REGULATORY INCENTIVES FOR CAPITAL INVESTMENTS IN ELECTRICITY SYSTEMS

In the restructured electricity markets networks remain regulated while generation is exposed to competition. In the first case the incentives for capital investments are function of the regulation imposed by the regulatory authorities. Differently in the case of generation no explicit price control applies, however the regulators may monitor generation adequacy and establish additional market and tariff based incentives to encourage new investments in the sector. The report provides conceptual framework, describes experiences in several countries and derives practical conclusions in relation to regulatory arrangements to encourage investments in network infrastructure and electricity generation. The conceptual work is supported by an empiric survey for several countries from different continents using a questionnaire.