Effect of Depreciation Method for Long-Term Tangible Assets on Sustainable Management: From a Nuclear Power Generation Cost Perspective under the Nuclear Phase-Out Policy

SungSig Bang and SangYun Park
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SungSig Bang: Department of Business and Technology Management, Korea Advanced Institute of Science and Technology, 291 Daehak-ro, Yuseong-gu, Daejeon 34141, Korea
SangYun Park: Department of Business Administration, Pai Chai University, 155-40 Baejae-ro, Seo-Gu, Daejeon 35345, Korea

Sustainability, 2021, vol. 13, issue 9, 1-15

Abstract: The Korean Government has been implementing a nuclear phase-out policy since 2017. Nuclear power plants accounted for 30.0% of the total power generation in 2016; this figure fell to 25.9% at the end of 2019, and the average Capacity Factor (CF) of a nuclear power plant approximately dropped from 89.1% to 69.2%. The nuclear phase-out policy presents severe consequences for the sustainable management of the nuclear power industry. Accordingly, the purpose of this study is to analyze the effect of a decrease in the nuclear capacity factor under the nuclear phase-out policy on the depreciation cost per unit using the Straight-Line Method (SLM) and Decelerated Depreciation Method (DDM) and to provide recommendations from a sustainable management perspective. The results show that the decrease in CF of nuclear power plants has a negative impact on sustainable development of the nuclear power industry. DDM is more beneficial than the SLM during this initial stage of depreciation under the nuclear phase-out policy. In addition, in the early stages of projects or immediately after attracting large-scale investments, DDM can offer more positive signs for stockholders by calculating a smaller net loss or a higher net profit.

Keywords: nuclear phase-out policy; sustainable management; depreciation method; decelerated depreciation method; nuclear power; generation cost; long-term tangible assets (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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