Nuclear Capacity Auctions

Sven-Olof Fridolfsson and Thomas Tangerås ()

No 892, Working Paper Series from Research Institute of Industrial Economics

Abstract: We propose nuclear capacity auctions as a means to improve the incentives for investing in nuclear power. A properly designed auction would (i) allocate the license to the most efficient bidder; (ii) sell the license if and only if new nuclear power was socially optimal. In particular, capacity auctions open the market for large-scale entry by outside firms. Requiring licensees to sell a share of capacity as virtual power plant contracts increases auction efficiency by softening incumbent producers’ incentive to bid for market power. Our motivating example is Sweden’s recent decision to allow new nuclear power to replace old reactors.

Keywords: Capacity auctions; investments; market power; nuclear power; virtual power plants (search for similar items in EconPapers)
JEL-codes: D44 L12 Q48 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2011-12-15
New Economics Papers: this item is included in nep-ene
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Nuclear Capacity Auctions (2015)
Journal Article: Nuclear Capacity Auctions (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:0892

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