Financing arrangements and industrial organisation for new nuclear build in electricity markets
AbstractThe paper studies how 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 significant risk transfers onto governments, consumers, and, vendors are likely to be needed to make nuclear power attractive to investors in liberalised markets, at least for the first batch of new reactors. These different types of risk allocations will in turn induce different investment financing choices. Four case studies of recent new nuclear projects illustrate the consistent combinations of contractual, organisational, and financial arrangements for new nuclear build depending on the industrial organisation, 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 InfoPaper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0850.
Date of creation: Sep 2008
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Web page: http://www.econ.cam.ac.uk/index.htm
electricity market; nuclear; financing;
Other versions of this item:
- D. Finon & F. Roques, 2008. "Financing Arrangements and Industrial Organisation for New Nuclear Build in Electricity Markets," Competition and Regulation in Network Industries, Intersentia, vol. 9(3), pages 247-282, September.
- 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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