energy markets start to price in transition related risks. Sixth, the energy transition process could be accelerated as higher long-term oil prices improve the economics of alternative resources. [post_title] => Energy Transition, Uncertainty, and the Implications of Change in the Risk Preferences of Fossil Fuels Investors [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => energy-transition-uncertainty-implications-change-risk-preferences-fossil-fuels-investors [to_ping] => [pinged] => [post_modified] => 2019-01-24 12:26:30 [post_modified_gmt] => 2019-01-24 12:26:30 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=31363 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [5] => WP_Post Object ( [ID] => 33487 [post_author] => 111 [post_date] => 2019-01-06 12:02:27 [post_date_gmt] => 2019-01-06 12:02:27 [post_content] => Although renewables in the resource-rich countries of the Middle East and North Africa are inconsequential contributors to regional total primary energy supply, recent project developments and overt support from a range of influential regional actors suggest a general trend towards a more environmentally sustainable electricity supply. This trend is driven as much by economics as by other factors, as rapidly falling renewable energy capital costs are complementing favourable policy environments, technical suitability, and concerns around the impacts of anthropogenic climate change and local pollution. Finance is an especially important consideration in this transition, yet it receives insufficient coverage. This article seeks to remedy this deficiency of academic inquiry by highlighting the case of the Gulf Cooperation Council to draw out broader implications for the region. It outlines the factors that affect the financeability of projects, reviews the latest developments in renewable energy finance in the region, and presents policy recommendations. Krupa, J., Poudineh, R., and Harvey, D. (2018). ‘Renewable electricity finance in the resource-rich countries of the Middle East and North Africa: a case study on the Gulf Cooperation Council’, Energy, 1, 1047–1062. [post_title] => Renewable electricity finance in the resource-rich countries of the Middle East and North Africa: a case study on the Gulf Cooperation Council’ [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => renewable-electricity-finance-in-the-resource-rich-countries-of-the-middle-east-and-north-africa-a-case-study-on-the-gulf-cooperation-council [to_ping] => [pinged] => [post_modified] => 2019-12-06 12:04:59 [post_modified_gmt] => 2019-12-06 12:04:59 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33487 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [6] => WP_Post Object ( [ID] => 33486 [post_author] => 111 [post_date] => 2019-01-06 12:01:39 [post_date_gmt] => 2019-01-06 12:01:39 [post_content] => Gifted with vast reserves of oil and natural gas, Nigeria is a country with a low level of electrification but a rapidly rising demand. This invites the question of whether domestic natural gas can be leveraged to facilitate full electrification in Nigeria. The authors contend that, while in principle natural gas is a solution to the problem of electrification, in practice there are constraints, in the gas industry specifically and in the general power sector, to the use of gas for electrification in Nigeria. The gas-industry-specific constraints are the lack of an independent downstream regulatory regime and poor geographical coverage of transportation pipelines. Even when such constraints are resolved, and gas is readily available for use in power generation, electrification is inhibited by the failure of power sector reform to encourage the participation of private capital in financing new generation capacity, an unstable transmission network, and a liquidity crisis in the power sector due to high energy loss, exacerbated by non-cost-reflective tariffs and irregular bill collection. Peng, D. and Poudineh, R. (2018). ‘Is natural gas a viable option to promote electrification in Nigeria?’ Economics of Energy & Environmental Policy, 8(1), 1–18. [post_title] => Is natural gas a viable option to promote electrification in Nigeria? [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => is-natural-gas-a-viable-option-to-promote-electrification-in-nigeria [to_ping] => [pinged] => [post_modified] => 2019-12-06 12:01:51 [post_modified_gmt] => 2019-12-06 12:01:51 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33486 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [7] => WP_Post Object ( [ID] => 31255 [post_author] => 111 [post_date] => 2018-11-01 11:17:57 [post_date_gmt] => 2018-11-01 11:17:57 [post_content] =>

Australia’s National Electricity Market is an important global test case of the impacts of electricity sector transition in a large-scale liberalized energy-only market. The integration of variable and distributed energy resources has provided opportunities for clean, low-cost generation, but has also challenged existing market frameworks and resulted in a debate about the necessity for new designs. The market’s delayed and insufficient response to disorderly retirement and the need for certain system services have resulted in government and system operator intervention to bridge the gap. There are difficulties in securing timely new investment under policy uncertainty and integrated capital models. Furthermore, contributions to system services that were previously provided as a consequence of energy provision are not inherently provided by many new-generation technologies. A range of solutions have been proposed to address these challenges, although none to date have harnessed the potential of comprehensive alignment between operational requirements and economic signals. For example, the government’s flagship National Energy Guarantee, while providing a new framework for emissions intensity and reliability, did not address the ‘missing markets’ in energy security. Measures such as forward markets may provide hedging options, but are limited to energy. Centralized commitment could provide operating robustness, but might not be able to provide sufficient transparency of the various electricity value streams, as the experience of international markets shows. Furthermore, while reliability has taken centre stage in the policy discourse, system security is as important in managing a large-scale complex grid with a significant share of asynchronous generation. We argue that an efficient and transparent real-time energy market must reflect the comprehensive operational requirements of electricity dispatch. This necessitates an extension of energy-only design to an ‘energy+services’ model in which efficient price signals are provided for the ‘missing products’ necessary for operational security. Clear service specifications provide transparent signals that enable clear price discovery and facilitate competition from new providers and technologies.

