A Political Economy of System Operators: Knowledge Asymmetries and Regulatory Intermediation in the Electricity Industry

Concerns over the competence gaps and knowledge asymmetries between regulators and industry are at the core of electricity market governance debates. The article proposes a new analytical framework to understand the structure of regulatory relations in the electricity industry through the application of theories of indirect governance and to highlight the position of System Operators (SO) as critical intermediators in regulatory relations. Political mandates to expand renewable energy have brought new technical and institutional challenges that test the effectiveness of existing conceptions of regulatory delegation as the means to overcome the challenge of regulators’ lack of information and technical competence. The analysis leverages network analysis and qualitative analysis from interviews and administrative data, in a controlled-comparison of two liberal markets —Chile and the UK— and two state-dominated markets —China and Mexico. By providing novel empirical description of the role of SOs in different governance context, the article actualizes the debates over electricity industry regulation, and calling for the study of SO as political actors whose positions is central to the recomposition of the industry in a decarbonizing world.