IDEAS home Printed from https://ideas.repec.org/a/eee/rensus/v166y2022ics1364032122004786.html
   My bibliography  Save this article

Estimating the economic costs of nuclear power plant outages in a regulated market using a latent factor model

Author

Listed:
  • Jeong, Minsoo
  • You, Jung S.

Abstract

In this study, we analyze the economic consequences of nuclear power plant outages in a regulated market when information on production costs and pricing rules is hidden through regulations. By using a latent factor model with a market-specific structure, we uncover the hidden supply-side factors and estimate the prospective changes in electricity prices, welfare redistribution, and the increase in carbon emissions through the nuclear plant outage scenario analysis. By analyzing time series data from 2004 to 2018 in South Korea, we find that the one reactor outage at more than the average outage level would result in a reduction of US$ 7.04 million in total consumer surplus in the first 12 months following the outage and would increase greenhouse gas emissions by 697 kilotons, equivalent to an increase in social costs of US$ 33.8 million, in the first 12 months.

Suggested Citation

  • Jeong, Minsoo & You, Jung S., 2022. "Estimating the economic costs of nuclear power plant outages in a regulated market using a latent factor model," Renewable and Sustainable Energy Reviews, Elsevier, vol. 166(C).
    • Handle: RePEc:eee:rensus:v:166:y:2022:i:c:s1364032122004786
    DOI: 10.1016/j.rser.2022.112582
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1364032122004786
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.rser.2022.112582?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Grossi, Luigi & Heim, Sven & Waterson, Michael, 2014. "A vision of the European energy future? The impact of the German response to the Fukushima earthquake," ZEW Discussion Papers 14-051, ZEW - Leibniz Centre for European Economic Research.
    2. Kopytko, Natalie & Perkins, John, 2011. "Climate change, nuclear power, and the adaptation-mitigation dilemma," Energy Policy, Elsevier, vol. 39(1), pages 318-333, January.
    3. repec:aen:journl:eeep3_2_02kunz is not listed on IDEAS
    4. Lucas Davis & Catherine Hausman, 2016. "Market Impacts of a Nuclear Power Plant Closure," American Economic Journal: Applied Economics, American Economic Association, vol. 8(2), pages 92-122, April.
    5. Adler, David B. & Jha, Akshaya & Severnini, Edson, 2020. "Considering the nuclear option: Hidden benefits and social costs of nuclear power in the U.S. since 1970," Resource and Energy Economics, Elsevier, vol. 59(C).
    6. Wealer, B. & Bauer, S. & Hirschhausen, C.v. & Kemfert, C. & Göke, L., 2021. "Investing into third generation nuclear power plants - Review of recent trends and analysis of future investments using Monte Carlo Simulation," Renewable and Sustainable Energy Reviews, Elsevier, vol. 143(C).
    7. Nam, Ilchong & Rothwell, Geoffrey (ed.), 2014. "New Nuclear Power Industry Procurement Markets: International Experiences," KDI Research Monographs, Korea Development Institute (KDI), volume 127, number 201401.
    8. Ali Ahmad, 2021. "Increase in frequency of nuclear power outages due to changing climate," Nature Energy, Nature, vol. 6(7), pages 755-762, July.
    9. Severin Borenstein, 2012. "The Redistributional Impact of Nonlinear Electricity Pricing," American Economic Journal: Economic Policy, American Economic Association, vol. 4(3), pages 56-90, August.
    10. Knapp, Vladimir & Pevec, Dubravko, 2018. "Promises and limitations of nuclear fission energy in combating climate change," Energy Policy, Elsevier, vol. 120(C), pages 94-99.