[post_title] => Electricity Sector Transition in the National Electricity Market of Australia: Managing Reliability and Security in an Energy-Only Market [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => electricity-sector-transition-national-electricity-market-australia-managing-reliability-security-energy-market [to_ping] => [pinged] => [post_modified] => 2018-11-05 11:32:34 [post_modified_gmt] => 2018-11-05 11:32:34 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=31255 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [8] => WP_Post Object ( [ID] => 31235 [post_author] => 111 [post_date] => 2018-10-16 10:38:30 [post_date_gmt] => 2018-10-16 09:38:30 [post_content] => In the face of challenges to energy-only market design under the electricity sector transition, an option considered by many jurisdictions is to incorporate some form of centralized capacity mechanism to respond to shortfalls in the market provision. For example, the UK government has already introduced a formal capacity market. In Germany and Belgium, strategic reserve mechanisms have already been approved and will be introduced shortly. Other markets, such as the National Electricity Market of Australia, are also considering enhancing their existing strategic reserve mechanisms, which would see more standardized and continual procurement of capacity by a noncommercial central agency. Under a market transition where generation is increasingly stochastic and decentralized, two key issues emerge with the above approaches. First, centralized mechanisms put increased focus on the efficiency of central authority decision making and the alignment between performance outcomes for reliability and agency incentives. Second, existing capacity mechanisms require the central agency to infer consumer preferences for reliability, something that is very challenging in practice. This is especially relevant in markets where the value of lost load is increasingly differentiated among different consumers. In this paper, we propose a new model for electricity market design—the insurer-of-last-resort model—that works as a risk overlay on an existing energy-only market. This model unbundles energy and reliability and incorporates insurance-based risk management concepts with the aims of (1) aligning incentives for centralized decision making and (2) allowing revealed consumer preferences to guide new capacity deployment. [post_title] => Decarbonized Market Design: An Insurance Overlay on Energy-Only Electricity Markets [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => decarbonized-market-design-insurance-overlay-energy-electricity-markets [to_ping] => [pinged] => [post_modified] => 2018-10-16 10:38:30 [post_modified_gmt] => 2018-10-16 09:38:30 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=31235 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [9] => WP_Post Object ( [ID] => 33488 [post_author] => 111 [post_date] => 2018-08-06 12:08:38 [post_date_gmt] => 2018-08-06 11:08:38 [post_content] => As much of the world pushes ahead with the deployment of renewable energy, resource-rich economies of the Middle East and North Africa are lagging behind. This article contends that while the main obstacles to deployment of renewables are grid infrastructure inadequacy, insufficient institutional capacity, and risks and uncertainties, the investment incentives lie on a policy instrument spectrum with two polar solutions: (1) the incentive is provided entirely through the market (removing all forms of fossil fuel subsidies and internalizing the cost of externalities), or (2) the incentive is provided through a full government subsidy programme (in addition to the existing fossil fuel subsidies). However, there is a trade-off between the two dimensions of the fiscal burden and political acceptance across the policy instrument spectrum, which implies that the two polar solutions themselves are not easily and fully implementable in these countries. The authors propose a new, dynamic, combined approach (partial subsidy programme and partial fossil fuel price adjustment) that gradually moves towards market-based incentive provision over the medium to long term and eventually phases out energy subsidies. The approach balances fiscal sustainability with political stability, enabling the gradual scaling up and development of markets for renewables. Poudineh, R., Sen, A., and Fattouh, B. (2018). ‘Advancing renewable energy in resource rich economies of the MENA’, Renewable Energy, 123: 135–149. [post_title] => Advancing renewable energy in resource rich economies of the MENA’ [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => advancing-renewable-energy-in-resource-rich-economies-of-the-mena [to_ping] => [pinged] => [post_modified] => 2019-12-06 12:10:26 [post_modified_gmt] => 2019-12-06 12:10:26 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33488 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [10] => WP_Post Object ( [ID] => 31095 [post_author] => 111 [post_date] => 2018-06-25 10:45:16 [post_date_gmt] => 2018-06-25 09:45:16 [post_content] => Resource-rich economies in the Middle East and North Africa (MENA) are pursuing two parallel strategies with regard to their electricity sectors: (i) increasing the role of renewables and integrating them into their power generation mix to mitigate the impact of rising domestic oil and gas demand on their economies and to boost their hydrocarbon export capacities; and (ii) conducting power sector reforms to attract investment in generation capacity and networks, remove subsidies, and improve operational efficiency. These goals imply that the design of power sector reforms (including regulations governing wholesale and retail markets and networks) needs to be carried out with a view to the possibility of a rising share of non-dispatchable resources. The lack of an integrated approach to simultaneously address these two strategies is likely to lead to several misalignments between renewables and the various components of future electricity markets, when the share of intermittent resources increases in the generation mix. The key challenge is that the ‘ultimate model’ that will reconcile these two goals (liberalization and integrating renewables) is as yet unknown, and is still evolving due to uncertainties around the development of technologies, institutions, and consumer preferences. We argue in this paper that resource-rich MENA countries can, however, move towards adopting a transition model of electricity markets, the individual elements of which can eventually be adapted to suit either centralized or decentralized future electricity sector outcomes. We outline the key components of this model for the wholesale market, retail market, and network regulation, considering the objectives of governments and the specific contexts of the region.​   [post_title] => Electricity Markets in MENA: Adapting for the Transition Era [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => electricity-markets-mena-adapting-transition-era [to_ping] => [pinged] => [post_modified] => 2018-06-21 13:01:32 [post_modified_gmt] => 2018-06-21 12:01:32 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=31095 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [11] => WP_Post Object ( [ID] => 33494 [post_author] => 111 [post_date] => 2018-06-06 12:23:51 [post_date_gmt] => 2018-06-06 11:23:51 [post_content] => Caught between the need to free their economies from reliance on oil revenues alone and the obligation to comply with a now burdensome social contract, Gulf countries are considering how and when to implement a transition that may not be entirely painless. Fattouh, B., Poudineh, R., and West, R. (2018). ‘The unknowns of the transition’, World Energy. [post_title] => The unknowns of the transition [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => the-unknowns-of-the-transition [to_ping] => [pinged] => [post_modified] => 2019-12-06 12:25:49 [post_modified_gmt] => 2019-12-06 12:25:49 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33494 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [12] => WP_Post Object ( [ID] => 31065 [post_author] => 111 [post_date] => 2018-05-29 10:58:01 [post_date_gmt] => 2018-05-29 09:58:01 [post_content] => The energy landscape is changing rapidly with far-reaching implications for global energy industries and actors, including oil companies and oil-exporting countries. These rapid changes introduce uncertainty in multiple dimensions, the most important of which is the speed of transition.  