China’s Electricity Sector Reform: Analysis and Implications for Iran's Policy Framework

Features such as natural monopoly and economies of scale in network industries such as the electricity industry led to the fact that in most countries, the ownership and management of  the mentioned industries in a vertically integrated form is provided to the government. Such an attitude prevailed in most countries until the end of the 1980s. Technological advances in these industries, including the electricity industry, led to a new attitude in the 1990s. Based on this approach, vertically integrated network industries include separate activities that have different economic characteristics from competitive to monopoly levels, and this provided the basis for power sector reform. This study employs analytical-descriptive methods and a case study approach, structured into three parts. The first part establishes a theoretical framework, examining the key components of electricity sector reforms and the importance of sequencing these reforms. The second part analyzes China's electricity sector reform process in five stages, based on the developed framework. The third part provides tailored policy recommendations for Iran's electricity industry. The findings of this research show that China's experience in the gradual separation of policy-making, regulation, and service provision affairs from each other, decentralization through the mechanism of provincial and local governments, and the commercialization of state-owned companies can bring lessons learned for Iran's electricity industry. In this regard, recommendations such as a-reorganizing the Ministry of Energy as a policy-making body and state-owned companies as actors of the service provider layer and b- Redefining the new financial relationship between the key companies of the electricity industry and the Ministry of Energy in order to commercialize the behavior of state-owned companies are suggested for Iran's electricity sector.