Investigating the Relevance of Market Model Power Sector Reforms – 30 Years On

This paper provides a critical review of the economic basis of the OECD power sector model, interrogating its relevance for desired sector outcomes in both developed and developing countries. The paper finds that the OECD model – as well as the related non-OECD standard model – has not been implemented in its ideal form in any country, in part due to the fact that it was ineffectively translated into a well-defined market design, comprising of distinct and implementable components. However, the paper also argues that the application of the model has been hampered by political economy contextualities where necessary sector reforms have been incongruent with entrenched political and economic interests, theoretical and ideological paradigms, and institutional and power equilibria. The role of political economy contextualities in obstructing the evolution of power systems in line with technological, communications, and financial innovations, suggest that the relevance of model reforms may lie in breaking such undesirable institutional equilibria. Three case studies are put forward to better explore these arguments. The paper concludes by considering the relevance of specific power sector reforms for emergent concerns – environmental sustainability and energy security – given recent advances in the technological options available to developed and developing countries.

By: Anupama Sen , Rahmat Poudineh , Catrina Godinho , Anton Eberhard