While the transformation of energy systems is rapid in certain regions of the world, such as Europe, the speed of global energy transition remains uncertain. It is also difficult to define the end game (which technology will win and what the final energy mix will be), as the outcome of transition will vary across regions. A key issue facing oil companies and oil-exporting countries is how they should now position themselves and how best to be part of the renewables ‘revolution’. For oil companies, moving beyond their core business is risky, but a ‘wait-and-see' strategy could be costly, therefore oil companies need to gradually ‘extend’ their business model and rather than a complete shift from hydrocarbons to renewables, they should aim to build an integrated portfolio which includes both hydrocarbon and low-carbon assets. The strategies designed to make this happen need to be flexible and able to evolve quickly in response to anticipated changes in the market. For oil-exporting countries, with subsidized prices and rising domestic energy consumption, there is no conflict between investing in renewables and in hydrocarbons as these countries can liberate oil and gas for export markets, improving the economics of renewables projects. In the long run, however, the main challenge for many oil exporting countries is economic diversification as it is the ultimate safeguard against the energy transition. Whether or not these countries succeed in their goal of achieving a diversified economy has implications for global energy markets and the speed of global energy transformations. In other words, the global energy transition will not only shape political and economic outcomes in oil-exporting countries, but the transformations in these major oil-exporting countries will, in turn, shape the global energy transition - adding another layer of uncertainty to the already complex phenomenon of energy transition. [post_title] => The rise of renewables and energy transition: what adaptation strategy for oil companies and oil-exporting countries? [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => rise-renewables-energy-transition-adaptation-strategy-oil-companies-oil-exporting-countries [to_ping] => [pinged] => [post_modified] => 2018-06-05 14:00:22 [post_modified_gmt] => 2018-06-05 13:00:22 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=31065 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [13] => WP_Post Object ( [ID] => 33491 [post_author] => 111 [post_date] => 2018-05-06 12:17:22 [post_date_gmt] => 2018-05-06 11:17:22 [post_content] => Hydrocarbon-rich countries in the Middle East and North Africa have been slow to adopt and scale up renewables. In addition to significant disincentives posed by general barriers to renewables deployment, countries in this region also face factors specific to their economic and political-economy contexts. Renewables have been ‘locked out’ of many of the region’s resource-rich energy systems as a result of plentiful low-priced hydrocarbon fuels and the simultaneous presence of risk and uncertainties, weak institutions, and inadequate grid infrastructure. Given these distinctive characteristics, this chapter argues that the design of longer-term policies to promote renewables should carefully consider the balance of market and government roles in providing investment incentives for renewables, while simultaneously taking into account the barriers to renewables investment that are prevalent in these countries. Poudineh, R., Sen., A., and Fattouh, B. (2018). ‘Policies to promote renewables in the Middle East and North Africa’s resource-rich economies’, in Akhonbay, H. (ed.), The Economics of Renewable Energy in the Gulf, Routledge. [post_title] => Policies to promote renewables in the Middle East and North Africa’s resource-rich economies [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => policies-to-promote-renewables-in-the-middle-east-and-north-africas-resource-rich-economies [to_ping] => [pinged] => [post_modified] => 2019-12-06 12:19:39 [post_modified_gmt] => 2019-12-06 12:19:39 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33491 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [14] => WP_Post Object ( [ID] => 30959 [post_author] => 111 [post_date] => 2018-04-03 12:49:24 [post_date_gmt] => 2018-04-03 11:49:24 [post_content] => Competitive tendering has become one of the preferred methods of contracting renewable energy generation capacity internationally. As of early 2015, at least 60 countries had adopted renewable energy tenders, compared to just six countries in 2005. However, there are limited country-specific comparisons which research the subject considering the importance and prominence of the issue. The aim of this study is to fill this research gap by examining the Brazilian and Mexican experiences in developing renewables and how their tendering programmes interact with the market and institutional frameworks in which they exist. Fundamentally, our study seeks to shed light on two simple questions: what auction design issues may serve as barriers to renewable development, and how can auctions be improved further? We provide a historical assessment of renewable and generation capacity development policies in both Brazil and Mexico, review auction design and results in both countries, and offer recommendations for the future design and implementation of renewable energy policy tools, and auctions in particular. Executive Summary [post_title] => Renewable Auction Design in Theory and Practice: Lessons from the Experiences of Brazil and Mexico [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => renewable-auction-design-theory-practice-lessons-experiences-brazil-mexico [to_ping] => [pinged] => [post_modified] => 2018-04-03 12:51:22 [post_modified_gmt] => 2018-04-03 11:51:22 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=30959 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [15] => WP_Post Object ( [ID] => 33493 [post_author] => 111 [post_date] => 2018-02-06 12:21:44 [post_date_gmt] => 2018-02-06 12:21:44 [post_content] => This article looks at ways that the European Union’s electricity market could be redesigned for a decarbonized future. Peng, D. and Poudineh, R. (2018). ‘What is the right solution?’, Petroleum Review, 72(851), 28–29. [post_title] => What is the right solution? [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => what-is-the-right-solution [to_ping] => [pinged] => [post_modified] => 2019-12-06 12:23:44 [post_modified_gmt] => 2019-12-06 12:23:44 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33493 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [16] => WP_Post Object ( [ID] => 30783 [post_author] => 111 [post_date] => 2017-12-14 15:10:11 [post_date_gmt] => 2017-12-14 15:10:11 [post_content] => While the economics of low carbon generation technologies is fast improving due to a mix of policy and market driven incentives, innovation in electricity networks has been relatively sluggish. This slow adaptation of electricity networks is challenging as they are key to the energy transition. Further electrification of the economy requires significant investment and innovation in the grid segment of the electricity supply chain.  Traditional regulatory models of natural monopoly network utilities are designed to incentivise cost efficiency, with the assumption that network business is costly and the task of regulation is to encourage cost reduction subject to firm achieving a certain level of reliability. A feature of innovation activities is that they are riskier in comparison with the business-as-usual activities of network firms. This paper reviews the evolution of electricity grids from the technological and organisational perspectives and analyses the efficacy of existing incentive models in encouraging innovation.  We show that incentive mechanisms that do not take uncertainty into account in the outcome of innovation efforts divert the attention of network utilities from innovation to normal efficiency gains. We also demonstrate that the issue of risk can distort the outcome of a competitive scheme for innovation funds when bidders are heterogeneous in their risk tolerance. Finally, based on the results of our analysis about the role of risk in innovation activities and a review of innovation incentive mechanisms in the UK and Italy, we provide recommendations for addressing the problem of innovation under regulation. Executive Summary [post_title] => Electricity Networks: Technology, Future Role and Economic Incentives for Innovation [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => electricity-networks-technology-future-role-economic-incentives-innovation [to_ping] => [pinged] => [post_modified] => 2017-12-14 15:10:11 [post_modified_gmt] => 2017-12-14 15:10:11 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=30783 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [17] => WP_Post Object ( [ID] => 30695 [post_author] => 111 [post_date] => 2017-10-26 12:06:14 [post_date_gmt] => 2017-10-26 11:06:14 [post_content] => In recent years, the debate on electricity market design in the EU has focused on the fitness-for-purpose of the existing dominant design, the appropriateness of energy policy that underpins the existing market design, and on the process through which energy policy is coordinated with market design. In this paper, we contribute to this debate on all three levels. First, we propose a ‘module-and-level’-based framework to illustrate our diagnosis of coordination issues present in the EU’s power markets. We apply this framework to make a systematic identification of existing misalignments between the components of current market design and physical RES integration/financial RES support schemes. Secondly, we argue that the role of energy policy is not just in managing existing trade-offs between competitiveness, sustainability, and reliability, but also in encouraging innovations that increase the compatibility of energy policy objectives in the future. Finally, we propose a seven-step condition-dependent evolution of power market design, where the government/regulatory authority plays the role of meta-coordinator, matching the adaptation of market-based coordination modules with a hybrid future where distributed energy resources coexist with centralised generation, while decentralised market participants trade with each other