World experience of the electric power industry restructuring
The article reveals the factors affecting the electricity consumption in the world. Based on the study of the world experience in the restructuring of the electric power industry, five groups of methods are identified to improve its efficiency: organizational, consolidation of markets, financial, ta...
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irk-123456789-1309302018-03-09T03:02:38Z World experience of the electric power industry restructuring Shabalina, L. Bulavka, E. Marketing The article reveals the factors affecting the electricity consumption in the world. Based on the study of the world experience in the restructuring of the electric power industry, five groups of methods are identified to improve its efficiency: organizational, consolidation of markets, financial, tax and environmental. У статті виявлено фактори, що впливають на споживання електроенергії в світі. На основі вивчення світової досвіду реструктуризації електроенергетичної галузі виділено п'ять груп методів щодо підвищення її ефективності: організаційний, консолідації ринків, фінансовий, податковий та екологічний. В статье выявлены факторы, влияющие на потребление электроэнергии в мире. На основе мирового опыта реструктуризации электроэнергетической отрасли выделены пять групп методов повышения ее эффективности: организационный, консолидации рынков, финансовый, налоговый и экологический. 2017 Article World experience of the electric power industry restructuring / L. Shabalina, E. Bulavka // Економічний вісник Донбасу. — 2017. — № 3 (50). — С. 124-128. — Бібліогр.: 11 назв. — англ. 1817-3772 http://dspace.nbuv.gov.ua/handle/123456789/130930 620.9 en Економічний вісник Донбасу Інститут економіки промисловості НАН України |
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Marketing Marketing Shabalina, L. Bulavka, E. World experience of the electric power industry restructuring Економічний вісник Донбасу |
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The article reveals the factors affecting the electricity consumption in the world. Based on the study of the world experience in the restructuring of the electric power industry, five groups of methods are identified to improve its efficiency: organizational, consolidation of markets, financial, tax and environmental. |
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Shabalina, L. Bulavka, E. |
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Shabalina, L. Bulavka, E. |
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Shabalina, L. |
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World experience of the electric power industry restructuring |
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World experience of the electric power industry restructuring |
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World experience of the electric power industry restructuring |
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World experience of the electric power industry restructuring |
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World experience of the electric power industry restructuring |
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world experience of the electric power industry restructuring |
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Інститут економіки промисловості НАН України |
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2017 |
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Marketing |
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World experience of the electric power industry restructuring / L. Shabalina, E. Bulavka // Економічний вісник Донбасу. — 2017. — № 3 (50). — С. 124-128. — Бібліогр.: 11 назв. — англ. |
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Економічний вісник Донбасу |
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AT shabalinal worldexperienceoftheelectricpowerindustryrestructuring AT bulavkae worldexperienceoftheelectricpowerindustryrestructuring |
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2025-07-09T14:29:33Z |
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2025-07-09T14:29:33Z |
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1837179994940375040 |
| fulltext |
L. Shabalina, E. Bulavka
124
Економічний вісник Донбасу № 4(50), 2017
UDC 620.9
L. Shabalina,
PhD (Economics),
E. Bulavka,
Donetsk National Technical University
WORLD EXPERIENCE OF THE ELECTRIC POWER INDUSTRY RESTRUCTURING
Problem statement. According to the forecasts of
the International Energy Agency, in the world primary
energy consumption will increase by an average of 1.3%
per year, which will lead to 46% growth to 2040 [1].
This is primarily due to the increase of the population,
the growth rate of the economy, per capita income and
the development of technologies that entail the availa-
bility of a large number of household appliances and
equipment, as well as inevitably increase in demand for
energy-intensive products – cars, air conditioners, etc.
The growth of industrial production and power
consumption will inevitably lead to an increase in the
amount of greenhouse gas emissions to the atmosphere,
which in turn will lead to pollution and deterioration of
the overall environment. In order to provide energy with
ever-increasing demand and raise the level of energy se-
curity without allowing global climate change, the
world energy system has to undergo a number of serious
transformations. Taking into account the tendency of
many countries of moving to a competitive electricity
market, energy saving technologies and renewable
energy sources, the relevance of this article is deter-
mined by the need to study the world experience of re-
structuring the industry with the aim of improving the
global energy industry as a whole.
