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As the world demand for energy continues to grow, a big question is where will all the energy come from and what will the price tag be. With such enormous sums needed, public-private partnerships (PPPs) could play a big role. But the financial crisis has raised worries about funding, and much is still not known about how best to attract PPPs. This report reviews the evidence to date with sectoral reforms and considers different approaches in varying circumstances to help outline the potential role of the private and public sector in: 1) strengthening the corporate governance of private and public utilities; 2) helping governments to establish legal, regulatory, contractual, and fiscal frameworks; and 3) improved market governance to attract private investment. Chapter one reviews the impact of the recent financial crisis on PPP investment compared with what happened in earlier financial crises. It also looks out the latest projections for additional power sector investment needed because of climate change and the possible sources of financing. Chapter two examines how PPP investment in the power sector has fared. It also gives the results of an econometric study that explores which types of incentives and variables matter most to PPPs when they are weighing entering the power sector, especially in renewables, and what influences the ongoing level of investment. The idea is to provide a powerful benchmarking tool at the sector and country levels against which governments and policy makers can evaluate progress on this issue. Chapter three examines four case studies-in China, Brazil, Peru, and Mexico-to identify, disseminate, and promote best practices on alternative ways to attract PPPs.

Off-grid renewable energy sources are dramatically altering the energy landscape in countries with low energy access. While techno-economic perspectives are already widely discussed, the political economy is largely ignored, particularly regarding the institutions providing electricity. Two of many ways that the task of electrification can be framed are: (1) as the duty of the government to provide a basic service to its people, or (2) as a goods that can be purchased from private players in a market system. Electrification in our country of focus, Tanzania, has developed a promising off-grid market as an increasing number of private players have recently become active there. While grid extension is still a priority for the government, solar home systems, which are estimated to make up more than half of all new connections by 2030, get surprisingly less attention in terms of coordination, political support, and policy frameworks. This is despite the fact that the population is highly dispersed, making grid extension less suitable and more expensive than off-grid, decentralized systems. After an extensive literature review, our method applies a theory-embedded framework of institutional economics to the use of solar home systems for electrification in Tanzania and examines the realizations of the electricity provided. The framework defines key political economy criteria as drivers for energy access and evaluates their respective relevance. We then apply this framework to evaluate 20 selected projects, which have promoted solar home systems in rural off-grid areas in Tanzania since 2000. As a unique contribution to the literature, this research highlights the underappreciated influence of different institutional arrangements on the political economy landscape and on the electricity provided for rural electrification in sub-Saharan Africa.

This research examines how financial transformative power sector reforms affect energy efficiency and the economy in a sample of economies from South Asia, the Middle East, and Europe. We applied two stages of OLS, Bayesian VAR, and Data Envelopment Analysis (DEA) methods to a panel data set from 1995 to 2018. According to empirical findings, institutional deficiency has a negative effect on electricity reforms, implying that the greater the impact of reforms on electricity performance, the higher the institutional efficiency, A collection of reform initiatives involving a variety of reform agencies will boost energy efficiency by up to 13% and per capita electricity access by 62%. Despite recent reforms and regulatory measures, the electricity sector continues to face challenges in terms of private investment and structural flaws such as energy inefficiency, significant technological and financial losses, low power quality, and outdated transmission and network infrastructure. Interestingly 13.2% increases can be found in energy efficiency after electricity reforms. Unlike previous studies, our findings reveal a conflict between the broader economic effects and the welfare impact on electricity consumers.

The last fifteen years have seen Armenia emerge from Soviet rule and a severe economic and energy crisis, both complicated by its newfound political surroundings. The last ten years have seen significant reform and progress in the power sector which, when compared to the progress made by its neighbors, is all the more remarkable. The benefits of reform have not been easily won, however, and Armenia’s success is a tribute to its ability to learn from mistakes and persevere. A combination of improper planning and bad fortune forced the Government of Armenia to go through three separate tenders for its privatization assets. A combination of good planning and good fortune ultimately allowed for what has turned out to be one of the region’s most successful infrastructure privatizations so far.

The article argues that cronyism in the funding of the Peoples Democratic Party (PDP) explains the dismal record of the recent power sector reforms in Nigeria. It implies that the reforms were packaged by the then PDP-led government to benefit their major campaign financiers with contracts; thus, within this period the party financiers were able to assume a commanding position in the sector. The article further contends that the funding regime in the party reinforces corruption as financiers leveraged on their contributions to the party to ensure that the reform processes and outcomes reflected their economic interests. The case exemplifies the crony relationship between the business and the political class (that ought to act as the regulatory body), which is skewed towards primitive accumulation.