and with incumbents. Executive Summary [post_title] => Electricity market design for a decarbonised future: An integrated approach [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => electricity-market-design-decarbonised-future-integrated-approach [to_ping] => [pinged] => [post_modified] => 2017-11-16 11:44:09 [post_modified_gmt] => 2017-11-16 11:44:09 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=30695 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [18] => WP_Post Object ( [ID] => 33510 [post_author] => 111 [post_date] => 2017-09-06 13:07:02 [post_date_gmt] => 2017-09-06 12:07:02 [post_content] => El plan original de la liberalización que consistía en una serie de mercados mayoristas diferenciados en el tiempo más el mercado al por menor, sufrió nuevos cambios debido a la intervención gubernamental directa. Poudineh, R. (2017, September). ‘The tension between liberalization and decarbonization in the electricity sector: lessons from the case of Britain’ [in Spanish], Proyecto Energético, 33(110), 12–15. [post_title] => The tension between liberalization and decarbonization in the electricity sector: lessons from the case of Britain [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => the-tension-between-liberalization-and-decarbonization-in-the-electricity-sector-lessons-from-the-case-of-britain [to_ping] => [pinged] => [post_modified] => 2019-12-06 13:08:55 [post_modified_gmt] => 2019-12-06 13:08:55 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33510 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [19] => WP_Post Object ( [ID] => 33496 [post_author] => 111 [post_date] => 2017-09-06 12:27:52 [post_date_gmt] => 2017-09-06 11:27:52 [post_content] => Investment in Tanzania’s electricity sector can be made through five different vehicles: the state-owned utility company TANESCO, independent power producers, emergency power producers, small power producers, and public–private partnerships. This article examines the role and performance of these vehicles, in light of the massive power infrastructure investment needs in Tanzania. It analyses the investment vehicles’ historical performance in attracting generation investment and their likely role in the coming years. It also discusses the implication of recent natural gas discoveries for investment in Tanzania’s power generation sector. Peng, D. and Poudineh, R. (2017). ‘An appraisal of investment vehicles in the Tanzania’s electricity sector’, Utilities Policy, 48, 51–68. [post_title] => An appraisal of investment vehicles in the Tanzania’s electricity sector’ [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => an-appraisal-of-investment-vehicles-in-the-tanzanias-electricity-sector [to_ping] => [pinged] => [post_modified] => 2019-12-06 12:29:44 [post_modified_gmt] => 2019-12-06 12:29:44 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33496 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [20] => WP_Post Object ( [ID] => 33499 [post_author] => 111 [post_date] => 2017-07-06 12:36:54 [post_date_gmt] => 2017-07-06 11:36:54 [post_content] => This book provides an overview of the policy frameworks that have been employed to support offshore wind power, and their efficacy in nurturing sustainable cost reductions across the industry. A growing number of countries are increasingly receptive to the prospect of implementing policies to support the deployment of large-scale renewable energy. The promise of carbon-free, utility-scale power generation from offshore wind farms has incentivized and nurtured offshore wind development. However, the high relative costs of deploying offshore wind compared to alternatives have a history of making it a politically divisive pursuit. At the same time, when many countries are just beginning to explore the possibility of developing an offshore wind industry, many other countries are experiencing what can be described as policy fatigue over supporting offshore wind. If cost reductions are not proven sustainable by the early 2020s, government support for offshore wind may start to erode and even completely evaporate in several key offshore wind markets, with global repercussions. This book offers a clear picture of the current status and future challenges of the offshore wind industry globally, incorporating both a technical analysis of the cost drivers and a detailed analysis of policy design and industrial economics. Poudineh, R., Brown, C., and Foley, B. (2017). Economics of Offshore Wind Power: Challenges and Policy Considerations, Palgrave Macmillan. [post_title] => Economics of Offshore Wind Power: Challenges and Policy Considerations [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => economics-of-offshore-wind-power-challenges-and-policy-considerations [to_ping] => [pinged] => [post_modified] => 2019-12-06 12:38:50 [post_modified_gmt] => 2019-12-06 12:38:50 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33499 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [21] => WP_Post Object ( [ID] => 33497 [post_author] => 111 [post_date] => 2017-04-06 12:29:57 [post_date_gmt] => 2017-04-06 11:29:57 [post_content] => Given the complementarity of electricity systems in the north and south Mediterranean basin, greater integration and trade can help achieve national and regional energy policy objectives of security of supply, cost optimization, and sustainability. However, issues such as different electricity market structures, regulatory and institutional diversity, and disparate levels of political stability make investment in interconnection between north and south a risky undertaking. Due to high perceived risk, delivery of interconnection projects through the European Union regulated model is less likely, or only possible at prohibitively high rates of return. The merchant transmission initiative, on the other hand, seen as an exception under European Union laws, can be approved only if the project meets a set of strict conditions. Here the authors show that a hybrid business model in which the main benefits of a merchant model are maintained within a regulated structure, which involves minimal regulatory changes to national electricity markets, offers an appropriate response to the existing investment challenges in the Euro-Mediterranean basin. The article highlights the main components of the proposed model and shows how it addresses the key features of a viable business model regarding investment incentives, risks, governance, and compatibility with the region’s energy scenario. Poudineh, R. and Rubino, A. (2017). ‘Business model for cross-border interconnections in the Mediterranean basin’, Energy Policy, 107, 96–108. [post_title] => Business model for cross-border interconnections in the Mediterranean basin’ [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => business-model-for-cross-border-interconnections-in-the-mediterranean-basin [to_ping] => [pinged] => [post_modified] => 2019-12-06 12:32:16 [post_modified_gmt] => 2019-12-06 12:32:16 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33497 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [22] => WP_Post Object ( [ID] => 30167 [post_author] => 111 [post_date] => 2017-03-06 10:56:05 [post_date_gmt] => 2017-03-06 10:56:05 [post_content] => In a recent paper we provide a comprehensive analysis of the gas to power supply chains in Nigeria and Bangladesh. This short article draws on the results of that study. In response to the dual challenge of decarbonisation and advancing energy access, some developing countries that are endowed with domestic natural gas resources have embarked on the path to develop a gas-to-power supply chain. Nigeria and Bangladesh, two of the most populous countries in the world, have adopted such a strategy. This paper uses a multi-step approach to evaluate the performance of the gas-to-power supply chains in these countries within political, regulatory, and commercial dimensions. The goal is to offer insights for other developing countries which are pursuing or considering the same strategy. By analysing the causal dynamics that are in place in Bangladesh and Nigeria, it suggests measures that may improve gas-to-power supply chain performance. Finally, it discusses the extent to which the causal dynamics observed can be generalised to other countries. Full paper. [post_title] => Gas-to-Power Supply Chains in Developing Countries: Comparative Case Studies of Nigeria and Bangladesh [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => gas-power-supply-chains-developing-countries-comparative-case-studies-nigeria-bangladesh [to_ping] => [pinged] => [post_modified] => 2017-11-16 14:22:12 [post_modified_gmt] => 2017-11-16 14:22:12 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=30167 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [23] => WP_Post Object ( [ID] => 30084 [post_author] => 111 [post_date] => 2017-02-13 11:52:40 [post_date_gmt] => 2017-02-13 11:52:40 [post_content] => Renewables in the resource-rich countries of the Middle East and North Africa (MENA) are inconsequential contributors to regional total primary energy supply, but recent project developments and overt support from a range of influential regional actors suggest a general trend towards a more environmentally sustainable electricity supply. This trend is driven just as much by economics as other factors, as rapidly falling renewable energy capital costs are complementing favourable policy environments, technical suitability, and concerns