Analysis of recent research and publications
based on the problem under consideration. Syste-
matic approach and methodological basis for solving the
problems of enterprises restructuring are highlighted in
the works of V. N. Burkova, I. I. Mazur, V. N. Trenev,
D. V. Sokolov, And M. B. Sokolowski, A. K., Tutun-
jian, M. J. Jenneskens, T. Rantalainen, M. Hammer. Is-
sues concerning enterprise restructuring in the electric-
ity industry are analyzed in detail in the works of
A. A. Tukenova and V. V. Khlebnikov [2-6]. However,
despite the high degree of theoretical development and
practical use of the electric power industry restructuring
methods, the need of development an integrated ap-
proach determines the relevance of research on this
topic.
The main aim of this work is to analyze the world
experience of restructuring the electricity industry.
The research object is modern methods of the
electricity industry restructuring in different countries.
Presentation of basic material of the research.
Energy is not only a fundamental branch of the eco-
nomy, determining its real limits and opportunities, but
also one of the most conservative industries. Since the
cost of large power plants building is estimated at bil-
lions of dollars, and the project lifetime is at least 30-
50 years, we can now confidently imagine what the
world energy industry will look like in the middle of the
century - as now, the foundation of our energy will be a
fossil fuel, primarily hydrocarbon.
Over the past decade, electricity production in the
world has grown by almost 1.5 times, reaching 24.5 bil-
lion kWh in 2015 (fig. 1).
0
5000
10000
15000
20000
25000
30000
Fig. 1. World production of electricity for 2000-2015, billion kWh
Note: compiled by authors on the basis of World Energy Statistics (Yearbook 2016) https://yearbook.enerdata.ru/world-
electricity-production-map-graph-and-data.html.
The largest electricity producers in the world are
China and USA, which generate about 5,649 and 4,297
billion kWh respectively and significantly outstrip other
countries in this indicator [7]. Over the past decades,
there have been significant regional shifts in electricity
generation. The share of developed countries has re-
duced significantly, from 73% in 1973 to 49% in 2016.
At the same time, the share of the developing countries
L. Shabalina, E. Bulavka
125
Економічний вісник Донбасу № 4(50), 2017
of Africa, Latin America and Asia, especially China,
grew from 3% of the world's electricity production in
1973 to more than 20% in 2016 [7].
An essential step during studying the pace of the
electric power industry development is the analysis of
factors, which influence the increase of electricity con-
sumption. The first factor in increasing power consump-
tion is global population increase. To assess this, we
need to plot the global population and the energy con-
sumption on the same figure (fig. 2).
9
12
15
18
21
6 6,5 7 7,5 8
E
le
c
tr
ic
it
y
c
o
n
su
m
p
ti
o
n
,
b
il
li
o
n
k
/W
h
Population, billions
Fig. 2. Electricity consumption
and population growth
Note: BP Statistical Review of World Energy, 2016
https://www.bp.com/content/dam/bp/pdf/energy-economics/
statistical-review-2016/bp-statistical-review-of-world-energy
-2016-full-report.pdf, Population.Pyramid.net http://www.po
pula tionpyramid.net/ru/мир-земля/2015.
The figure shows that the population of the planet
increased during 2000-2016 from 6.1 to 7.5 billion peo-
ple by more than 22%, and world energy consumption –
from 11 to 22 billion kWh. There is a direct correlation
between the growth of the population and the increase
in electricity consumption. Another prerequisite for
growth in consumption is an increase in the pace of eco-
nomic development. To analyze how the growth of per
capita GDP affects the increase in power consumption
we need to chart the next figure (fig. 3).
2,3
2,55
2,8
3,05
3,3
5 6,5 8 9,5 11E
le
ct
ri
ci
ty
c
o
n
su
m
p
ti
o
n
,
th
o
u
sa
n
d
s
k
/W
h
p
er
c
a
p
it
a
GDP per capita, thousands $
Fig. 3. Electricity consumption
and population growth
Note: BP Statistical Review of World Energy, 2016
https://www.bp.com/content/dam/bp/pdf/energy-economics/
statistical-review-2016/bp-statistical-review-of-world-energy
-2016-full-report.pdf, Population.Pyramid.net http://www.po
pula tion pyramid.net/ru/мир-земля/2015.
Over the past 15 years, that per capita GDP has
doubled, while energy consumption per capita increased
from 2.3 to 3.3 thousand kWh per capita by more than
43.5%. Thus, we can conclude that GDP is growing
more rapidly than the increase in electricity consump-
tion per capita. In other words, the level of the country's
economic development can cover production costs and
electricity consumption. However, attention should be
paid to the ecological component of this increase, since
large incomes of the population can result in the availa-
bility of a variety of household appliances and equip-
ment, which consume a large amount of electricity and
have a detrimental effect on the state of the environment.
