Bottom-up Electricity Reform Using Industrial Captive Generation

The two-decade long history of power reforms in emerging economies has returned a mix of successes and failures. Building and financing adequate new electricity generation capacity remains a persistent problem in developing countries. To address capacity shortfalls and the lack of capital available for new units, the conventional wisdom has been to create competitive electricity markets by encouraging new entry into the generation sector and by breaking up vertically integrated monopolies power companies; all with the goal of increasing power sector efficiency and investment (Joskow 1998). What began in Chile in 1980, continued in the UK and US and then prospered as a policy direction around the world has been a top-down approach that seeks to disaggregate and privatise the generation sector and create regulated private ownership in the natural monopolies of transmission and distribution.

By: Christopher Joshi Hansen