Policy and Regulatory Issues in Power Sector

Policy and Regulatory Issues in Power Sector

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Executive Summary

Policy and Regulatory Issues in Power Sector


Power systems across the world are witnessing significant changes on account of various external factors. Climate change is leading to increased power demand, which is putting pressure on generators as well as grid operators. It is also increasing the demand for storage technology, demand response programs, and alternate pricing schemes. There has been a shift in the generation mix in most countries, from fossil fuel-based generation to renewable energy generation. Renewable energy, being intermittent in nature, puts significant demands on grid operators to balance it. The generation profiles of renewable energy sources do not necessarily match the peak demand periods. Distributed generation is witnessing an increased role in meeting the power needs of the unelectrified population. Utilities are increasingly engaging with consumers to smoothen the demand curves through peak shaving. Against this backdrop, the role of regulators is changing to accommodate all these changes and safeguard the interests of consumers.

In the US, the change in the regulatory environment is particularly apparent, with the Trump administration taking charge. President Donald Trump has made abundantly clear his intent to deregulate the sector, especially with respect to climate regulations. Some of the key regulations that were passed during President Barack Obama's administration, such as the Clean Power Plan (CPP) and Mercury and Air Toxics Standards (MATS), forced the power industry to look at power generating sources other than coal. A number of coal-based power plants either shut down, or had to make significant investments. However, experts point out that it was not only these regulations that led to the closure of coal-based power plants, but also the economics tilting in favor of gas-based plants. And this may continue given that the new government will also make it easier to extract gas from federal lands.


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