We need to analyze the structure of GDP growth
and outline in which countries an increase in GDP per
capita leads to a greater increase in electricity consump-
tion, depending on the level of their economic develop-
ment (fig. 4).
Fig. 4. Dynamics of electricity consumption per capita by country, thousands k/Wh per capita
Note: International Energy Agency (IEA Statistics © OECD/IEA, Energy Statistics and Balances of Non-OECD Countries
and Energy Statistics of OECD Countries http://www.iea.org/stats/index.asp, http://data.worldbank.org/indicator/
EG.USE.ELEC.KH.PC.
L. Shabalina, E. Bulavka
126
Економічний вісник Донбасу № 4(50), 2017
Analysis of per capita electricity consumption by
countries for the period 1900-2015 showed a significant
difference in the rate of increase in consumption, de-
pending on the level of economic development of the
country. So, against the background of insignificant eco-
nomic growth of developed countries such as Japan,
Britain, France, Italy and Spain, some of which have al-
ready reached the upper limit of domestic energy con-
sumption, the demand for hydrocarbon fuel in large de-
veloping countries, primarily in China, has increased.
Based on the analysis of the figure 4, all the above-men-
tioned countries should be divided into three groups ac-
cording to the level of electricity consumption per cap-
ita:
1. Countries with rapidly growing energy con-
sumption are mainly developing and some former so-
cialist countries – South Korea, China, and Brazil.
2. Countries with a relatively stable high level of
consumption and small fluctuations in energy consump-
tion are almost all countries that have long embarked on
the path of post-industrial development – Great Britain,
France, USA, Japan, Italy.
3. Countries with a reduction in energy consump-
tion are countries that have not yet fully overcome the
consequences of the crisis, in which the reduction in en-
ergy consumption was caused not by the introduction of
advanced energy-saving technologies, but by the eco-
nomic and structural crisis, mainly post-soviet coun-
tries – Russia, Ukraine, Azerbaijan, Belarus and etc.
The third factor affecting the level of energy con-
sumption per capita depends mainly on the level of tech-
nology development and the constant increase in the
number of cars per capita. So, the very high level of en-
ergy consumption per capita in the US and Japan is due
to the exceptionally high level of increase in the number
of cars among the population. Compared with North
American indices in the industrially developed countries
of Western Europe, per capita energy consumption is 2-
2.5 times lower and grows poorly, mainly due to inten-
sive introduction of advanced energy saving methods,
technological innovations, active improvement of heat-
ing systems and insulation of premises, and gradual cur-
tailment of the most energy-intensive industries – pri-
marily the mining and metallurgical and large chemical
industries.
It is also necessary to pay special attention on the
environmental component of the power industry reform,
since the main drawback of modern hydrocarbon energy
is emissions of a huge amount, about 30 billion tons /
year, of carbon dioxide, which is the main greenhouse
gas, negatively affecting the planet's climate (fig. 5).
If we compare the growth of CO2 emissions with
increasing energy use, we will see that greenhouse gas
emissions grew more slowly than energy consumption
in the period from the 70s to the 90s, then the lines in-
creasingly diverge. This discrepancy is the result of en-
ergy reform in many countries and changes in the struc-
ture of the fuel balance, where the share of nuclear
power and natural gas has increased, compared to coal
during the period under review. Since 2000, the two
lines have been running approximately parallel, indicat-
ing that there is no further reduction in CO2 emissions
and a predicted increase in the concentration of green-
house gases that enter the atmosphere when fossil fuels
are burned during electricity generation. The increase in
energy consumption can lead to catastrophic changes in
the environment, affect the climate of the planet and
worsen the state of the atmosphere as a whole. There-
fore, it becomes obvious the huge scale of the efforts
necessary for the successful reform of the industry. Ob-
viously, huge efforts are required/necessary for the suc-
cessful reform of the industry.
Fig. 5. Dynamic of the primary energy consumption
per capita (Mtoe) and CO2 emissions (metric tons
per person)
Note: compiled by authors on the basis of BP Statistical
Review of World Energy, 2016 https://www.bp.com/con-
tent/dam/bp/pdf/energy-economics/statistical-review-2016/
bp-statistical-review-of-world-energy-2016-full-report.pdf.
