Isaac Scientific Publishing

International Journal of Power and Energy Research

Promoting Nuclear Energy: Market Pricing or Regulated Tariffs?

Download PDF (382.9 KB) PP. 81 - 92 Pub. Date: July 25, 2017

DOI: 10.22606/ijper.2017.12001

Author(s)

  • Jacques Percebois*
    University of Montpellier (UMR CNRS Art-Dev), Climate Economics Chair (Paris Dauphine University), Faculty of Economics, CS 79606, 34960 Montpellier cedex2, France

Abstract

In Europe, the ability for nuclear power to compete in the energy market is undermined by two interconnected issues: a scheme of guaranteed purchase prices for renewable energy sources (wind and solar) and very low spot market prices. A feed-in tariffs system increases costs to end-users and moreover prompts decreases in the electricity price on the wholesale market. Low spot electricity prices jeopardize conventional power investments, particularly in nuclear energy. Consequently, to redress the balance between nuclear and renewable energy, it is necessary to cut subsidies for renewables and/or to help the nuclear sector through an arrangement, such as “Contract for Differences”, employed in the United Kingdom. Such a mechanism may guarantee profitability of nuclear investments in the future. This paper presents, in the introduction [1], the specificity of the French electricity sector; it analyses in a second step some “perverse effects” due to the “feed-in tariffs” mechanism implemented in the European Union, particularly in France because of the system of regulated prices for the end-user [2] and presents then some suggested solutions for restoring the competitiveness of nuclear energy, which is an important goal for France [3].

Keywords

Electricity market, nuclear energy, renewable energies, energy subsidies, energy regulation, capacity market

References

[1] S. Bode and H.M. Groscurth, “The Effect of the German Renewable Energy Act (EEG) on the electricity price”, HWWA Discussion Paper (348), 25 p, 2006.

[2] J. Neubarth, O. Woll, C. Weber, and M. Gerecht, “Influence of Wind Electricity Generation on Spot Prices”, Energiewirtschaftliche (56), pp. 42–45, 2006.

[3] F. Sensfuss, M. Ragwitz, and M. Genoese, “The merit-order effect: A detailed analysis of the price effect of renewable electricity generation on spot market prices in Germany” Energy Policy, (36), pp. 3086-3094, 2008.

[4] H. Weigt “Germany’s Wind Energy: the potential for fossil capacity replacement and cost saving”, Applied Energy, 86, pp. 1857-1863, 2008.

[5] M. Nicolosi,and M. Fürsch, “The impact of an increasing share of RES-E on the conventional power market - The example of Germany”, Zeitschrift für Energiewirtschaft (33), pp. 246–254, 2009.

[6] J. Munksgaard,and P.E. Morthorst, “Wind power in the Danish liberalised power market; Policy measures, price impact and investor incentives”, Energy Policy (36), pp. 3940–3947, 2008.

[7] T. Jonsson, P. Pinson, and H. Madsen, “On the market impact of wind energy forecasts”, Energy Economics, 32(2), pp. 313-320, 2010.

[8] A. O’Mahoney and E. Denny, “The merit order effect of wind generation in the Irish electricity market”, Proceedings of the 30th USAEE/IAEE,MPRA, Washington D.C., October, 14 p, 2011.

[9] G. Saenz de Miera, D.G. Rio, and I. Vizcaino, “Analysing the impact of renewable electricity support scheme on power prices: the case of wind electricity in Spain”, Energy Policy, vol. 36(9), pp. 3345-3359, 2008.

[10] F. Benhmad, and J. Percebois,”Wind power feed-in impact on electricity prices in Germany 2009-2013”, The European Journal of Comparative Economics, Vol. 13, no. 1, pp. 81-96, 2016.

[11] S. Phan and F. Roques, “Is the depressive effect on renewable on power prices contagious? A cross border econometric analysis”, CEEM Working Paper 2015-16, European Electricity Market Chair, Paris Dauphine University, 25 p, 2015.

[12] B. Rivard and A. Yatchew, “Integration of Renewables into the Ontario Electricity System”, The Energy Journal, 37, pp. 221-242, 2016.

[13] J. Percebois, “The French Electricity Market: Competition, Nuclear Rent and Price Regulation” chapter 3 in F. Sioshansi (Editor) “Evolution of Global Electricity Markets”, Elsevier, June, 2013.

[14] Cour des Comptes “Le co?t de production de l’électricité nucléaire” (communication à la Commission d’Enquête de l’Assemblée Nationale,Paris, 26 May, 2014.

[15] V. Chari and R.J. Weber “How the US Treasury should auction its Debt?”, Federal Bank of Minneapolis Quarterly Review, Fall, vol 16, no.4, pp. 3-12, 1992.

[16] I.E.A. (International Energy Agency) “World Energy Outlook”, Paris, 2014.

[17] OECD-NEA “Nuclear Energy and Renewables; System Effects in Low-carbon Electricity”, Paris, 2012.

[18] M. Buchsteeg, S. Spiecker and C. Weber, Impact of Coordinated Capacity Mechanisms on the European Power Markets, House of Energy Markets and Finance, HEMF Working Paper no. 01, January, 37 p, 2017.