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Financing the Nuclear Renaissance

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Abstract

This paper considers the key economic risks associated with nuclear power. The authors observe that the bulk of the risks of a nuclear power station project fall during the roughly five year period of plant construction. This window of risk follows a lengthy siting process and comes before power station operations lasting up to sixty years. As a consequence of the nature of the economic risks, operational nuclear power plants are more attractive targets for initial investment than new build projects. The authors suggest that the first glimmers of a US nuclear renaissance were visible in 2000 when dramatically higher prices were achieved for second-hand nuclear power plants following a period of depressed prices in the 1990s. The paper closes with a consideration of the prospects for nuclear new build in both Europe and the United States and the key financial and economic factors that could drive such developments differently in each case.
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Suggested Citation

  • WJ Nuttall & S Taylor, 2008. "Financing the Nuclear Renaissance," Working Papers EPRG 0814, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    • Handle: RePEc:enp:wpaper:eprg0814
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    References listed on IDEAS

    as
    1. Simon Taylor, 2010. "Nuclear Power and Deregulated Electricity Markets: Lessons from British Energy," Chapters, in: François Lévêque & Jean-Michel Glachant & Julián Barquín & Christian von Hirschhausen & Franziska Ho (ed.), Security of Energy Supply in Europe, chapter 7, Edward Elgar Publishing.
    2. Fabien A. Roques & William J. Nuttall & David M. Newbery & Richard de Neufville & Stephen Connors, 2006. "Nuclear Power: A Hedge against Uncertain Gas and Carbon Prices?," The Energy Journal, , vol. 27(4), pages 1-24, October.
    3. Gupta, Nainish K. & Thompson, Herbert G., 1999. "The Market Value of Nuclear Power," The Electricity Journal, Elsevier, vol. 12(8), pages 38-45, October.
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    Cited by:

    1. D. Finon & F. Roques, 2008. "Financing Arrangements and Industrial Organisation for New Nuclear Build in Electricity Markets," Competition and Regulation in Network Industries, Intersentia, vol. 9(3), pages 247-282, September.
    2. Jewell, Jessica, 2011. "A nuclear-powered North Africa: Just a desert mirage or is there something on the horizon?," Energy Policy, Elsevier, vol. 39(8), pages 4445-4457, August.
    3. 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.
    4. Jewell, Jessica, 2011. "Ready for nuclear energy?: An assessment of capacities and motivations for launching new national nuclear power programs," Energy Policy, Elsevier, vol. 39(3), pages 1041-1055, March.
    5. 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.
    6. Kessides, Ioannis N., 2012. "The future of the Nuclear industry reconsidered : risks, uncertainties, and continued potential," Policy Research Working Paper Series 6112, The World Bank.

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    More about this item

    Keywords

    Finance; Nuclear Power; Electricity Generation; Economic Risk; Energy Policy;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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