OECD Environment Working Papers

This series is designed to make available to a wider readership selected studies on environmental issues prepared for use within the OECD. Authorship is usually collective, but principal authors are named. The papers are generally available only in their original language English or French with a summary in the other if available.


The Determinants of Entry in The Electricity Generation Sector in OECD Countries

A Focus on Renewable Energy

Ease of entry is crucial to well-functioning electricity markets. This paper investigates the patterns of entry in the generation segment of the electricity industry of OECD countries and seeks to provide an understanding of their key determinants. It aims to derive implications for the design of policies aimed at spurring competition under significant renewable policy objectives. The analysis focuses on investments in renewable-based electricity generation in all OECD countries over the period 1990-2007. Hypotheses drawn from the literature are tested empirically with using a panel data set based on UDI’s World Electric Power Plant Database. Findings suggest that the likelihood and the volume of entry in renewable-based power generation technologies are significantly affected by industry regulation, renewable support policies, local structural industry characteristics, such as concentration, sectoral expansion and the share of renewable-based capacity already present in the host country. Finally, micro-level factors such as the size of the (parent) firm, its experience with renewables, and whether it is a utility company, are found to significantly affect firm-level investment and entry decisions.


Keywords: Electricity generation, market entry, electricity market liberalisation, renewable energy, regulation, energy policy, market structure, competition
JEL: L10: Industrial Organization / Market Structure, Firm Strategy, and Market Performance / Market Structure, Firm Strategy, and Market Performance: General; L94: Industrial Organization / Industry Studies: Transportation and Utilities / Electric Utilities; Q40: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Energy / Energy: General
This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error