In many ways, electric power is the antithesis of a global industry: except for generation, where load sharing across regional pools is commonplace, nearly everything the utilities do is carried out by local players serving local customers. Yet slowly but surely, the electric power industry has started to globalize.

It is the restructuring of electric power through privatization and competition that is giving rise to opportunities for globalization. Changes in the structure of local industry—notably the disaggregation of the vertically integrated business system—will permit companies to specialize in narrow pieces, or "slivers," of the industry. These specialists will quickly recognize economies of scale beyond the "local position" and seek to aggregate horizontally. Consider the reading of electricity meters. In the past, this was just a tiny part of the operations of national or regional monopoly electric utilities, which typically sent workers to read the customers’ meters. But new technologies make it possible to read meters cost-effectively from remote locations. As a result, meter reading has started to become a stand-alone business all over the world; it is being disaggregated from the value chain. Later on, through organic expansion, as well as mergers and acquisitions, a few giant companies will...