around the impacts of anthropogenic climate change. Finance is an especially important consideration in this transition, yet it receives insufficient coverage. This paper seeks to remedy this deficiency of academic inquiry. At the root of our inquiry lies a simple pair of questions: what makes a project financeable, and what can the resource-rich nations of the region do to create vibrant clean electricity financing markets for renewables? We outline the factors that affect the financeability of projects, review the latest developments in renewable energy finance in the region, and present policy recommendations going forward. Executive Summary [post_title] => Financing renewable electricity in the resource-rich countries of the Middle East and North Africa: A review [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => financing-renewable-electricity-middle-east-north-africa-review [to_ping] => [pinged] => [post_modified] => 2017-11-16 13:26:42 [post_modified_gmt] => 2017-11-16 13:26:42 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=30084 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [24] => WP_Post Object ( [ID] => 33500 [post_author] => 111 [post_date] => 2017-01-06 12:38:59 [post_date_gmt] => 2017-01-06 12:38:59 [post_content] => Modern economies and infrastructure sectors rely on secure electricity supplies. Due to sectoral interdependencies, major interruptions cause cascading effects in the economy. This article investigates the economic effects of major power supply disruptions, taking such interdependencies into account. The authors apply a dynamic inoperability input-output model to 101 sectors, including households, of the Scottish economy in 2009 to explore the direct, indirect, and induced effects of supply interruptions. They estimate the societal cost of energy not supplied (SCENS) due to an interruption. The results show that the most economically affected industries, following an outage, are different from the most inoperable ones. The results also indicate that SCENS varies with the duration of a power cut, ranging from 4,300/MWh for a one-minute outage to 8,100/MWh for a three-hour (and higher) interruption. These results can be used to design policies for contingencies and preventive investments in the power sector. Poudineh, R. and Jamasb, T. (2017). ‘Electricity supply interruptions: sectoral interdependencies and the cost of energy not served for the Scottish economy’, Energy Journal, 38(1): 51–76. [post_title] => Electricity supply interruptions: sectoral interdependencies and the cost of energy not served for the Scottish economy’ [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => electricity-supply-interruptions-sectoral-interdependencies-and-the-cost-of-energy-not-served-for-the-scottish-economy-2 [to_ping] => [pinged] => [post_modified] => 2019-12-06 12:41:28 [post_modified_gmt] => 2019-12-06 12:41:28 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33500 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [25] => WP_Post Object ( [ID] => 33595 [post_author] => 111 [post_date] => 2016-11-09 15:12:18 [post_date_gmt] => 2016-11-09 15:12:18 [post_content] => The increasing global use of natural gas for power generation has begun a period of interdependence between two important energy industries. Understanding of the extended gas-to-power supply chain is important for power and gas system operators, integrated utilities, regulators, and government bodies responsible for overall energy policy. This article seeks to align the study of the gas and power industries by providing a holistic framework for the thorough identification and discussion of power and gas sector structure, infrastructure, markets, and regulatory drivers. Additionally, it offers a simulation model as an example of applying the analytical framework to study gas and power interdependence in the United Kingdom. Peng, D. and Poudineh, R. (2016). ‘A holistic framework for the study of interdependence between electricity and gas sectors’, Energy Strategy Reviews, 13–14, 32–52. [post_title] => A holistic framework for the study of interdependence between electricity and gas sectors’ [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => a-holistic-framework-for-the-study-of-interdependence-between-electricity-and-gas-sectors-2 [to_ping] => [pinged] => [post_modified] => 2019-12-09 15:16:12 [post_modified_gmt] => 2019-12-09 15:16:12 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33595 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [26] => WP_Post Object ( [ID] => 29685 [post_author] => 111 [post_date] => 2016-10-03 13:24:47 [post_date_gmt] => 2016-10-03 12:24:47 [post_content] =>

As much of the world pushes ahead with the deployment of renewable energy, resource-rich MENA economies are lagging behind. For the region to catch up, new policies are required to remove barriers of entry to the industry and create investment incentives. This paper contends that while the main obstacles to deployment of renewables are grid infrastructure inadequacy, insufficient institutional capacity, and risks and uncertainties, the investment incentives lie on a policy instrument spectrum with two polar solutions: (i) the incentive is provided entirely through the market (removing all forms of fossil fuel subsidies and internalising the cost of externalities); or (ii) the incentive is provided through a full government subsidy programme (in addition to the existing fossil fuel subsidies). However, there is a trade-off between the two dimensions of the fiscal burden and political acceptance across the policy instrument spectrum, which implies that the two polar solutions themselves are not easily and fully implementable in these countries. Therefore, we propose a combinatorial approach in which the incentive for renewables deployment is provided through a partial renewable subsidy program and partial fossil fuel price reform in a way that balances the fiscal pressure on the government against political acceptability. Additionally, the paper argues that the fact resource-rich countries are behind advanced economies in electricity sector reform gives them a last-mover advantage in the sense that they can tap into years of international experience to avoid design mistakes and create a sustainable solution that is compatible with renewables deployment and their own context.

Executive Summary

[post_title] => Advancing Renewable Energy in Resource-Rich Economies of the MENA [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => advancing-renewable-energy-resource-rich-economies-mena [to_ping] => [pinged] => [post_modified] => 2017-11-16 13:39:10 [post_modified_gmt] => 2017-11-16 13:39:10 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=29685 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [27] => WP_Post Object ( [ID] => 29390 [post_author] => 111 [post_date] => 2016-07-18 10:45:03 [post_date_gmt] => 2016-07-18 09:45:03 [post_content] => In a recent paper we investigate the problem of incentivising flexibility in electricity markets. As the share of intermittent renewable energy increases in the generation mix, power systems are exposed to greater levels of uncertainty and risk, which requires planners, policy and business decision makers to incentivise flexibility, that is: their adaptability to unforeseen variations in generation and demand. The greater need for flexibility, along with the fact that its provision is costly, highlights the importance of efficient procurement. As a commodity, flexibility has multiple attributes such as capacity, ramp rate, duration and lead time among which there are complementarities. Additionally, along with traditional sources, which already enable flexibility, a number of business models, such as thermostat-based demand response, aggregators and small storage providers, are emerging in electricity markets and expected to constitute important sources of flexibility in future decentralised power systems. However, due to presence of high transaction costs, relative to the size of resource, the emerging small resources cannot directly participate in an organised electricity market and/or compete. Therefore we ask the fundamental question of how should the provision of flexibility, as a multi-dimensional commodity, be incentivised in this context? We model the procurement of flexibility services from emerging small resources through bilateral contracts in a multidimensional adverse selection setting. We take a normative perspective and show how efficient contracts for flexibility services can be designed given its peculiarity as an economic commodity. Through a simulation analysis we elucidate the applicability of the proposed model and demonstrate the way it can be utilised in, for example, a thermostat based demand response programme. [post_title] => Flexibility-Enabling Contracts in Electricity Markets [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => flexibility-enabling-contracts-electricity-markets [to_ping] => [pinged] => [post_modified] => 2016-07-18 10:45:03 [post_modified_gmt] => 2016-07-18 09:45:03 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=29390 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [28] => WP_Post Object ( [ID] => 33601 [post_author] => 111 [post_date] => 2016-07-09 15:33:30 [post_date_gmt] => 2016-07-09 14:33:30 [post_content] => As intermittent renewable resources gain more share in the generation mix, the need for power system flexibility increases