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Exploring investment potential in a context of nuclear phase-out uncertainty : perfect vs. imperfect electricity markets

Julia de Frutos Cachorro, Gwen Willeghems and Jeroen Buysse (UGent)
(2020) ENERGY POLICY. 144.
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Abstract
In view of the ongoing nuclear power debate in Europe, we analyze how uncertainty about a nuclear phaseout affects investment capacity decisions by Belgian electricity suppliers depending on the type of market structure considered. To achieve this goal, we build a structural model and solve it by using game-theoretic and optimization approaches, in order to consider the different types of market structure, namely oligopoly (simplified to a duopoly in this case), and the two extremes of the competition spectrum, i.e., monopoly and perfect competition. We show that higher levels of investment in new electricity generation capacity are reached with decreasing probability of nuclear license extension and/or with higher levels of competition in the market. Moreover, investments in perfectly competitive markets are less influenced by changes in the probability of future nuclear license extension, resulting in a more stable long-term investment climate. However, the consideration of possible changes in market structure and gradual nuclear phase-out is crucial in order to not overestimate investment potential in Belgium.
Keywords
Generation capacity investments, Electricity markets, Nuclear phase-out uncertainty, Level of market competition, EQUILIBRIUM, CAPACITY

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MLA
de Frutos Cachorro, Julia, et al. “Exploring Investment Potential in a Context of Nuclear Phase-out Uncertainty : Perfect vs. Imperfect Electricity Markets.” ENERGY POLICY, vol. 144, 2020, doi:10.1016/j.enpol.2020.111640.
APA
de Frutos Cachorro, J., Willeghems, G., & Buysse, J. (2020). Exploring investment potential in a context of nuclear phase-out uncertainty : perfect vs. imperfect electricity markets. ENERGY POLICY, 144. https://doi.org/10.1016/j.enpol.2020.111640
Chicago author-date
Frutos Cachorro, Julia de, Gwen Willeghems, and Jeroen Buysse. 2020. “Exploring Investment Potential in a Context of Nuclear Phase-out Uncertainty : Perfect vs. Imperfect Electricity Markets.” ENERGY POLICY 144. https://doi.org/10.1016/j.enpol.2020.111640.
Chicago author-date (all authors)
de Frutos Cachorro, Julia, Gwen Willeghems, and Jeroen Buysse. 2020. “Exploring Investment Potential in a Context of Nuclear Phase-out Uncertainty : Perfect vs. Imperfect Electricity Markets.” ENERGY POLICY 144. doi:10.1016/j.enpol.2020.111640.
Vancouver
1.
de Frutos Cachorro J, Willeghems G, Buysse J. Exploring investment potential in a context of nuclear phase-out uncertainty : perfect vs. imperfect electricity markets. ENERGY POLICY. 2020;144.
IEEE
[1]
J. de Frutos Cachorro, G. Willeghems, and J. Buysse, “Exploring investment potential in a context of nuclear phase-out uncertainty : perfect vs. imperfect electricity markets,” ENERGY POLICY, vol. 144, 2020.
@article{8718504,
  abstract     = {{In view of the ongoing nuclear power debate in Europe, we analyze how uncertainty about a nuclear phaseout affects investment capacity decisions by Belgian electricity suppliers depending on the type of market structure considered. To achieve this goal, we build a structural model and solve it by using game-theoretic and optimization approaches, in order to consider the different types of market structure, namely oligopoly (simplified to a duopoly in this case), and the two extremes of the competition spectrum, i.e., monopoly and perfect competition. We show that higher levels of investment in new electricity generation capacity are reached with decreasing probability of nuclear license extension and/or with higher levels of competition in the market. Moreover, investments in perfectly competitive markets are less influenced by changes in the probability of future nuclear license extension, resulting in a more stable long-term investment climate. However, the consideration of possible changes in market structure and gradual nuclear phase-out is crucial in order to not overestimate investment potential in Belgium.}},
  articleno    = {{111640}},
  author       = {{de Frutos Cachorro, Julia and Willeghems, Gwen and Buysse, Jeroen}},
  issn         = {{0301-4215}},
  journal      = {{ENERGY POLICY}},
  keywords     = {{Generation capacity investments,Electricity markets,Nuclear phase-out uncertainty,Level of market competition,EQUILIBRIUM,CAPACITY}},
  language     = {{eng}},
  pages        = {{15}},
  title        = {{Exploring investment potential in a context of nuclear phase-out uncertainty : perfect vs. imperfect electricity markets}},
  url          = {{http://doi.org/10.1016/j.enpol.2020.111640}},
  volume       = {{144}},
  year         = {{2020}},
}
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