An experiment in liberalising power markets has been underway in the UK since the 1980s and three phases can be identified. The first ran from around 1989 to 1999, beginning with the privatisation of the generating industry and grid and ending by giving customers the freedom to shop around for their supplier.
When liberalisation proper started in 1999 the system was well supplied – even oversupplied – with generating capacity. So the next stage was one of cut-throat competition for market share. This led to a collapse in the wholesale price of power.
Another decade on and new problems emerged as power plants approached the end of their lives. Competitive markets are efficient at getting best value out of existing infrastructure but much less so at deciding when and how it should be replaced – especially when there is uncertainty about how much business coal and gas-fired plants will secure in an era where there are green energy targets to meet.
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