EconPapers    
Economics at your fingertips  
 

Nuclear Power: a Hedge against Uncertain Gas and Carbon Prices?

Fabien Roques (), William Nuttall (), David M Newbery () and Richard de Neufville

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: High fossil fuel prices have rekindled interest in nuclear power. This paper identifies specific nuclear characteristics making it unattractive to merchant generators in liberalised electricity markets, and argues that non-fossil fuel technologies have an overlooked ‘option value’ given fuel and carbon price uncertainty. Stochastic optimisation estimates the company option value of keeping open the choice between nuclear and gas technologies. This option value decreases sharply as the correlation between electricity, gas, and carbon prices rises, casting doubt on whether private investors’ fuel-mix diversification incentives in electricity markets are aligned with the social value of a diverse fuel-mix.

Keywords: Nuclear economics; stochastic optimisation; fuel-mix; diversification. (search for similar items in EconPapers)
JEL-codes: C15 C61 L52 L94 (search for similar items in EconPapers)
Pages: 27
Date: 2005-11
New Economics Papers: this item is included in nep-ene
Note: IO, EPRG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed

Downloads: (external link)
http://www.electricitypolicy.org.uk/pubs/wp/eprg0509.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to www.electricitypolicy.org.uk:80 (No such host is known. )

Related works:
Journal Article: Nuclear Power: A Hedge against Uncertain Gas and Carbon Prices? (2006) Downloads
Working Paper: Nuclear Power: A Hedge against Uncertain Gas and Carbon Prices? (2005) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0555

Access Statistics for this paper

More papers in Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge
Bibliographic data for series maintained by Jake Dyer ().

 
Page updated 2021-04-14
Handle: RePEc:cam:camdae:0555