Strategic investment decisions under the nuclear power debate in Belgium
Julia de Frutos Cachorro (),
Gwen Willeghems () and
Jeroen Buysse ()
Additional contact information
Julia de Frutos Cachorro: Universitat de Barcelona
Gwen Willeghems: VITO - EnergyVille
Jeroen Buysse: Ghent University
No 2018/383, UB Economics Working Papers from Universitat de Barcelona, Facultat d'Economia i Empresa, UB School of Economics
In view of the current nuclear power debate in Belgium, we analyze how uncertainty about a nuclear phase-out, coupled with the implementation of renewable energy subsidies and nuclear taxes, affects investment capacity and productivity decisions by Belgian electricity suppliers. To achieve this goal, considering the key characteristics of the Belgian market, we build a Stackelberg closed-loop (two-stage) equilibrium model in which investment decisions are made in a first stage under uncertainty regarding a nuclear phase-out, and productivity decisions are subsequently made in a second stage in a certainty environment. Our analysis indicates that, regardless of subsidies, an increase in the probability of nuclear license extension results in lower levels of investment - primarily in renewable energy -, lower total production and a higher electricity price. We also show that the implementation of renewable energy subsidies reduces the effect of an increase in probability of nuclear license extension on producer’s decisions regarding expanded capacity and on total profits in the market.
Keywords: Electricity market; capacity investment decisions; stackelberg-based model; closed-loop; uncertainty nuclear production; renewable energy subsidies (search for similar items in EconPapers)
JEL-codes: C72 L10 L94 Q40 Q48 (search for similar items in EconPapers)
Pages: 56 pages
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ewp:wpaper:383web
Access Statistics for this paper
More papers in UB Economics Working Papers from Universitat de Barcelona, Facultat d'Economia i Empresa, UB School of Economics Av. Diagonal 690, 08034 Barcelona. Contact information at EDIRC.
Bibliographic data for series maintained by UB School of Economics ().