Rethinking Power Sector Reform

Rethinking Power Sector Reform is a multiyear initiative that provides an updated assessment of power sector reform issues at the global and country levels. It aims to reignite the policy debate around reform approaches by articulating a new vision that incorporates lessons learned over the past 25 years. It also reflects on how recent technological trends and business models that are disrupting the sector may call for a new thinking on reform strategies.

Supported by the World Bank’s Energy Sector Management Assistance Program (ESMAP) and the Public – Private Infrastructure Advisory Facility (PPIAF), the initiative works with different partners and experts across the World Bank Group (WBG) and beyond to generate evidence, analysis and insights on key themes of interest to power sector reform practitioners and decision makers globally: cost recovery, utility governance and restructuring, power markets, regulation, and political economy.  Findings and recommendations on each of these themes will be included in a forthcoming flagship report.  

The initiative is strongly evidence-based, grounding its research in an in-depth exploration of the 25-year power sector reform journey of 15 WBG client countries that represent a wide diversity of geographies, income levels, and approaches to reform. A series of case studies document the narrative of the reform dynamics in each country and evaluate the impact of reforms on key dimensions including security of supply, operational efficiency, cost recovery and energy access. In addition, the initiative is based on an extensive stock-taking exercise of the existing knowledge base that is available in the form of a series of thematic literature reviews.

Why a “Rethink”

Since the 1990s, a standard set of policy prescriptions for power sector reform has been widely used. These include vertical and horizontal unbundling of power utilities; private sector participation; creation of an independent regulator; achievement of cost recovery pricing; and the introduction of competition in power generation. While this package of reforms was, at least partially, adopted by several developing countries, momentum and uptake slowed considerably in the 2000s. There is a need to revise approaches in the light of: 25 years of experience, evidence, technological disruptions such as the plummeting cost of renewable energy, developments in battery storage, and with advances in energy efficiency and smart grid infrastructure. The aim is to provide practitioners with a flexible frame of reference that can help identify the types of reforms needed, and overall approach to reforms to improve the power sector in different country contexts.