Integrated resource planning (IRP) and power sector reform in developing countries

The integrated resource planning (IRP) approach is one that considers both supply and demand-side options to meet the need for a resource, while minimising the costs accruing to the firm and to society. This paper focuses on IRP as a tool for the power sector in the light of the existing problems and the ongoing reforms in developing countries. It looks at the advantages that IRP would afford, juxtaposing these with the barriers to such a planning process—those encountered in the past as well as the possibilities in view of structural changes. It then discusses the policies that would enable the IRP approach to be usefully employed to mitigate the problems of the power sector. Although IRP has receded in importance in some areas of the world, there are perceptible benefits for developing countries; these could adopt such planning methods through the agents and the instruments suggested.