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Nuclear Capacity Auctions

Sven-Olof Fridolfsson and Thomas P. Tangeras

Year: 2015
Volume: Volume 36
Number: Number 3
DOI: 10.5547/01956574.36.3.sfri
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Abstract:
We propose nuclear capacity auctions as a means to correcting the incentives for investing in nuclear power. In particular, capacity auctions open the market for large-scale entry by outside firms. Requiring licensees to sell a share of capacity as virtual power plant contracts increases auction efficiency by mitigating incumbent producers' incentive to bid for market power. A motivating example is Sweden's policy reversal to allow new nuclear power to replace old reactors.



Renewable Electricity Policy and Market Integration

Thomas P. Tangerås

Year: 2015
Volume: Volume 36
Number: Number 4
DOI: 10.5547/01956574.36.4.ttan
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Abstract:
I analyze renewable electricity policy in a multinational electricity market with transmission investment. If national policy makers choose support schemes to maximize domestic welfare, a trade policy motive arises operating independently of any direct benefit of renewable electricity. The model predicts electricity importing (exporting) countries to choose policies which reduce (increase) electricity prices. A narrow pursuit of domestic objectives distorts transmission investment, and thereby market integration, below the efficient level. Distortions cannot be corrected by imposing national renewable targets alone. Instead, subsidies to transmission investment and a harmonization of and reduction in the number of policy instruments can improve welfare.





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