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Nuclear Capacity Auctions

Author

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  • Sven-Olof Fridolfsson
  • Thomas P. Tangers

Abstract

We propose nuclear capacity auctions as a means to correcting the incentives for investing in nuclear power. In particular, capacity auctions open the market for large-scale entry by outside firms. Requiring licensees to sell a share of capacity as virtual power plant contracts increases auction efficiency by mitigating incumbent producers’ incentive to bid for market power. A motivating example is Sweden’s policy reversal to allow new nuclear power to replace old reactors.

Suggested Citation

  • Sven-Olof Fridolfsson & Thomas P. Tangers, 2015. "Nuclear Capacity Auctions," The Energy Journal, , vol. 36(3), pages 247-262, July.
  • Handle: RePEc:sae:enejou:v:36:y:2015:i:3:p:247-262
    DOI: 10.5547/01956574.36.3.sfri
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    Keywords

    Capacity auctions; Investments; Market power; Nuclear power; Virtual power plants;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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