Development of Competitive Relations in Isolated Energy Districts: Institutional Barriers and Economic Incentives

• Aleksandr S. Mosin

  Aleksandr S. Mosin. University of World Civilizations named after V. V. Zhirinovsky. Moscow. Russia

• Evgeniy E. Shchedrin

  Evgeniy E. Shchedrin. Moscow State Technological University "STANKIN". Moscow. Russia

• Ivan A. Salkovsky

  Ivan A. Salkovsky JSC "Euler Analytical Technologies". Moscow. Russia

The paper argues that competition in isolated energy districts cannot be developed by simply copying wholesale market models used in large interconnected power systems. In small and spatially fragmented systems, competition for the market is more efficient than competition within the market. The study identifies the main institutional barriers: thin markets, high fixed costs, muted tariff signals, uncertainty related to future grid arrival, low contract standardization, and poor data availability. It substantiates a set of incentives capable of reducing total system costs, including project-based competitive procurement, longterm tariff formulas, compensation for grid encroachment risk, support for anchor demand, and performance-based subsidies linked to reliability and fuel savings.
Keywords: isolated energy districts, electric power industry, competition, tariff regulation, mini-grids, economic incentives