more than ever. Parallel to this, technological change and the emergence of new players bringing about innovative solutions are boosting the development of flexibility-enabling business models, adding new activities to the existing supply chain. This chapter reviews the latest developments in these emerging models, ranging from technological to market-based innovation. The main conclusion is that when flexibility becomes scarce in the system, new players with their innovative business models will play an important role in ensuring sufficiency and efficiency of flexibility services. Boscán, L. and Poudineh, R. (2016). ‘Business models for power system flexibility: new actors, new roles, new rules’, in Sioshansi, F. (ed.), Future of Utilities: Utilities of the Future, Elsevier. [post_title] => Business models for power system flexibility: new actors, new roles, new rules’ [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => business-models-for-power-system-flexibility-new-actors-new-roles-new-rules [to_ping] => [pinged] => [post_modified] => 2019-12-09 15:35:29 [post_modified_gmt] => 2019-12-09 15:35:29 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33601 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [29] => WP_Post Object ( [ID] => 29354 [post_author] => 111 [post_date] => 2016-07-04 13:36:32 [post_date_gmt] => 2016-07-04 12:36:32 [post_content] => In order to fulfil its aspiration to become a middle-income country, Tanzania is working on improving infrastructure and service delivery in electricity provision, where $40 billion investment is needed in the sector to meet rising demand and widening electrification efforts from 2013 to 2035. This paper considers the institutional arrangements for investment in Tanzania’s power sector and surveys the track record (and possible bottlenecks) in funnelling investment to the sector, with special attention given to the gas sector, given the power sector’s planned reliance upon natural gas as a generation fuel. The paper finds that the financial health of TANESCO is central to all investment vehicles, since it is either directly responsible for investment, or indirectly, as the counter party to the variety of PPAs available with IPPs, EPPs, SPPs, or PPPs. During 2011–13, the financial position of TANESCO was negatively impacted by the increased of its electricity purchases, while the regulated tariff that it charges has not changed. The cost increase is partially attributable to non-favourable hydrology and partially attributable to the depreciation of Tanzanian shilling against the US dollar, in which PPAs are denominated. Detailed study of the tariff setting methodology in place in Tanzania, as evidenced through its latest tariff review, and evaluation of the ratemaking principles used in the tariff approved in 2013 reveals that the core tension within Tanzania’s tariff setting methodology is the trade-off between efficiency, sufficiency, and stability principles. The ex-ante assessment of TANESCO’s revenue requirement, a typical incentive-based price cap regulation, is theoretically efficient but not robust: TANESCO’s costs of service are subject to important external uncertainties like hydrology, currency depreciation, and global fuel prices. In order to take revenue sufficiency into account, the regulator needs to periodically adjust tariffs based on ex post fuel costs and inflation rates. This diminishes the regulator’s ability to maintain tariff stability, which might impact certain classes of customers more than others (lifeline rate customers and domestic industries). The experiences of other nations, namely Bangladesh and Côte d’Ivoire, reveal a potential challenge with regard to power and gas co-development: if non-cost reflective gas tariffs are applied as a regulatory decision, then high gas demand that results from that cannot be indefinitely sustained, since investment in gas supply will not follow suite. The case study of Côte d’Ivoire also reveals a less obvious opportunity: periods of low electricity demand can be leveraged positively through electricity exports, which can positively influence investor interest. Executive Summary [post_title] => Sustainable electricity pricing for Tanzania [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => susatainable-electricity-pricing-tanzania [to_ping] => [pinged] => [post_modified] => 2017-11-16 13:56:43 [post_modified_gmt] => 2017-11-16 13:56:43 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=29354 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [30] => WP_Post Object ( [ID] => 29338 [post_author] => 111 [post_date] => 2016-06-20 13:00:39 [post_date_gmt] => 2016-06-20 12:00:39 [post_content] => The complementarity between electricity systems of the north and south Mediterranean basin along with the need for diversification of energy resources and optimisation of energy systems are among the reasons for greater electricity trade and cross-border integration in the region. However, development of cross-border interconnection in the Mediterranean basin requires a business model which provides incentives for investment and efficient operation, manages risks and uncertainties and facilitates coordinated planning and governance. We contend that, due to high perceived risk of investment, delivery of interconnection projects through the EU regulated model is less likely, or only possible at prohibitively high rate of returns. The merchant transmission initiative (MTI), on the other hand, is seen as an exception under the EU laws and can be approved only if the project meets a set of strict conditions. We, therefore, advocate a hybrid business model in which the main benefits of a merchant model are maintained within a regulated structure. We highlight the main components of the proposed business model and show how it addresses the key features of a viable business model in relation to incentives, risks and governance. Our analysis demonstrates that the proposed Mediterranean business model for interconnection can better provide incentives for investment and is more compatible with the region’s energy scenario, governance structure and the risk attitude. Executive Summary [post_title] => Business model for cross-border interconnections in the Mediterranean basin [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => business-model-cross-border-interconnections-mediterranean-basin [to_ping] => [pinged] => [post_modified] => 2017-11-16 13:58:04 [post_modified_gmt] => 2017-11-16 13:58:04 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=29338 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [31] => WP_Post Object ( [ID] => 33597 [post_author] => 111 [post_date] => 2016-05-09 15:26:37 [post_date_gmt] => 2016-05-09 14:26:37 [post_content] => Ghana’s electricity generation capacity is currently insufficient to meet demand, making power outages and load shedding common. The resulting impact is potentially devastating for the country’s growth prospects. Traditionally, lack of an affordable and reliable fuel supply for power generation, coupled with ineffective institutions and an unfavourable investment climate, have resulted in Ghana’s electricity sector performing poorly. In light of the 2007 discovery of natural gas reserves in Ghanaian waters, this article examines whether domestic gas could advance the performance of the electricity sector, and if so, how. The results of this analysis show that utilization of gas reserves in Ghana’s gas-to-power market is an economically superior strategy compared to an export-oriented utilization scheme. The lack of an effective regulatory framework for investment, skill shortages, and an inefficient electricity pricing structure continue to be the main constraining factors. The analysis also considers possible approaches to modification of the electricity tariff in order to send the right signal to potential investors in generation capacity, without compromising the affordability of power supply. Fritsch, J. and Poudineh, R. (2016). ‘Gas-to-power market and investment incentive for enhancing generation capacity: an analysis of Ghana’s electricity sector’, Energy Policy, 92, 92–101. [post_title] => Gas-to-power market and investment incentive for enhancing generation capacity: an analysis of Ghana’s electricity sector’ [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => gas-to-power-market-and-investment-incentive-for-enhancing-generation-capacity-an-analysis-of-ghanas-electricity-sector-2 [to_ping] => [pinged] => [post_modified] => 2019-12-09 15:28:58 [post_modified_gmt] => 2019-12-09 15:28:58 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33597 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [32] => WP_Post Object ( [ID] => 33599 [post_author] => 111 [post_date] => 2016-04-09 15:29:10 [post_date_gmt] => 2016-04-09 14:29:10 [post_content] => Given its highly undiversified economic base, maximizing revenues will always rank highly in Saudi Arabia’s output decision. However, this objective needs to be balanced against another—maintaining its share in key markets and maximizing long-term revenue—given the massive size of Saudi Arabia’s reserves. The trade-off between these two objectives tends to change over time, depending on market conditions, the nature of the shock, and the behaviour of other producers; Saudi Arabia’s oil policy is hence not constant. The authors argue that the advent of US shale has made the calculus of the trade-off more uncertain, complicating