The Price and Emissions Effects of Extending Nuclear Lifetimes: Evidence from Spain

As Spain approaches the first scheduled nuclear retirements — most notably, Almaraz in 2027 — the debate over the implications of delaying the nuclear phase-out has reopened. This paper uses detailed simulations of the Iberian electricity market to assess the consequences of postponing Almaraz’s closure on wholesale electricity prices, renewable and storage profitability, and power-sector CO2 emissions. We test the robustness of our findings to alternative investment targets, electricity demand paths, and gas marginal costs. We caution against a purely static assessment: while extending Almaraz, holding everything else equal, lowers prices and emissions by displacing gas, it also depresses renewables’ captured prices and increases curtailment, weakening incentives to invest in renewables and storage. If the investment response is large enough, a delayed nuclear phase-out may ultimately lead to higher prices and higher emissions. This article was prepared as the Presidential Address for my term as President of the Spanish Economic Association (2023–2024). I thank Lorenzo Cattabriga, à lvaro Oballe, Elena Parra for their outstanding research support. Fabra has benefited from generous funding by the European Union (ERC grant \textit{ENERGY-IN-TRANSITION}, 101142583). At the time of writing, Natalia Fabra is an independent board member of Redeia. Views and opinions expressed are, however, those of the author only and do not necessarily reflect those of the European Research Council or Redeia. Neither of them can be held responsible for the results reported in this paper. The author declares that this work has been carried out independently, and that she has no financial or personal conflicts of interest that could have influenced the findings reported in this paper.