ctor participation and the introduction of competition, are having a profound impact on industry structure and the way in which investments are financed. The traditional structure of the electricity utility is a vertically integrated entity, which is often state-owned. Competition is introduced by breaking up or unbundling that structure into its constituent parts - generation, transmission, distribution and supply. In most cases, the INFRASTRUCTURE TO 2030: TELECOM, LAND TRANSPORT, WATER AND ELECTRICITY - ISBN 92-64-02398-4 © OECD 2006 OUTLOOK FOR GLOBAL INVESTMENT IN ELECTRICITY INFRASTRUCTURE physical transmission and distribution functions remain regulated by the authorities as natural monopolies. The way in which the electricity sector has been unbundled varies considerably across countries. The ownership of some components is the same in many cases, but the commercial and operational relationships between them have to be made transparent if competition in generation and supply is to be effective. The participation of a sufficient number of generators and marketers is also a critical condition for effective competition to develop. Today, the electricity market is organised around power companies whose size varies substantially. The ten largest power companies in the world - led by Electricité de France (EdF) - account for about one-fifth of the world's installed capacity. Until the 1990s most utilities were national, focusing almost exclusively on their domestic markets. In the past decade or so, many utilities chose to invest in other countries and regions. Activity was particularly intense in Europe. A number of large power companies have invested in power projects in developing countries. However, many of these companies are now withdrawing or selling their assets, and interest in new projects in developing countries is very limited. Several markets, particularly that in the United Kingdom, have recently experienced varying degrees of vertical re-integration. This has involved the horizontal mergers of po