There is some evidence that deregulation does not work as effectively in small markets, because there is not enough volume to justify a large enough number of participants at the various levels. This was foreseen by some of the small countries when the EU Directives were first proposed and Ireland, Malta, Greece, Cyprus and Portugal negotiated derogations from compliance with the Directives’ provisions. Among the countries in the Accession States which joined the EU in 2004 the smaller countries did likewise. This opens questions about the design of liberalised markets in the developing world, where there are many very small markets.
A development in the global market in recent years has been the emergence of a second generation of global investors, regional companies looking outside their immediate sphere of influence. The first generation of global investors were European and American companies, notably E.ON, RWE, Suez, Vivendi, Endesa, Iberdrola, EDF, Enel, Tracetebel and other large European companies. The American investors included TXU, AES, PSEG, AEP, CMS, Duke, Mirant and others. Many of the American companies have withdrawn or reduced their overseas investment.
There has also been a trend for utilities to withdraw from non-core business; for example, RWE is in the process of divesting its water interests, which included Thames Water, now the third largest global water company, to concentrate on its energy business. Several large Asian companies are now looking outside their national markets. China Light & Power and Cheung Kong, both of Hong Kong, JPower (formerly the state-owned Electric Power Development Company of Japan), KEPCO of Korea, Meiya and Singapore Power have all invested in other countries.