Introduction
European legislation imposes that the network activities are 'unbundled' and that the network operator is independent of generation activities. There are different levels of independence:
- Accounting Unbundling: separate accounts for generation and transmission
- Management Unbundling: full separation of generation and transmission activities in different holdings, same share holders
- Ownership Unbundling: separate shareholders in generation sector and transmission sector
Research question
There is a debate on which level of independence is needed in order to obtain a competitive market. Is it sufficient that generators cannot influence the decision process of the Network Operator (Management Unbundling) or should there be a full Ownership Unbundling.
Ownership of the Belgian network operator by the incumbent generator
I developed a small game model in which an incumbent generator owns part of the Network operator, and all players are profit maximizing. A numerical model was developed for the Belgian market.
- The potential impact of the transmission ownership structure on the Belgian electricity market
It shows that the integration of the Network Operator and the incumbent generator reduces double marginalization (= Welfare improving) but also could reduce entry in the generation market (Welfare decreasing). Management unbundling is insufficient in order to obtain a level-playing field.