nuclear economics

What Killed Nuclear Energy and Why it Matters

February 14, 2021

 

During the height of the pandemic in 2020, Edward Kee took the time to write a book on the failure of the nuclear power market, how nuclear energy is the most sensible energy alternative, and what market failure means for this industry.

The biggest threat faced by nuclear power is from a market approach to the electricity industry. Electricity industry reforms have led to the early closure of existing nuclear power plants and stopped new nuclear power development.

In the US, 6,778 MWe of operating nuclear power plant capacity was closed early between 2013 and 2020, an additional 9,162 MWe of operating nuclear power plant capacity is scheduled to close early by the end of 2025, and more US merchant nuclear plants face financial issues that may lead them to close early.

In the market approach to electricity, short-term electricity market prices set the value of commodity electricity, electricity prices define power plant value, and private companies develop and own power plants based on financial returns. This market approach leads to less nuclear power, with the loss of the considerable public benefits that nuclear power provides.

Economists call this market failure.

This book includes information on the nuclear power and electricity industries, market failure in the nuclear power industry, and some ideas about resolving this market failure.

 

Key points covered in this book include:

  • Why nuclear power matters
  • Market failure
  • Nuclear power in the real world

 

Find the book, Market Failure, Market-Based Electricity is Killing Nuclear Power, on Amazon.com. 

 

The Problem with Renewable Energy Subsidies

September 29, 2020

 

Edward Kee shares news on the current nuclear energy situation in the US with insights on the deregulated electricity market and the energy subsidy policy.

Government energy subsidies are standing in the way of a clean US electricity system — and US nuclear.

Nuclear power in the United States is struggling, with well-maintained plants closing early and few new projects in the works.  At the heart of these struggles lies a failed gamble: regulators and policy makers bet that market forces in de-regulated electricity markets would lead to the electricity sector that best served the needs of society.

Sadly, deregulated electricity markets have fallen well short of this target.  When markets fail, economic theory recommends prudent regulation. Instead, we have US energy subsidy policy, a poor replacement.

The Logic of Energy Subsidies

Energy subsidies are intended to steer markets away from a course considered bad for society. During the early years of a technology’s commercialization, subsidies are often used to increase investment and development, as well as to protect nascent industries from competition. Starting in the Carter administration with the creation of the Department of Energy, support for alternative fuel, and later renewable energy, often had this second goal in mind. Any technology that could diminish US reliance on imported oil had value, over and above its costs to consumers. It was in the best interests of the US to support these industries and help them develop.[1]

 

Points covered in this article include:

  • Problems with energy subsidies
  • Closing nuclear plants
  • Phasing out subsidies for fossil fuels

 

Read the full article, Time to rethink renewable subsidies, on NuclearEconomics.com

 

Will a Regulated Asset Base Model Work for a New Nuclear Power Plant?

December 11, 2019

Edward Kees provides the commentary from consultation on the Regulated Asset Base (RAB) model for new nuclear power plant investment in Great Britain.

The challenges of delivering new nuclear power plant (NPP) investment in the reformed electricity industry in Great Britain are significant and there is no simple or easy approach to resolve those challenges.
The RAB model may be a useful tool if properly developed and implemented, but:

-Is complex and may be difficult to implement;

-May not clearly reflect the objectives for the British nuclear power industry;

-May not be relevant without a broader review and/or re-opening of the overall approach to the electricity industry structure and electricity market approach in Great Britain; and

-May not deliver desired new NPP investment, or may only deliver new NPP investment with EdF and/or other State-Owned Enterprises (SOEs), such as CGN from China.

We provide a response to the Consultation questions, as context for later sections of this Commentary that describe some issues that must be addressed to attract new NPP investment.

 

Read the full article, #30 – UK RAB Model, on the Nuclear Economics website.