Too Big to Fail in the Electricity Sector


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Actes de conférence (partie): contribution originale à la littérature scientifique, publiée à l'occasion de conférences scientifiques, dans un ouvrage de compte-rendu (proceedings), ou dans l'édition spéciale d'un journal reconnu (conference proceedings).
Too Big to Fail in the Electricity Sector
Titre de la conférence
AIEE Energy forum - Singapore Issue 2017
Osorio S., Larsen E.R, van Ackere A.
International Association for Energy Economics
Statut éditorial
Date de publication
There have always been certain sectors that are critical for the functioning of society. Examples include hospitals, gas, railways, electricity, etc. Such sectors used to be state-owned, or subject to strict regulation. But over the last decades many of these have been deregulated and privatized, with the creation of markets and competition (Newbery, 2002).
However, what happens when one or more key companies of these industries face bankruptcy, threatening the availability of the service? While this issue has received attention since the start of the privatization process, the discussion has remained very much theoretical, with occasional problems being solved on a case by case basis. The situation changed drastically in 2007/2008 when the USA mortgage crisis created a snowballing effect, causing a global collapse of the financial sector to become a realistic prospect.
During the decade following this crisis the financial sector was subject to a close scrutiny, with particular attention to the influence of individual financial institutions on the overall system. In addition to a general tightening of regulation and oversight, there was a focus on identifying system critical institution; these became the subject of careful monitoring, and were required to increase their capitalization to increase their solvency, so as to reduce the risk of a rerun of the financial crisis.
In this paper we address the following question: given the essential role of electricity in today’s society, is there a need for a similar critical evaluation of the electricity sector to ensure security of supply? While the electricity sector does not have the same global inter-connectedness as the financial sector, it has become increasingly connected. The failure of a major generator or distributor, leading to reduced access to electricity or even large-scale blackouts would have devastating effects, spreading well beyond national boundaries. As was the case in the financial sector, public intervention would be required to prevent such a disastrous event.
Création de la notice
19/12/2017 15:32
Dernière modification de la notice
20/08/2019 15:16
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