Nuclear Power in Competitive Electricity Markets

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EXECUTIVE SUMMARY

Electricity has tradit state-owned facilities, or state-protected monopolies with regulated pricing. More recently, however, several countries have deregulated their electricity markets, thus opening the door to competitive supply and pricing. Deregulation of electricity markets is a trend that is expected to be followed by many countries. This can have a significant impact on the future of nuclear power programmes, particularly since these have been to some extent subsidised programmes, or have been carried out by utilities that were either state-owned or had a monopoly on electricity supply, in most OECD countries.
Recognising the importance of deregulation in the electricity sector for nuclear power, the NEA Committee for Technical and Economic Studies on Nuclear Energy Development and the Fuel Cycle (NDC) conducted a study that reviews and analyses its potential impact on existing and future nuclear power plants. While this report does not contain recommendations or solutions that the nuclear power community can adopt in order to deal effectively with electricity market deregulation, it is expected to be useful for policy makers and nuclear generators in identifying potential impacts on their particular situations and in planning for the future.
The report provides an overview of the status of electricity market deregulation, briefly reviews related aspects of privatisation of electricity supply, and examines generic and specific issues concerning nuclear power in a deregulated market. In a deregulated, economically competitive market, power
generators want to invest in profitable options that have relatively well-known technical, economic and political risks. In such a market, nuclear power might be at a disadvantage, since it may be considered to be encumbered with political risks (such as those arising from public opposition), technical risks related to waste disposal issues, and economic risks associated with liabilities for eventual decommissioning and dismantling of nuclear power plants. On the other hand,
nuclear does have environmental advantages, in particular practically zero emissions of greenhouse gases, particulate and other atmospheric pollutants. All of these nuclear-specific characteristics, both positive and negative, may be important in assessing the competitiveness of nuclear power in a deregulated electricity market. High capital cost, long construction time and need for operation at high capacity factors are relevant to nuclear power, but they apply to other power technologies as well.