Finally, reforms have also included competition for wholesale power and, less often, retail services. Commercialization should help renewables in distributed markets. Distributed renewables reduce demand for grid electricity, so that utilities can channel power to cities, where clustered customers use more electricity per unit of capital outlay. Commercialization alone will have little effect on bulk power markets for renewables, although it may improve utilities' ability to adopt new technologies. The effects of privatization on penetration of renewables are mixed.
Privatization can promote renewables by introducing new capital.
However, higher discount rates and short time horizons may favor non-renewables. Private energy suppliers face higher interest rates than government entities, and will prefer conventional energy options with lower capital costs. For bulk power markets, since private producers often must recover their investment over a limited contract period, renewables with a comparatively high capital cost may find it difficult to attract private debt financing. Moreover, preparing a power purchase bid for site-specific renewable energy projects may cost more per megawatt than for conventional projects. At best, restructuring will leave prospects for renewables as well off as they were when the utility was vertically integrated.