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State and federal nuclear support schemes in dynamic electricity market conditions: Insights from NYISO and PJM

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  • Bah, Muhammad Maladoh

    (University of Basel)

Abstract

Since 2017, several U.S. states have put in place out-of-market financial support schemes for nuclear power plants operating in deregulated electricity markets. In late 2021, the federal government announced the introduction of two new support schemes to secure the continued operation of nuclear power plants. This policy paper evaluates the profitability of state subsidized nuclear plants in the NYISO and PJM markets over a five-year period between 2017 and 2021. Results indicate that apart from 2019, nuclear power plants were financially robust, relying solely on market revenues without the need for state support schemes. More importantly, the recent upswing in competitive electricity market prices suggests that additional federal-level support schemes are not economically justified in the current market conditions. I provide several suggestions to reconfigure the support schemes to reflect dynamic market conditions and ensure only vulnerable plants are granted out-of-market support.

Suggested Citation

  • Bah, Muhammad Maladoh, 2023. "State and federal nuclear support schemes in dynamic electricity market conditions: Insights from NYISO and PJM," Working papers 2023/05, Faculty of Business and Economics - University of Basel.
    • Handle: RePEc:bsl:wpaper:2023/05
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    References listed on IDEAS

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    1. Mills, Andrew & Wiser, Ryan & Millstein, Dev & Carvallo, Juan Pablo & Gorman, Will & Seel, Joachim & Jeong, Seongeun, 2021. "The impact of wind, solar, and other factors on the decline in wholesale power prices in the United States," Applied Energy, Elsevier, vol. 283(C).
    2. Haratyk, Geoffrey, 2017. "Early nuclear retirements in deregulated U.S. markets: Causes, implications and policy options," Energy Policy, Elsevier, vol. 110(C), pages 150-166.
    3. Roth, Michael Buchdahl & Jaramillo, Paulina, 2017. "Going nuclear for climate mitigation: An analysis of the cost effectiveness of preserving existing U.S. nuclear power plants as a carbon avoidance strategy," Energy, Elsevier, vol. 131(C), pages 67-77.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    nuclear support schemes; electricity market; excess profit; NYISO; PJM;
    All these keywords.

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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