Financing Arrangements and Industrial Organisation for New Nuclear Build in Electricity Markets
AbstractThe paper studies how the risks specific to a nuclear power investment in liberalised markets - regulatory, construction, operation and market risks - can be mitigated or transferred away from the plant investor through different contractual and organisational arrangements. It argues that at least for the first new reactors significant risk transfers onto governments, consumers, and, vendors are likely to be needed to make nuclear power attractive to investors in liberalised markets. These different types of risk allocations will in turn induce different investment financing choices. Four case studies of recent new nuclear projects illustrate the alternative consistent combinations of contractual, organization, and financial arrangements for new nuclear build depending on the industrial organisation, the market position of the company and the institutional environment prevailing in different countries. The most likely financing structure will likely be based on corporate financing or some form of hybrid arrangement backed by the balance sheet of one or a consortium of large vertically integrated companies.
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Bibliographic InfoArticle provided by Intersentia in its journal Competition and Regulation in Network Industries (CRNI).
Volume (Year): 9 (2008)
Issue (Month): 3 (September)
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Web page: http://www.crninet.com/
electricity market; risk; nuclear; investment;
Other versions of this item:
- Finon, D. & Roques, F., 2008. "Financing arrangements and industrial organisation for new nuclear build in electricity markets," Cambridge Working Papers in Economics 0850, Faculty of Economics, University of Cambridge.
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- G3 - Financial Economics - - Corporate Finance and Governance
- L38 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Policy
- N7 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
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