Power Generation Investment in Electricity Markets (Energy Market Reform)

Most IEA countries are liberalising their electricity markets, shifting the responsibility for financing new investment in power generation to private investors. No longer able to automatically pass on costs to consumers, and with future prices of electricity uncertain, investors face a much riskier environment for investment in electricity infrastructure. This Report Looks At How Investors Have Responded To The Need To Internalise Investment Risk In Power Generation And How These Responses Have Affected The Organisation Of The Power Sector And Technology Choices. This Study Looks At Several Cases Of Volatile Prices In Iea Countries’ Electricity Markets, And Finds That While Market Prices Can Be A Sufficient Incentive For New Investment In Peak Capacity, Government Intervention Into The Market To Limit Prices May Undermine Such Investment. Executive Summary -- 1. Introduction -- 2. Risk And Power Generation Investment -- 3. Hedging Risk In Power Generation Investment -- 4. Price Volatility, Investment, And Government Intervention -- 5. Conclusions And Recommendations International Energy Agency. Preliminaries CONTENTS EXECUTIVE SUMMARY INTRODUCTION RISK AND POWER GENERATION INVESTMENT HEDGING RISK IN POWER GENERATION INVESTMENT PRICE VOLATILITY, INVESTMENT AND GOVERNMENT INTERVENTION CONCLUSIONS AND RECOMMENDATIONS BIBLIOGRAPHY.