    11. Berthélemy, Michel & Escobar Rangel, Lina, 2015. "Nuclear reactors' construction costs: The role of lead-time, standardization and technological progress," Energy Policy, Elsevier, vol. 82(C), pages 118-130.
    12. Jenkins, Lisa Martine & Alvarez, Robert & Jordaan, Sarah Marie, 2020. "Unmanaged climate risks to spent fuel from U.S. nuclear power plants: The case of sea-level rise," Energy Policy, Elsevier, vol. 137(C).
    13. Durbin, James & Koopman, Siem Jan, 2012. "Time Series Analysis by State Space Methods," OUP Catalogue, Oxford University Press, edition 2, number 9780199641178.
    14. Davis, Steven J & Lewis, Nathan S. & Shaner, Matthew & Aggarwal, Sonia & Arent, Doug & Azevedo, Inês & Benson, Sally & Bradley, Thomas & Brouwer, Jack & Chiang, Yet-Ming & Clack, Christopher T.M. & Co, 2018. "Net-Zero Emissions Energy Systems," Institute of Transportation Studies, Working Paper Series qt7qv6q35r, Institute of Transportation Studies, UC Davis.
    15. Lovering, Jessica R. & Yip, Arthur & Nordhaus, Ted, 2016. "Historical construction costs of global nuclear power reactors," Energy Policy, Elsevier, vol. 91(C), pages 371-382.
    16. Sovacool, Benjamin K., 2008. "Valuing the greenhouse gas emissions from nuclear power: A critical survey," Energy Policy, Elsevier, vol. 36(8), pages 2940-2953, August.
    17. Kristin Linnerud & Torben K. Mideksa & Gunnar S. Eskeland, 2011. "The Impact of Climate Change on Nuclear Power Supply," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 149-168.
    18. Grossi, Luigi & Heim, Sven & Waterson, Michael, 2017. "The impact of the German response to the Fukushima earthquake," Energy Economics, Elsevier, vol. 66(C), pages 450-465.
    19. SarahM. Jordaan & Afreen Siddiqi & William Kakenmaster & AliceC. Hill, 2019. "The Climate Vulnerabilities of Global Nuclear Power," Global Environmental Politics, MIT Press, vol. 19(4), pages 3-13, November.
    20. Brigitte Knopf & Michael Pahle & Hendrik Kondziella & Fabian Joas & Ottmar Edenhofer & Thomas Bruckner, 2014. "Germany's Nuclear Phase-out: Sensitivities and Impacts on Electricity Prices and CO2 Emissions," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    21. Linares, Pedro & Conchado, Adela, 2013. "The economics of new nuclear power plants in liberalized electricity markets," Energy Economics, Elsevier, vol. 40(S1), pages 119-125.
    22. Beerten, Jef & Laes, Erik & Meskens, Gaston & D'haeseleer, William, 2009. "Greenhouse gas emissions in the nuclear life cycle: A balanced appraisal," Energy Policy, Elsevier, vol. 37(12), pages 5056-5068, December.
    23. Michel Berthélemy & Lina Escobar Rangel, 2015. "Nuclear reactors' construction costs: The role of lead-time, standardization and technological progress," Post-Print hal-01523016, HAL.
    24. Friedrich Kunz and Hannes Weigt, 2014. "Germanys Nuclear Phase Out - A Survey of the Impact since 2011 and Outlook to 2023," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nicolai Lystbæk & Mikkel Gregersen & Hamid Reza Shaker, 2023. "Review of Energy Portfolio Optimization in Energy Markets Considering Flexibility of Power-to-X," Sustainability, MDPI, vol. 15(5), pages 1-17, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wealer, B. & Bauer, S. & Hirschhausen, C.v. & Kemfert, C. & Göke, L., 2021. "Investing into third generation nuclear power plants - Review of recent trends and analysis of future investments using Monte Carlo Simulation," Renewable and Sustainable Energy Reviews, Elsevier, vol. 143(C).
    2. Perrier, Quentin, 2018. "The second French nuclear bet," Energy Economics, Elsevier, vol. 74(C), pages 858-877.
    3. Samadi, Sascha, 2018. "The experience curve theory and its application in the field of electricity generation technologies – A literature review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 82(P3), pages 2346-2364.
