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Deregulation of electricity markets : The Norwegian experience

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Abstract

In this paper, we describe the approach to, and experience of, the deregulation and liberalisation of the Norwegian electricity sector from 1991. The Norwegian electricity market was subsequently integrated with the Swedish, Finnish and Danish markets to become the Nordic electricity market: the first common, integrated, intercountry electric power market in the world. We discuss the background to electricity market reform, the analytical and legal foundations for reform, and the chosen market and regulatory design. We find that the market has performed well in terms of economic efficiency and market functionality, even when exposed to severe supply shocks because of water shortages for a power system that relies heavily on hydropower. However, we also identify issues and challenges that must be addressed to improve the performance of the Nordic electricity market and its regulatory system.

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  • Torstein Bye & Einar Hope, 2005. "Deregulation of electricity markets : The Norwegian experience," Discussion Papers 433, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:433
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    1. Kittelsen, S.A.C., 1993. "Stepwise DEA; Choosing Variables for Measuring Technical Efficiency in Norwegian Electricity Distribution," Memorandum 1993_006, Oslo University, Department of Economics.
    2. Førsund, Finn R. & Kittelsen, Sverre A. C., 1998. "Productivity development of Norwegian electricity distribution utilities," Resource and Energy Economics, Elsevier, vol. 20(3), pages 207-224, September.
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    More about this item

    Keywords

    Deregulation; Market design; Electricity markets;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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