Having a strategic importance, the electric power
industry in all countries is subject of state regulation, be-
cause the enterprises simply can not cope with con-
stantly arising difficulties by themselves. Therefore, all
methods of restructuring must be ensured by state regu-
lation in order to protect the most important interests of
the industry, regardless of the degree of liberalization in
a particular market. In countries with vertically inte-
grated state monopolies, the main subject of regulation
should be tariffs for electricity. In countries where elec-
tricity prices are set by the market, greater emphasis
should be placed on providing equitable access to
transport networks for all producers. The world experi-
ence in reforming the electric power industry shows the
use of various mechanisms and ways of restructuring in
different countries. However, all existing methods can
be divided into the following five groups: organiza-
tional, method of combining markets, financial, fiscal
and environmental:
1. Organizational method. This method by separat-
ing the monopoly functions from the competitive unit –
the functional division of generation, transportation and
sale of electricity – makes it possible to liquidate natural
L. Shabalina, E. Bulavka
127
Економічний вісник Донбасу № 4(50), 2017
monopoly structures and introduce competition into the
production of electricity. This is due to the fact that re-
cent advances in technology and production of generat-
ing capacities have led to the fact that medium-sized
power plants proved to be quite competitive in compa-
rison with large power plants that are part of the giant
structures of existing vertically integrated companies.
Therefore, smaller investors were able to build inde-
pendent generating capacities and conduct their own
commercial activities.
Such a way of reforming the electric power indus-
try was used in the UK, where, as a result of the division
of the monopoly company, private power generation
companies and sales companies were formed, which al-
lowed to build their own power generation capacities in
order to increase the efficiency of meeting the demand
for electricity and reduced the load of existing generat-
ing capacities. Also, examples of the most successful
liberalization of the generation market can be found in
Argentina, where through the disintegration and priva-
tization of the largest electric power stations, strict reg-
ulation systems for permissible electricity transmission
tariffs were created, and the total government revenues
from the privatization of the electric power industry
exceeded 10 billion dollars [8]. Due to vertical disinte-
gration in many countries, it was possible to reduce elec-
tricity tariffs, so in some US states the price of electricity
fell by 7.96% [9].
2. The method of combining the energy system.
The need of reducing the high tariffs for electricity, as
well as the internationalization of global markets, aimed
at creating a single economic space, has set the task of
many countries to reorganize their own energy facilities.
To solve the problems, the method of combining the
energy system was used, the main purpose of which was
equalization of loads, smoothing of peaks and optimal
use of different energy sources for electricity genera-
tion. In winter, more electricity is produced by wind
farms located in the northern countries, which are part
of this system, in summer – by solar power plants that
operate in the southern countries. A vivid example of
such system is the Scandinavian countries, where an ef-
ficient infrastructure for the functioning of the market
was created resulted from the separation of public verti-
cally integrated companies [10]. Thus, the result of the
Nordic electricity reform was the creation of a common
electricity market, the so-called Nord Pool, the success-
ful operation of which improved the reliability of the re-
gion's energy systems, leading to a reduction in the sig-
nificant difference in electricity prices in various re-
gions.
3. Financial method. In our opinion, one of the
most reasonable ways to support the use of renewable
energy is the provision of investment preferences. In-
vestment preferences may include the full amount of
grants. Exemption from customs duties is due on import
of equipment and components to it, imported for the im-
plementation of the investment project. State full-scale
grants can include land plots, buildings, structures, ma-
chinery and equipment, computers, measuring and re-
gulating devices for production using RES. In the event
that investment obligations are in compliance with the
contract, the property is granted to the investor in the
property free of charge. For instance, each year the go-
vernment of the USA allocates 67 billion $ for the de-
velopment of renewable energy technologies, and state
R&D grants to enterprises that generate electricity using
solar, wind and geothermal energy rather than fossil
fuels . In a number of countries, such as France, Ger-
many, Luxembourg and the Netherlands, an accelerated
depreciation rate is applied that grants eligible busi-
nesses the opportunity to write off investments in energy
efficiency projects faster than other investments, which
makes it possible to reduce arrears in a short period of
time.
4. The fiscal method. The government of the coun-
try should pay special attention to non-traditional, clean
energy sources, and introduce energy-saving technolo-
gies. The combination of financial-tax and industrial
policies is aimed at improving the structure of produc-
tion and raising its level, which is possible when certain
laws and tax incentives are adopted. Preferential taxa-
tion as the main instrument for stimulating the develop-
ment of renewable energy is used in many developed
countries, such as Germany, the United States and
France, where the most effective way to ensure energy
conservation is to adopt laws on tax incentives. In this
way it is possible to provide tax rebates on the costs of
acquiring equipment or services leading to energy sa-
vings. In a number of countries, such as Belgium, Den-
mark and France, a state fund for investing in energy-
saving measures has been established. As a rule, the in-
terest rate set by the fund is lower than under normal
commercial conditions, which is equivalent to a conces-
sional loan.