More than 200 new infrastructure regulators have been created around the world in the last 15 years. They were established to encourage clear and sustainable long-term economic and legal commitments by governments and investors to encourage new investment to benefit existing and new customers. There is now considerable evidence that both investors and consumers—the two groups that were supposed to have benefited from these new regulatory systems—have often been disappointed with their performance. The fundamental premise of this book is that regulatory systems can be successfully reformed only if there are independent, objective and public evaluations of their performance. Just as one goes to a medical doctor for a regular health checkup, it is clear that infrastructure regulation would also benefit from periodic checkups. This book provides a general framework as well as detailed practical guidance on how to perform such “regulatory checkups.”.

The current distribution of power markets around intermediate structures between full integration and unbundling suggests that there has not been a linear path to reform in practice. Instead, many developing countries may retain intermediate structures in the foreseeable future. This possibility exposes a large gap in understanding about power market structures, since most theoretical work has focused on the two extreme structures and there is limited evidence on the impact of unbundling for developing countries.The study reports the evidence from statistical analysis and a representative sample of twenty case studies selected based on the initial conditions, such as income and power system size. It proposes a novel analytical approach to model market structure, together with ownership and regulation, controlling for several variables, as a key determinant of performance across several indicators, including access, operational and financial performance and environmental sustainability. The results of the analysis provide the following conclusions for policy guidance on power market restructuring for developing countries:• There seems to be credible empirical basis for selecting a threshold power system size and per capita income level below which unbundling of the power supply chain is not expected to be worthwhile. Indeed a dichotomy emerges between high income countries characterized by a large system size for which unbundling and other reforms are significantly linked to better performance and low income countries characterized by small system power size for which there is no strong evidence that unbundling and other reforms delivered improvements in performance.• Unbundling deliver consistently superior results across the board of performance indicators when used as an entry point to implement broader reforms, particularly introducing a sound regulatory framework, reducing the degree of concentration of the generation and distribution segments of the market by attracting additional number of both public and private players and encouraging private sector participation. • Partial forms of vertical unbundling do not appear to drive improvements, probably because the owner was able to continue exercising control over the affairs of the sector and hinder the development of competitive pressure within the power market.

This study is a product of the Africa Infrastructure Country Diagnostic (AICD), a project designed to expand the world's knowledge of physical infrastructure in Africa. The AICD provides a baseline against which future improvements in infrastructure services can be measured, making it possible to monitor the results achieved from donor support. It also offers a more solid empirical foundation for prioritizing investments and designing policy reforms in the infrastructure sectors in Africa. The book draws upon a number of background papers that were prepared by World Bank staff and consultants, under the auspices of the AICD. The main findings were synthesized in a flagship report titled Africa's infrastructure: A time for transformation, published in November 2009. Meant for policy makers, that report necessarily focused on the high-level conclusions. It attracted widespread media coverage feeding directly into discussions at the 2009 African union commission heads of state summit on infrastructure.

This book reviews the major developments in and the lessons learned from the 21-year (1991-2012) experience with private sector participation (PSP) in the power sector in India. It discusses the political economy context of the policy changes, looks at reform initiatives that were implemented for the generation sector, describes transmission and distribution segments at different points in the evolution of the sector, and concludes with a summary of lessons learned and a suggested way forward. The evolution of private participation in the Indian power sector can be divided into different phases. Phase one was launched with the opening of the generation sector to private investment in 1991. Phase two soon followed - early experiments with state-level unbundling and other reform initiatives, including regulatory reform, culminating in divestiture, and privatization in Orissa and Delhi respectively. Phase three, the passage of the electricity act of 2003 by the central government, followed by a large increase in private entry into generation and forays into transmission and experiments with distribution franchise models in urban and rural areas during the 11th five-year plan (2007-12) period. In phase four, at the start of the 12th five-year plan (2012-17), the sector is seeing a sharp reduction in bid euphoria and greater risk aversion on the part of bidders, who are concerned about access to basic inputs such as fuel and land. In this context, the report is structured as follows: chapter one gives introduction; chapter two presents private sector participation in thermal generation; chapter three presents private sector participation in transmission; chapter four deals with private sector participation in distribution; chapter five deals with private sector participation in the Indian solar energy sector; chapter six deals with financing of the power sector; chapter seven presents emerging issues and proposed approaches for the Indian power sector; and chapter eight give updates.

The article takes a look at the issues of the market-oriented power sector reform and the experience that is of interest in the process of reforms in any country. Organizational models might, however, vary quite substantially in different countries in terms of basic characteristics. The article studies the difference between idealistic notions that underlie the existing market model and real economic relations that are directly connected to the technological features of the industry. It validates proposals for alternative energy market models and a management mechanism for the industry.