Saudi Arabia’s output decision. Using a simple game, they show that, under uncertainty, it is always safer for the Kingdom to assume that the shale oil supply is highly elastic, and thus decide not to cut output. But as Saudi Arabia learns more about this new source of supply, its policy could adapt accordingly. The fact that Saudi Arabia’s oil policy could change as the trade-off between revenue maximization and market share evolves, and as new information to the market arrives, will keep the market second-guessing and will continue to shape market expectations and to influence market outcomes. Fattouh, B., Poudineh, R., and Sen, A. (2016). ‘The dynamics of the revenue maximization–market share trade-off: Saudi Arabia’s oil policy in the 2014–15 price fall’, Oxford Review of Economic Policy, 32(2), 223–240. [post_title] => The dynamics of the revenue maximization–market share trade-off: Saudi Arabia’s oil policy in the 2014–15 price fall’ [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => the-dynamics-of-the-revenue-maximization-market-share-trade-off-saudi-arabias-oil-policy-in-the-2014-15-price-fall [to_ping] => [pinged] => [post_modified] => 2019-12-09 15:31:23 [post_modified_gmt] => 2019-12-09 15:31:23 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33599 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [33] => WP_Post Object ( [ID] => 33596 [post_author] => 111 [post_date] => 2016-01-09 15:16:22 [post_date_gmt] => 2016-01-09 15:16:22 [post_content] => Investment in electricity networks, as regulated natural monopolies, is among the highest regulatory and energy policy priorities. Electricity sector regulators adopt different incentive mechanisms to ensure that the firms undertake sufficient investment to maintain and modernize the grid. Thus, an effective regulatory treatment of investment requires an understanding of the response of companies to the regulatory incentives. This article analyses the determinants of investment in electricity distribution networks using a panel dataset of 129 Norwegian companies observed from 2004 to 2010. A Bayesian model averaging approach is used to provide a robust statistical inference by taking into account the uncertainties around model selection and estimation. The results show that three factors drive nearly all network investments: investment rate in previous period, socioeconomic costs of energy not supplied, and useful life of assets. The results indicate that Norwegian companies have, to some degree, responded to the investment incentives provided by the regulatory framework. However, some of the incentives do not appear to be effective in driving investments. Poudineh, R. and Jamasb, T. (2016). ‘Determinants of investment under incentive regulation: the case of the Norwegian electricity distribution networks’, Energy Economics, 53, 193–202. [post_title] => Determinants of investment under incentive regulation: the case of the Norwegian electricity distribution networks [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => determinants-of-investment-under-incentive-regulation-the-case-of-the-norwegian-electricity-distribution-networks [to_ping] => [pinged] => [post_modified] => 2019-12-09 15:26:32 [post_modified_gmt] => 2019-12-09 15:26:32 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33596 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [34] => WP_Post Object ( [ID] => 33606 [post_author] => 111 [post_date] => 2015-11-09 15:45:39 [post_date_gmt] => 2015-11-09 15:45:39 [post_content] => This chapter reviews the main challenges facing electricity distribution network utilities along technological, economic, and social dimensions. It also discusses the implications of challenges ahead for network utilities and provides some insights into the likely features of their future business models. Poudineh, R., Tobiasson, W., and Jamasb, T. (2015). ‘Electricity distribution utilities and the future: more than wires’, in Finger, M. and Jaag, C. (eds.), The Routledge Companion to Network Industries. [post_title] => Electricity distribution utilities and the future: more than wires’ [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => electricity-distribution-utilities-and-the-future-more-than-wires [to_ping] => [pinged] => [post_modified] => 2019-12-09 15:47:37 [post_modified_gmt] => 2019-12-09 15:47:37 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33606 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [35] => WP_Post Object ( [ID] => 27314 [post_author] => 1 [post_date] => 2015-11-09 10:55:21 [post_date_gmt] => 2015-11-09 10:55:21 [post_content] => The increasing global use of natural gas for power generation has resulted in a period of interdependence between two important energy industries. Understanding of the extended gas-to-power supply chain is important for industry agents, power and gas system operators or integrated utilities, regulators, and government bodies responsible for overall energy policy. This paper seeks to align the study of gas and power industries by providing a holistic framework for the thorough identification and discussion of power and gas sector structure, infrastructure, market, and regulatory drivers. It acts as a lens through which the combined gas and power supply chains of any given country can be observed and understood. The gas-to-power supply chain of the United Kingdom is profiled to illustrate how the framework proposed can be applied to integrate the various dimensions of power and gas industries. Executive Summary [post_title] => A holistic framework for the study of interdependence between electricity and gas sectors [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => a-holistic-framework-for-the-study-of-interdependence-between-electricity-and-gas-sectors [to_ping] => [pinged] => [post_modified] => 2017-11-20 09:32:52 [post_modified_gmt] => 2017-11-20 09:32:52 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/wpcms/publications/a-holistic-framework-for-the-study-of-interdependence-between-electricity-and-gas-sectors/ [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [36] => WP_Post Object ( [ID] => 27320 [post_author] => 1 [post_date] => 2015-10-19 15:22:05 [post_date_gmt] => 2015-10-19 14:22:05 [post_content] => This paper follows on from ‘Saudi Arabia’s Oil Policy: More than Meets the Eye?’ published in June 2015, which raised a set of fundamental questions in relation to the sharp drop in the oil price between June 2014 and January 2015, and OPEC’s decision, spearheaded by Saudi Arabia, not to cut output in response. We develop a simple analytical framework, which formalizes Saudi Arabia’s decision-making process relative to the fundamental revenue maximization-market share trade-off in the 2014-15 oil price fall. Using a simple game, we show that under uncertainty, it is always better off for the Kingdom to assume shale oil supply is elastic and not to cut output. But we also argue that as Saudi Arabia learns more about this new source of supply, its policy will adapt accordingly. The fact Saudi Arabia’s oil policy could change as the trade-off between revenue maximization and market share evolves, and as new information is transmitted to the market, will keep the market second-guessing. It will continue to shape market expectations and influence market outcomes. Executive Summary [post_title] => The Dynamics of the Revenue Maximisation--Market Share Trade-off - Saudi Arabia's Oil Policy in the 2014--2015 Price Fall [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => the-dynamics-of-the-revenue-maximisation-market-share-trade-off-saudi-arabias-oil-policy-in-the-2014-2015-price-fall [to_ping] => [pinged] => [post_modified] => 2017-11-20 09:37:12 [post_modified_gmt] => 2017-11-20 09:37:12 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/wpcms/publications/the-dynamics-of-the-revenue-maximisation-market-share-trade-off-saudi-arabias-oil-policy-in-the-2014-2015-price-fall/ [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [37] => WP_Post Object ( [ID] => 33605 [post_author] => 111 [post_date] => 2015-10-09 15:42:59 [post_date_gmt] => 2015-10-09 14:42:59 [post_content] => Following the liberalization of the electricity industry since the early 1990s, many sector regulators have adopted incentive regulation aided by benchmarking and productivity analysis. This approach has often resulted in improved efficiency and quality of service. However, there remains a growing concern as to whether the utilities invest sufficiently and efficiently in maintaining and modernizing their networks. This article discusses the relationship between investments and cost efficiency in the context of incentive regulation with ex-post regulatory treatment of investments, using a panel dataset of 129 Norwegian distribution companies from 2004 to 2010. The authors introduce the concept of ‘no-impact efficiency’ as a revenue-neutral efficiency effect of investment under incentive regulation that makes a firm ‘investment efficient’ in cost benchmarking. They also estimate the observed efficiency effect of investments and compare these with the no-impact efficiency. Finally, they discuss the implications of cost benchmarking for the investment behaviour of network companies. Poudineh, R. and Jamasb, T. (2015). ‘A new perspective: investment and efficiency under incentive regulation’, Energy Journal, 36(4), 241–263. [post_title] => A new perspective: investment and efficiency under incentive regulation’ [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => a-new-perspective-investment-and-efficiency-under-incentive-regulation [to_ping] => [pinged] => [post_modified] => 2019-12-09 15:45:33 [post_modified_gmt] => 2019-12-09 15:45:33 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33605 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [38] => WP_Post Object ( [ID] => 27324 [post_author] => 1 [post_date] => 2015-09-01 12:47:04 [post_date_gmt] => 2015-09-01 11:47:04 [post_content] => The promise of carbon-free, utility-scale power generation from offshore wind farms is encouraging a number of governments to implement policy support frameworks and national targets for offshore wind power generation. However, the high capital requirements for the deployment of offshore wind have proven that it is an expensive approach to meeting national renewable energy and carbon reduction targets, relative to other power generation sources. The capital requirement for offshore wind farms will be pushed even higher as consented development zones move further from shore and into deeper waters. In this paper, we analyse the major capital cost drivers of offshore wind plants and the implications of various policy frameworks on overall cost reductions for the industry. According to the results of our analysis, this issue – whether the promotion of scalability, or of competition for subsidies, will be more effective in driving down industry-wide costs – is highly market specific. Competitive policies are likely to be most effective when the market size is sufficiently large, whereas enhancing scale is more effective in nascent markets. However, we caution that in either case, the public costs of policies directly supporting offshore wind must be reconciled with the cost of supporting other low-carbon and zero-carbon technologies that may be equally as effective in helping governments achieve renewable energy and carbon reduction targets. Executive Summary [post_title] => Achieving a cost-competitive offshore wind power industry - what is the most effective policy framework? [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => achieving-a-cost-competitive-offshore-wind-power-industry-what-is-the-most-effective-policy-framework [to_ping] => [pinged] => [post_modified] => 2017-11-20 09:38:27 [post_modified_gmt] => 2017-11-20 09:38:27 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/wpcms/publications/achieving-a-cost-competitive-offshore-wind-power-industry-what-is-the-most-effective-policy-framework/ [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [39] => WP_Post Object ( [ID] => 27327 [post_author] => 1 [post_date] => 2015-08-10 10:44:42 [post_date_gmt] => 2015-08-10 09:44:42 [post_content] => Ghana’s electricity generation capacity is currently insufficient to meet demand, making power outages and load shedding common. The resulting impact is potentially devastating for the country’s growth prospects. Traditionally, lack of an affordable and reliable fuel supply for power generation, coupled with ineffective institutions and an unfavourable investment climate, have resulted in Ghana’s electricity sector performing poorly. In light of the 2007 discovery of natural gas reserves in Ghanaian waters, this paper examines whether domestic gas could advance the performance of the electricity sector, and if so, how. The results of our analysis show that utilization of gas reserves in Ghana’s gas-to-power market is an economically superior strategy compared to an export-oriented utilization scheme. The lack of an effective regulatory framework for investment, skill shortages, and an inefficient electricity pricing structure continue to be the main constraining factors. Our analysis also considers possible approaches to modification of the electricity tariff in order to send the right signal to potential investors in generation capacity, without compromising the affordability of power supply. Executive Summary [post_title] => Gas-to-power market and investment incentive for enhancing generation capacity - an analysis of Ghana’s electricity sector [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => gas-to-power-market-and-investment-incentive-for-enhancing-generation-capacity-an-analysis-of-ghanas-electricity-sector [to_ping] => [pinged] => [post_modified] => 2017-11-20 09:40:31 [post_modified_gmt] => 2017-11-20 09:40:31 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/wpcms/publications/gas-to-power-market-and-investment-incentive-for-enhancing-generation-capacity-an-analysis-of-ghanas-electricity-sector/ [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [40] => WP_Post Object ( [ID] => 27361 [post_author] => 1 [post_date] => 2015-03-09 15:11:44 [post_date_gmt] => 2015-03-09 15:11:44 [post_content] => The distribution network is an important element of the power system that delivers electricity to the end-user. In the coming years a large amount of investment is envisioned in distribution system as these networks play a pivotal role in integration of renewable resources, demand side management and market competition, among other things. At the same time, network companies are regulated natural monopolies where their investment decisions are influenced by regulatory framework and intuitional constraints. There are various models of regulatory treatment of investment but the main objective of all is to ensure sufficiency and efficiency of investment. In this presentation with explore the relationship between investment and efficiency under incentive regulation with ex-post regulatory treatment of investment costs. [post_title] => Investment and efficiency in electricity networks [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => investment-and-efficiency-in-electricity-networks [to_ping] => [pinged] => [post_modified] => 2015-03-09 15:11:44 [post_modified_gmt] => 2015-03-09 15:11:44 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/wpcms/publications/investment-and-efficiency-in-electricity-networks/ [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [41] => WP_Post Object ( [ID] => 27370 [post_author] => 1 [post_date] => 2015-02-09 13:58:58 [post_date_gmt] => 2015-02-09 13:58:58 [post_content] => The power sector has a central role in modern economies and other interdependent infrastructures rely heavily upon secure electricity supplies. Due to interdependencies, major electricity supply interruptions result in cascading effects in other sectors of the economy. This paper investigates the economic effects of large power supply disruptions taking such interdependencies into account. We apply a dynamic inoperability input–output model (DIIM) to 101 sectors (including households) of the Scottish economy in 2009 in order to explore direct, indirect, and induced effects of electricity supply interruptions. We then estimate the societal cost of energy not supplied (SCENS) due to interruption, in the presence of interdependency among the sectors. The results show that the most economically affected industries, following an outage, can be different from the most inoperable ones. The results also indicate that SCENS varies with duration of a power cut, ranging from around £4300/MWh for a one-minute outage to around £8100/MWh for a three hour (and higher) interruption. The economic impact of estimates can be used to design policies for contingencies such as roll-out priorities as well as preventive investments in the sector. 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The retail electricity market, as the key link between end users and the wider electricity system, play a significant role throughout the power sector. This paper argues that the reference design of the retail market in the post liberalization era has not only failed to achieve its original objectives but has also proved to be unfit to keep pace with technological change, consumer preference, and the energy transition. Measures to reduce barriers to entry for new suppliers have distorted competition, put consumers at risk through unsustainable retail business models, and led to an unfair distribution of system and public policy costs. Lack of consumer engagement has been one of the biggest weaknesses of retail electricity markets. The nature of issues that impede engagement – such as complexity of the market and electricity tariffs, transaction costs, perceived barriers, and behavioural biases – have made remedial proposals, based on individual switching, less effective for the most disengaged consumers. The growth of government wedge and policy costs has reduced the size of the competitive portion of the retail tariff. At the same time, the structure of end users’ tariffs bears little relationship to the actual cost structure of the electricity system. This lowers the ability of retailers to recover these costs from energy consumption in an equitable manner. The emergence of non-traditional business models, the rise of new players, and a change in the nature of end users’ interactions with the electricity system call into question the dominance of the vertical architecture of an electricity market in which retail suppliers act as the hub. This paper concludes that retail market design and regulations need to be rethought to enable innovation and deliver the decarbonised, resilient, and affordable electricity that all consumers need.

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Latest Publications by Rahmat Poudineh

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