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Electricity-market price and nuclear power plant shutdown: Evidence from California

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  • Woo, C.K.
  • Ho, T.
  • Zarnikau, J.
  • Olson, A.
  • Jones, R.
  • Chait, M.
  • Horowitz, I.
  • Wang, J.

Abstract

Japan׳s Fukushima nuclear disaster, triggered by the March 11, 2011 earthquake, has led to calls for shutting down existing nuclear plants. To maintain resource adequacy for a grid׳s reliable operation, one option is to expand conventional generation, whose marginal unit is typically fueled by natural-gas. Two timely and relevant questions thus arise for a deregulated wholesale electricity market: (1) what is the likely price increase due to a nuclear plant shutdown? and (2) what can be done to mitigate the price increase? To answer these questions, we perform a regression analysis of a large sample of hourly real-time electricity-market price data from the California Independent System Operator (CAISO) for the 33-month sample period of April 2010–December 2012. Our analysis indicates that the 2013 shutdown of the state׳s San Onofre plant raised the CAISO real-time hourly market prices by $6/MWH to $9/MWH, and that the price increases could have been offset by a combination of demand reduction, increasing solar generation, and increasing wind generation.

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  • Woo, C.K. & Ho, T. & Zarnikau, J. & Olson, A. & Jones, R. & Chait, M. & Horowitz, I. & Wang, J., 2014. "Electricity-market price and nuclear power plant shutdown: Evidence from California," Energy Policy, Elsevier, vol. 73(C), pages 234-244.
    • Handle: RePEc:eee:enepol:v:73:y:2014:i:c:p:234-244
    DOI: 10.1016/j.enpol.2014.05.027
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    5. Woo, C.K. & Milstein, I. & Tishler, A. & Zarnikau, J., 2019. "A wholesale electricity market design sans missing money and price manipulation," Energy Policy, Elsevier, vol. 134(C).
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    17. Woo, C.K. & Olson, A. & Chen, Y. & Moore, J. & Schlag, N. & Ong, A. & Ho, T., 2017. "Does California's CO2 price affect wholesale electricity prices in the Western U.S.A.?," Energy Policy, Elsevier, vol. 110(C), pages 9-19.
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    19. Damien, Paul & Fuentes-García, Ruth & Mena, Ramsés H. & Zarnikau, Jay, 2019. "Impacts of day-ahead versus real-time market prices on wholesale electricity demand in Texas," Energy Economics, Elsevier, vol. 81(C), pages 259-272.

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