The challenge of production investments in the new electricity markets - Thoughts on the Norwegian crisis of winter 2002/2003 [Les défis de l'investissement en production sur les nouveaux marchés électriques - Réflexions à partir de la crise Norvégienne de l'hiver 2002/03]

Abstract : This paper considers the reponses to capacity requirements in the liberalised electricity markets as a result of the insufficient number of incentives they include, taking account of the highly unusual volatility of these new markets. We begin by looking at the crisis seen in the Norwegian and Nordic markets in winter 2002/2003 and the responses provided to deal with the temporary scarcity of capacity, before looking at the range of solutions that are usually considered, focused on the need to encourage supply-side investments only. There is no single solution to deal with the challenge of electrical investments in liberalised markets. We show that the need for direct public co-ordination via tenders is significantly attenuated by various solutions. The question is considered in two ways : firstly by combining an economic approach with an institutional approach which includes the acceptability conditions for liberalisation reforms and environmental policies, and secondly by getting out of the assumption that a single technological model based on large sized units would be feasible.