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Is forced divestment of networks the appropriate tool to productively stimulate competition on the European energy market? This question amongst others is the focus of the new research project “UNECOM: Unbundling of Energy Companies – Will it be worth it?" under the lead of Gert Brunekreeft, Jacobs Professor of Energy Economics. The 720,000 Euro project, which started now and is designed for a 1.5-year period, is partnered by the Ruhr-Universität Bochum, the Tilburg University and the Delft University of Technology in the Netherlands as well as the Vienna University of Economics and Business Administration.
[
Jan
03, 2008]
In fall 2007 the European Commission presented its new legislative plans for the further liberalization of the energy markets. The most important and at the same time the most disputed proposition is the forced ownership unbundling of “integrative” energy companies, which is a strict separation of the network from the energy production and retail activities. Economy, legal, and technology experts doubt the intended effect of the new directives on market competition and energy prices and fear that the decoupling of the networks compromise the long-term safety of the networks and the energy supply.
“If you look at the overall debate in the literature and in Brussels, then the impression comes up that a lot is to be done yet. Although there are huge stakes involved in the Europe-wide unbundling of the energy networks, we don’t actually know very well the costs and benefits to society. Analytically some arguments are simply missing and other arguments are not worked out thoroughly. Empirically, numbers to assess unbundling at this scale are not readily available. What we try to achieve is to fill in these dark spots,” says Gert Brunekreft on the goals of the newly implemented UNECOM research consortium. The Jacobs professor, who also heads the Bremer Energie Institut, specializes in energy economy in Germany, the Netherlands, and the UK.
To assess this complex set of problems and possible alternatives to the proposed measures, UNECOM takes an international and, most importantly, an interdisciplinary approach, as economical, technical, administrational, and legal issues have to be accounted for. Gert Brunekreft: “In Bremen, we concentrate on three different issues. First, we do a comprehensive social cost benefit analysis, with which we try to get an idea of the order of magnitude of the consequences for society. This analysis centers around the effect of unbundling on competition. Secondly, we try to make an in-depth empirical assessment of unbundling using econometrics techniques. This part focuses on the cost-effects of unbundling. Lastly, we study the coordination of interactive, but unbundled investment decisions for the network and the power plants. This analysis will be more theoretical and rely on advanced micro-economic models.”
In addition to the economic studies, which will be conducted in Bremen and Vienna, the project also focuses on the legal aspects of conflicting national and EU legislative in the development and implementation of the prospected energy directives. These studies will be carried out mainly in Bochum and in Tilburg. Technological and institutional compatibility problems of a decentralized energy market with competitive actors will be in the focus of the research in Delft. UNECOM is financed by the Dutch Science Council “Next Generation Infrastructures Foundation” (NGInfra), the EnBW Energie Baden-Württemberg AG, the RWE Energy AG, and the network Verbund Austrian Power Grit (APG).
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