5. The ecological method. This method, first of all,
includes the introduction of energy saving technologies
and the transition to renewable energy sources – solar,
wind, hydro power of rivers. The advantage of rene-
wable energy is due to the fact that they do not lead to a
change in the climate of the planet and to global warm-
ing, in contrast to fuel fossils, which, when burned, emit
harmful substances into the atmosphere.
World experience shows that the developed coun-
tries began to support and stimulate non-traditional en-
ergy, through the implementation of federal develop-
ment programs, within which various privileges and
preferences for this sphere are provided. Today, in the
United States, there are already three cities that have
completely switched to renewable energy – Aspen, Bur-
lington, Vermont. Germany produces about 14% of en-
ergy in installations using biomass, geothermal and so-
lar energy and plans to increase this share to 25-30% by
2030 [11]. The economic use of geothermal sources is
L. Shabalina, E. Bulavka
128
Економічний вісник Донбасу № 4(50), 2017
common in countries such as France, Italy, the USA,
New Zealand, and Iceland. For example, in Iceland, five
thermal geothermal power plants are successfully func-
tioning, due to which 26.5% of electrical and 90% of
thermal energy is produced in the country [11]. In the
newly industrialized countries of South-East Asia, much
of the energy-saving measures are financed by the state
itself, which most often installs energy equipment that
corresponds to the non-industrial sphere, allocates tar-
geted interest-free loans or subsidies to the owners of
residential buildings for the acquisition of materials in
accordance with existing standards of energy saving
technologies.
Conclusion. The analysis of the global use of elec-
tricity has made it possible to identify the dependence of
electricity consumption on the population and the level
of economic development, as well as the effect of in-
creasing energy consumption on the state of the environ-
ment. Based on the identified problems, the world expe-
rience in the restructuring of the electric power industry
was studied and methods for reforming the industry
were proposed. These methods were combined into five
groups: an organizational one, a method of consolidat-
ing markets, financial, fiscal and environmental. The
carried out researches in the field of tools of reforming
the electric power industry will, firstly, lead to the con-
struction of such a system of electricity markets that will
create incentives for competition, improve efficiency,
and also contribute to the development of the industry,
and secondly, the considered environmental methods of
reforming the industry will reduce environmental pollu-
tion, by switching to energy-saving technologies and re-
newable energy sources in order to improve the energy
security and environmental friendliness of the industry.
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Шабаліна Л. В., Булавка О. Д. Світовий до-
свід реструктуризації електроенергетичної галузі
У статті виявлено фактори, що впливають на
споживання електроенергії в світі. На основі ви-
вчення світової досвіду реструктуризації електро-
енергетичної галузі виділено п'ять груп методів
щодо підвищення її ефективності: організаційний,
консолідації ринків, фінансовий, податковий та еко-
логічний.
Ключові слова: реструктуризація електроенер-
гетики, перехід на поновлювані джерела енергії,
енергозберігаючі технології, навколишнє середо-
вище, тариф на електроенергію.
Шабалина Л. В., Булавка Е. Д. Мировой
опыт реструктуризации электроэнергетической
отрасли
В статье выявлены факторы, влияющие на по-
требление электроэнергии в мире. На основе миро-
вого опыта реструктуризации электроэнергетиче-
ской отрасли выделены пять групп методов повы-
шения ее эффективности: организационный, консо-
лидации рынков, финансовый, налоговый и эколо-
гический.
Ключевые слова: реструктуризация, электро-
энергетическая отрасль, возобновляемые источники
энергии, энергосберегающие технологии, окружаю-
щая среда, тариф на электроэнергию.
Shabalina L., Bulavka E. World experience of
the electric power industry restructuring
The article reveals the factors affecting the electric-
ity consumption in the world. Based on the study of the
world experience in the restructuring of the electric
power industry, five groups of methods are identified to
improve its efficiency: organizational, consolidation of
markets, financial, tax and environmental.
Keywords: restructuring of the electric power in-
dustry, transition to renewable energy sources, energy-
saving technologies, environment, and electricity tariff.
Received by the editors: 26.10.2017
and final form 22.12.2017
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