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Performance-Based Pricing for Nucleaer Power Plants

Yeon-Koo Che and Geoffrey Rothwell

Year: 1995
Volume: Volume16
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol16-No4-3
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Abstract:
State public utility commissions in the United States have implemented incentive regulations to promote the operating efficiency of nuclear power plants. This paper surveys these incentive programs, focusing on the perfomance-based pricing approach. Our findings suggest that the performance-based price should be set between the electric utility's avoided cost and the marginal cost of generating electricity at the nuclear power plant.



A Real Options Approach to Evaluating New Nuclear Power Plants

Geoffrey Rothwell

Year: 2006
Volume: Volume 27
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol27-No1-3
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Abstract:
Although nuclear power plants are being built in Asia, they have not been ordered in the U.S. since the 1979 accident at Three Mile Island. For many reasons, new attention is being given to light water reactors. Currently- operating nuclear power plants in the U.S. were built under rate-of-return regulation. Now, new nuclear power plants must compete in power markets. This paper models the net present value of building an Advanced Boiling Water Reactor in Texas using a real options approach to determine the risk premium associated with net revenue uncertainty. It finds that a cost of about $1,200 per kilowatt-electric (including financing costs) for advanced light water nuclear power plants could trigger new orders. On the other hand, owner-operators might be willing to pay higher prices for nuclear megawatts if methods for mitigating price, cost, and capacity risk through contracts or real assets could be found.





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