and sequenced and their relative prevalence and momentum are carefully considered. Finally, a simple Power Sector Reform Index is introduced as a convenient device for summarizing the extent of power sector reform in each country. The index takes an unweighted average of a country’s score on an interval of 0 to 100 for each of the four dimensions of power sector reform.<sup>8</sup> Once again, the index is descriptive rather than normative in nature. A higher score simply denotes that more reform measures were taken, but is not necessarily intended to convey a superior power sector architecture or performance.

Throughout the paper, the sensitivity of reform experiences to initial country characteristics – as of 1995 – is systematically examined. Statistical tests of differences in values between the chosen country groupings outlined below are based on N‐1 two‐proportion tests for binary variables and ANOVA tests for continuous variables. In the case of more than 2 groups pair‐wise tests were carried out, and all pairwise significant variables received the marker. The country characteristics include country income group<sup>9</sup> , power system size<sup>10</sup> , fragility status<sup>11</sup> , and oil exporting status<sup>12</sup> , as well as the political economy characteristics<sup>13</sup> of the country.

Income group is known to affect many aspects of a country’s economy. In this case, income group is relevant for a number of reasons. It will affect the purchasing power of the population and the prospects for recovering the costs of power supply, which is often an objective of regulation as well as a prerequisite for other reforms such as private sector participation and competition.

Oil exporting countries, due to their abundance of domestic hydrocarbon wealth, are often inclined to subsidize the power sector, sometimes quite substantially. This, in turn, makes it difficult to introduce reforms related to cost recovery, and hence regulation, private sector participation and ultimately competition.

Power system size is expected to be an important factor in restructuring and competition reforms. Effective power market competition is only possible when there are a significant number of generators in the market that are able to act as alternative suppliers of power. The sector has traditionally been characterized by large scale economies in power generation, implying that only larger power systems are able to support the requisite number of generators operating beyond minimum efficient scale; although this reality is shifting with the advent of smaller scale and more modular renewable energy technologies. Furthermore, even when an adequate number of generators can be supported by the market, there may be technological characteristics (e.g. nuclear power) or transmission constraints that prevent generation plants from really competing with each other. Thus, the larger the system becomes, the less likely that such constraints can present an effective limit on competition.

Fragile and conflict‐affected states face particular challenges in adopting the ambitious institutional reforms entailed by power sector reform; in particular, their weak governance and institutional capacity combined with their risky policy environments make it challenging to attract private sector participation.

> 8 Details on the construction of the Index can be found in Box 3, Chapter 7.

> _9 World Development Indicators, World Bank_

> _10 Electricity Data, U.S. Energy Information Administration_

> _11 Polity IV Indicator, Center for Systemic Peace_

> _12 Global Energy Statistic Yearbook 2017, Enerdata_

> _13 Center for Systemic Peace and World Governance Indicators, World Bank_

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