ABSTRACT

Originally, electricity was produced by each user on its premises. Edison, financially backed by JP Morgan, built the first integrated centralized system in Manhattan, which evolved into General Electric. The history of the electricity industry can be explained as a quest to fully exploit network effects by physically connecting a growing pool of assets in the most complementary way, forming hierarchical centralized system at a continental scale. Deregulation fragmented the industry both horizontally (competition) and in Europe also vertically (unbundling). Regulation plays a fundamental role to coordinate the a complex system formed by generators, transmission system operators, distribution system operators, retailers, and traders