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Financing arrangements and industrial organisation for new nuclear build in electricity markets

Dominique Finon and Fabien Roques ()

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

Abstract: The paper studies how risks specific to a nuclear power investment in liberalised markets – regulatory, construction, operation and market risks – can be mitigated or transferred away from the plant investor through different contractual and organisational arrangements. It argues that significant risk transfers onto governments, consumers, and, vendors are likely to be needed to make nuclear power attractive to investors in liberalised markets, at least for the first batch of new reactors. These different types of risk allocations will in turn induce different investment financing choices. Four case studies of recent new nuclear projects illustrate the consistent combinations of contractual, organisational, and financial arrangements for new nuclear build depending on the industrial organisation, market position of the company and the institutional environment prevailing in different countries. The most likely financing structure will likely be based on corporate financing or some form of hybrid arrangement backed by the balance sheet of one or a consortium of large vertically integrated companies.

Keywords: electricity market; nuclear; financing (search for similar items in EconPapers)
JEL-codes: D24 G3 L38 N7 Q48 (search for similar items in EconPapers)
Date: 2008-09
New Economics Papers: this item is included in nep-ene
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Related works:
Journal Article: Financing Arrangements and Industrial Organisation for New Nuclear Build in Electricity Markets (2008)
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