    4. Portugal-Pereira, J. & Ferreira, P. & Cunha, J. & Szklo, A. & Schaeffer, R. & Araújo, M., 2018. "Better late than never, but never late is better: Risk assessment of nuclear power construction projects," Energy Policy, Elsevier, vol. 120(C), pages 158-166.
    5. Rinne, Sonja, 2018. "Radioinactive: Are nuclear power plant outages in France contagious to the German electricity price?," CIW Discussion Papers 3/2018, University of Münster, Center for Interdisciplinary Economics (CIW).
    6. Batini, Nicoletta & Di Serio, Mario & Fragetta, Matteo & Melina, Giovanni & Waldron, Anthony, 2022. "Building back better: How big are green spending multipliers?," Ecological Economics, Elsevier, vol. 193(C).
    7. Grace Dehner & Mark K. McBeth & Rae Moss & Irene van Woerden, 2023. "A Zero-Carbon Nuclear Energy Future? Lessons Learned from Perceptions of Climate Change and Nuclear Waste," Energies, MDPI, vol. 16(4), pages 1-16, February.
    8. Sascha Samadi, 2016. "A Review of Factors Influencing the Cost Development of Electricity Generation Technologies," Energies, MDPI, vol. 9(11), pages 1-25, November.
    9. Muellner, Nikolaus & Arnold, Nikolaus & Gufler, Klaus & Kromp, Wolfgang & Renneberg, Wolfgang & Liebert, Wolfgang, 2021. "Nuclear energy - The solution to climate change?," Energy Policy, Elsevier, vol. 155(C).
    10. Elia, A. & Kamidelivand, M. & Rogan, F. & Ó Gallachóir, B., 2021. "Impacts of innovation on renewable energy technology cost reductions," Renewable and Sustainable Energy Reviews, Elsevier, vol. 138(C).
    11. repec:ags:aaea22:335434 is not listed on IDEAS
    12. Grossi, Luigi & Heim, Sven & Waterson, Michael, 2017. "The impact of the German response to the Fukushima earthquake," Energy Economics, Elsevier, vol. 66(C), pages 450-465.
    13. Lovering, Jessica R. & Nordhaus, Ted & Yip, Arthur, 2017. "Apples and oranges: Comparing nuclear construction costs across nations, time periods, and technologies," Energy Policy, Elsevier, vol. 102(C), pages 650-654.
    14. Levi, Peter G. & Pollitt, Michael G., 2015. "Cost trajectories of low carbon electricity generation technologies in the UK: A study of cost uncertainty," Energy Policy, Elsevier, vol. 87(C), pages 48-59.
    15. Gumber, Anurag & Zana, Riccardo & Steffen, Bjarne, 2024. "A global analysis of renewable energy project commissioning timelines," Applied Energy, Elsevier, vol. 358(C).
    16. SarahM. Jordaan & Afreen Siddiqi & William Kakenmaster & AliceC. Hill, 2019. "The Climate Vulnerabilities of Global Nuclear Power," Global Environmental Politics, MIT Press, vol. 19(4), pages 3-13, November.
    17. Linares, Pedro & Conchado, Adela, 2013. "The economics of new nuclear power plants in liberalized electricity markets," Energy Economics, Elsevier, vol. 40(S1), pages 119-125.
    18. Matteo Vagnoli & Francesco Di Maio & Enrico Zio, 2018. "Ensembles of climate change models for risk assessment of nuclear power plants," Journal of Risk and Reliability, , vol. 232(2), pages 185-200, April.
    19. Wyman-Pain, Heather & Bian, Yuankai & Thomas, Cain & Li, Furong, 2018. "The economics of different generation technologies for frequency response provision," Applied Energy, Elsevier, vol. 222(C), pages 554-563.
    20. Gangyang, Zheng & Xianke, Peng & Xiaozhen, Li & Yexi, Kang & Xiangeng, Zhao, 2021. "Research on the standardization strategy of China's nuclear industry," Energy Policy, Elsevier, vol. 155(C).
    21. Brook, Barry W., 2012. "Could nuclear fission energy, etc., solve the greenhouse problem? The affirmative case," Energy Policy, Elsevier, vol. 42(C), pages 4-8.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:rensus:v:166:y:2022:i:c:s1364032122004786. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/600126/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.