Key Drivers of PPPs in Electricity Generation in Developing Countries : Cross-Country Evidence of Switching between PPP Investment in Fossil Fuel and Renewable-Based Generation

This paper presents new global evidence on the key determinants of public-private partnership investment in electricity generated by fossil fuels and renewable energy based on a panel data analysis for 105 developing countries over a period of 16 years from 1993 to 2008. It aims to identify the key factors affecting private investors' decision to enter electricity generation, through probit analysis, and the amount of investment sunk in this market segment, based on Heckman's sample selection analysis. The paper shows some evidence of switching from investment in fossil fuels to investment in hydro and renewables and within fossil fuels from oil to natural gas. An interesting result of the econometric analysis is that the likelihood of switching toward renewable investment is driven by long-run environmental factors, such as the increases in the price of oil and the introduction of the Kyoto protocol. Another interesting result is that sector governance support schemes, provided by feed-in tariffs, affect only the entry in renewable based electricity generation and have no impact in reducing the amount of investment in fossil fuel based generation. Economy-wide governance factors, including control for corruption and degree of political competition, are factored in by private investors only in the initial stage of the game when the decision to enter into the generation market is taken and not the amount of investment. This confirms that the first generations of independent power producers have been developed on the basis of long-term power purchase agreements guaranteeing a fixed rate of return, through take-or-pay clauses and/or government guarantees.

Bibliographic Details

Main Author:	Vagliasindi, Maria
Format:	Policy Research Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2012-07
Subjects:	ALTERNATIVE ENERGY, ALTERNATIVE ENERGY DEVELOPMENT, APPROACH, BALANCE, BARRELS PER DAY, CARBON, CARBON EMISSIONS, CIVIL WAR, CLEAN FUELS, CLIMATE CHANGE, COAL, COAL INVESTMENT, COMMODITY, COMMODITY PRICES, COMPETITION FOR ENERGY, CONVENTIONAL ELECTRICITY, CONVENTIONAL ELECTRICITY GENERATION, COST OF ELECTRICITY, CREDITWORTHINESS, CRUDE OIL, CRUDE OIL MARKET, CRUDE OIL PRICE, CRUDE OIL PRICES, CRUDE OIL PRODUCTION, CRUDE PRICES, DEMAND GROWTH, DEMOCRACY, DEVELOPING COUNTRIES, DIESEL, DISTRIBUTION LOSSES, DRILLING, ELECTRICITY, ELECTRICITY GENERATION, ELECTRICITY SECTOR, EMERGING ECONOMIES, ENERGY DEMAND, ENERGY EFFICIENCY, ENERGY EFFICIENCY MEASURES, ENERGY OUTLOOK, ENERGY RESOURCES, ENERGY SECURITY, ENERGY SOURCE, ENERGY SOURCES, ENVIRONMENTAL FACTORS, ENVIRONMENTAL SUSTAINABILITY, ETHANOL, FEDERAL RESERVE, FEDERAL RESERVE BANK, FINANCIAL CRISES, FIXED RATE, FOSSIL, FOSSIL FUEL, FOSSIL FUEL PRICES, FOSSIL FUEL USE, FOSSIL FUELS, FUEL OIL, GAS PRICES, GAS SUPPLY, GLOBAL MARKET, GLOBAL OUTPUT, GOVERNANCE INDICATOR, GOVERNANCE INDICATORS, GOVERNMENT GUARANTEES, GROWTH IN ENERGY DEMAND, HEAT, HYDROPOWER, INCOME, INTEREST RATES, INTERNATIONAL ENERGY AGENCY, INVESTMENT IN COAL, KILOWATT-HOUR, LIGHTING, LNG, LNG TERMINALS, MARKET FAILURES, NATURAL GAS, NONRENEWABLE RESOURCES, NUCLEAR ENERGY, OIL, OIL ACCOUNTS, OIL CONSUMPTION, OIL DEMAND, OIL EXPORTS, OIL PRICES, OIL PRODUCERS, OIL PRODUCTION, OIL SHOCK, OIL SHOCKS, OIL SUPPLY, OILS, PEAK OIL, PETROLEUM, PETROLEUM EXPORTING COUNTRIES, PETROLEUM PRODUCTION, POLITICAL ECONOMY, POLITICAL SYSTEM, POWER, POWER CRISIS, POWER GENERATION, POWER OUTAGES, POWER PLANT, POWER PLANTS, POWER PRODUCERS, POWER PURCHASE AGREEMENTS, POWER SECTOR, POWER SYSTEM, PRICE ELASTICITY, PRICE OF OIL, PRIVATE INVESTMENT, PRIVATE INVESTOR, PRIVATE INVESTORS, PRODUCTION CAPACITY, PUBLIC FINANCES, PUBLIC-PRIVATE PARTNERSHIP, RAPID GROWTH, RATE OF RETURN, REGULATOR, RENEWABLE ENERGY, RENEWABLE ENERGY MARKET, RENEWABLE SOURCES, RENEWABLE SOURCES OF ENERGY, SECURITY CONCERNS, SOURCE OF ENERGY, SPECULATIVE BUBBLE, SUPPLY DISRUPTIONS, SUPPLY SHOCK, SUPPLY SHOCKS, SUSTAINABLE ENERGY, TECHNOLOGICAL CHANGE, TOTAL ELECTRICITY GENERATION, TRANSMISSION LINES, WASTE, WIND, WORLD DEVELOPMENT INDICATORS, WORLD ECONOMY, WORLD ENERGY, WORLD ENERGY OUTLOOK, WORLD OIL,
Online Access:	http://documents.worldbank.org/curated/en/2012/07/16462671/key-drivers-ppps-electricity-generation-developing-countries-cross-country-evidence-switching-between-ppp-investment-fossil-fuel-renewable-based-generation http://hdl.handle.net/10986/11938
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