Liberalized markets

The competitiveness of the discussed pipeline routes will largely depend on the transportation costs and the transit fees. Experience from North America and Great Britain shows that owing to the liberal market conditions economic competitiveness becomes a main criteria. This means that longterm contracts will be less attractive. 

We represent the difference between the behaviour of individual generators and the impact on the system price by defining the add-on and the work-on rate. In a competitive environment, generators add-on the opportunity costs of C02 allowances to the power price. The increase of the bid of the marginal unit will then determine how much of the C02 allowance prices are worked-on the electricity price. However, in a liberalized market, prices are ultimately determined by a complex set of market forces. As a result, the work-on rate may be lower than the add-on rate. 

Two dimensions of European gas security which are only just beginning to receive the attention which they deserve are the potential problems which can be caused by infrastructure breakdown, and the question of how to ensure the availability of adequate gas storage in liberalized markets. This chapter is not the place to explore these issues in any detail, but it is important to note that the fire at the Rough storage site in February 2006 - arguably Europe s most important gas security incident of that year -deprived the UK of access to around 80 percent of its stored gas for several months. Had the incident happened any earlier or later in the winter, the consequences might have been substantially more serious than the price spikes which the market experienced in the few weeks before temperatures rose and demand declined. ... 

The huge investments in both new supplies and new storage which are under way in the UK certainly contradict the views expressed in the late 1990s and early 2000s that multibillion dollar investments would be impossible to finance in a highly liberalized market. For a discussion of such views, see Stern (2002). However, these projects will arrive several years after the market needed them and, even when all of the storage capacity which UK investors are currently seeking to build is complete. 

Contractual and financing arrangements for new nuclear investment in liberalized markets which efficient combination ... 

The key factor in the success of nuclear power in liberalized markets will be the ability of the power industry to engage with regulatory and safety authorities, plant vendors and consumers to allocate risks to parties that are best able to manage them. By shifting part of the pre-construction, construction, operating, and market risks to other parties (regulators, plant vendors, creditworthy consumers, and so on), electricity producers are in a better position to attract potential investors (lenders, and so on). 

The objective of this chapter is to study how the risks specific to a nuclear power investment in liberalized markets can be mitigated, how they can be allocated to the different stakeholders, and what financial arrangements are consistent with the alternative allocations of the construction, and operating and market risks. 

Former electricity monopolies traditionally assumed nuclear plant construction risks, which represented less of a burden in a regulated industry. But for nuclear build in liberalized markets the difficulty is twofold nuclear technology is at the stage of industrial relearning in a number of countries with new designs to be tested, and the producers have to support construction and market risks on a very large investment. 

In addition to the nuclear plant orders in US states which are still regulated, some announcements of nuclear projects by non-vertically integrated producers in liberalized US markets in 2006-07 seemed to signal the renaissance of nuclear orders in such markets in a merchant framework. The rationale to invest in nuclear build in liberalized markets lies in the opportunity to earn potentially greater revenues than under the cost of service regulation (Lacy, 2006). As well as the South Texas Project (STP) which is studied next, four other projects have been announced in these liberalized markets. ... 

Let us now consider other candidates for new nuclear plant investment other large companies Suez-Electrabel, EON, RWE and ENEL on the one hand, and some medium-sized or small companies in Eastern Europe and in US liberalized markets. 

To conclude from these four case studies, it appears that requirements for managing specific risks associated with new nuclear build in liberalized markets with new advanced light water reactor (LWR) technologies are so important that there is a natural selection of industrial organization... 

Roques, F. (2008) Technology choices for new entrants in liberalized markets the value of operating flexibility and contractual arrangements . Utilities Policy, Vol. 16, No. 4, pp. 245-53. 

The fact that BE failed financially in 2002 reflects its financial and corporate decisions, not the inherent risks of nuclear power in a liberalized market. 

Table 7.3 Risk management strategies for nuclear generation in a liberalized market...

This means that nuclear generation, even in a liberalized market, does not present any new form of risk management beyond those already used in other industries, in the private sector. 

Sharma, V., Gulati, A. (2003). Trade liberalization, market reforms and competitiveness of Indian dairy sector. Discussion Paper No. 61, Markets, Trade and Institutions Division. Washington, DC International Food Policy Research Institute. 

With Liberalization of commercial air transport comes the opportunity for new carriers to compete for market access. It also gives existing carriers the opportunity to compete with each other as well as with the new entrants with a view to consolidating their positions in a liberalized market. There is an onerous burden on States to ensure that, hand in hand with unfettered competition among carriers. 

Air transport, unlike any other mode of transport, is severely constrained by international treaty. While rail, maritime and road transport do not require the express permission of the State into which they operate services internationally, no scheduled air service can be operated over or into the territory of a contracting State, except with the special permission or other authorization of that State, and in accordance with the terms of such permission or authorization. This anomaly has spawned htmdreds of bilateral air services agreements and enabled States to adopt a protectionist attitude in guarding the market share of its own national carrier, thus stultifying competition among carriers and depriving the consumer of the most efficient and cost effective air transport product that an otherwise liberalized market would have produced. 

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