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This chapter examines two development assistance projects undertaken by Sida in India. These case studies demonstrate the use of institutional analysis as a diagnostic tool, and illustrate how problems of motivation and asymmetric information arise within the complex mix of actors involved in a project, presenting distinct challenges for sustainable development.

Poor financial health of the distribution companies is one of the biggest challenges facing the power sector in India today. This has created an atmosphere of uncertainty in the entire value chain, namely, transmission, trading, and generation. This chapter presents the current scenario of performance of various distribution utilities in the country. Data and statistics have been provided on various key performance indicators to analyse the state of affairs in the distribution sector. The vision in the law and policy in this context has been explained. Distribution loss is the critical area that needs resolution. The distribution franchisee (DF) model has been tried to address the issue of distribution loss. This model has been examined in the light of the experience so far in this regard. The chapter also discusses the status regarding tariff operationalization, issues around supply to agricultural consumers, and the challenges around regulation of government-owned utilities. The chapter also suggests measures to restore the financial viability of the distribution utility.

This chapter covers the legal and policy provisions about the short-term electricity markets in India. It presents the status of implementation of these provisions. Drawing on the data and statistics available, primarily with the Central Electricity Regulatory Commission (CERC), it describes various constituents of the short-term market, namely, traders, power exchanges, and the Unscheduled Interchange (UI). The chapter then analyses the issues regarding the role and impact of the electricity market. It deals with the UI mechanism in detail which is a unique intervention for handling the real time imbalances and enforcing grid discipline in India. The chapter presents a critical analysis of the various decisions of the Central Commission in promoting short-term markets and specifically discusses issues around Over the Counter (OTC) market and power exchanges. It also briefly touches upon the jurisdictional issues between the power sector regulator, namely, CERC and the forward contract regulator, namely, Forward Market Commission (FMC)

Capacities for meeting peak demand for power are the need of the hour. This chapter outlines perspectives from the supply side as well as the demand side for peaking power and also explains the pre-requisites for making investments in peaking power plants feasible. The Electricity Act, 2003 and the Tariff Policy have provisions for differential tariff based on total consumption for a specific period and introduction of differential rates for fixed charges for peak and off-peak generation for better management of load. The chapter presents the current scenario in this respect and also the regulatory response so far. The chapter analyses the various issues which are seen as a constraint to the development of peaking power capacity in the country. Required policy and regulatory interventions have been suggested to encourage setting up of peaking power plants which are urgently required for the power sector in India.

This chapter examines the processes and outcomes of Europeanization in the German utilities sectors. Employing an institutionalist perspective, it focuses on interaction between the institutional system of the EU and that of Germany. The chapter argues that adaptation pressures are reduced by Germany's ability to exert ‘soft’ power to ensure that EU policy is congruent with domestic governance. The tempo of EU reform is particularly significant. Incremental legislation in telecommunications permitted Germany to liberalize at its own pace in line with domestic policy style. In electricity, by contrast, the 1996 Directive created more acute adaptation pressures. Thus, in telecommunications Germany was activist in ‘downloading’ EU legislation in line with EU requirements. In electricity, it made considerable use of the zone of discretion in the Directive to minimize the impact on domestic governance. In examining the way in which Germany responds to adaptation pressures, particular attention is given to opportunity structures, veto points, and institutional norms in the domestic policy process. The experience of the electricity reform suggests that adaptation pressures are exacerbated by a highly pluralist institutional regime with numerous veto actors capable of blocking implementation. Moreover, German reluctance to embrace independent, sector-specific regulation suggests the resistance of domestic regulatory norms to the effects of Europeanization.

This chapter highlights a situation where reforms are challenged despite ideational changes within the government, when it is unable to deal with a powerful political constituency such as farmers. The state of Andhra Pradesh has been considered a governance and reform champion since the late 1990s. The state government had excellent technocratic capacity to understand and implement reforms. The state-owned utilities were in good shape in the state. Moreover, Chief Minister Chandra Babu Naidu was one of India’s reform champions. Despite these factors favouring reforms, Andhra Pradesh could not make a substantial headway with reducing the losses of its distribution companies, and private sector participation did not play the kind of role it could in telecommunications. To add fuel to fire, the announcement of free power by Chief Minister Rajasekhar Reddy, further derailed the fiscal situation in the sector. Market and competition did not work in a sector where there was a large and powerful constituency opposing reforms. The story of Andhra Pradesh reflects the malaise facing the sector in India today.

In Nigeria, an estimated 170 million people depend on less than 4,000 megawatts of electricity from the grid for economic and social needs. Since 2000 the country has embarked on an ambitious power sector reform programme, the main objective of which is to ensure adequate, available, and reliable electricity. The power sector reform adopts a neo-liberal development model that is based on the triple strategy of liberalization, commercialization, and privatization. This strategy has relied heavily on the reform of the existing legal regime of state institutions so as to attract foreign private capital to increase capacity, expand connection, and improve reliability. This chapter reviews the incompletely theorized neo-liberal assumptions in the reform policies and shows how these assumptions have undermined the efficacy of legal reform in the electricity industry and resulted in failed expectation.