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Deregulation and Investment in Generation Capacity: Evidence from Nuclear Power Uprates in the United States

Nuclear power uprates are investments in generation capacity that enable reactors to operate beyond their original power limit. We find that owners of deregulated reactors are more likely to make investment in power uprates. Moreover, after deregulation owners of boiling water reactors are more likely to choose Extended Power Uprates (EPUs) that could add up to 20 percent of the original power, but owners of pressurized water reactors, another type of reactors for which EPUs are more technically challenging, tend to select other types of uprates that add less of reactor power. Deregulation incentivizes reactor owners to pursue profitable investments and propels them to make careful investment decisions more consistent with the technological nature of their plants.

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Energy Specializations: Electricity – Markets and Prices ; Electricity - Storage; Electricity – Distributed Generation; Electricity – Local Distribution; Electricity – Transmission and Network Management; Electricity – Generation Technologies

JEL Codes: L98: Industry Studies: Utilities and Transportation: Government Policy, L51: Economics of Regulation, Q40: Energy: General, Q41: Energy: Demand and Supply; Prices, Q35: Hydrocarbon Resources

Keywords: Deregulation, Power uprate, Investment, Efficiency, Generation capacity, Nuclear energy, Electricity market

DOI: 10.5547/01956574.38.3.zlei

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Published in Volume 38, Number 3 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


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