Edward Kee reports that there are 69 reactors under construction in the world today - the largest number in 25 years - but only one is in a liberalized electricity market. In the U.S., two nuclear power plants operating in liberalized electricity markets recently closed for financial reasons. Other operating nuclear power plants in liberalized electricity markets face similar issues and may also retire early. Moreover, all new nuclear power projects in U.S. liberalized electricity markets are on hold or have been cancelled.
The UK electricity market caused financial problems for British Energy prior to its sale to EDF. The difficulty in developing a new nuclear power project in the UK electricity market is demonstrated by the complex Electricity Market Reform program and controversial incentive package for Hinkley Point C. Are liberalized electricity markets incompatible with nuclear power?
The electricity industry has two competing models. The traditional model has vertically integrated monopolies subject to economic regulation or government ownership. The new model has a de-integrated and restructured electricity industry with a liberalized electricity market. Retail electricity rates in such market regions were both higher and more closely linked to natural gas prices.
These two models are based on very different economic principles. In the traditional model, regulated and government utilities plan and build a portfolio of generation units intended to minimize long-term total cost of the electricity system. In the new model, liberalized electricity markets use spot-market prices to manage system dispatch to minimize short-term marginal cost of wholesale electricity.
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Managed & Built by I2M Consulting, LLC | © 2010-
Managed & Built by I2M Consulting, LLC | © 2010-