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How to manage a large and flexible nuclear set in a deregulated electricity market from the point of view of social welfare?

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  • Pascal Gourdel

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Maria Lykidi

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

In the case of a large nuclear set (like the French set), nuclear production needs to be flexible to adjust to the predicted evolutions of the energy demmand. Consequently, the dominant position of nuclear in the national energy mix makes it responsible for the overall equilibrium of the electricity system which is directly intertwined with social welfare. In a previous work, we looked at producers own profits (short-term, inter-temporal) considering the equality between supply and demand. Here, we proceed with a full optimization of the social welfare in an identical framework. Theoretically, the optimal production behaviour that maximizes social welfare is characterized by a constant thermal production and a totally flexible nuclear production given that the nuclear capacity is sufficient. Numerically, the significant amount of nuclear capacities compared with thermal capacities in the French electricity market leads to the same "paradoxical" production behaviour. Therefore, we conclude that social optimum is ensured within our model by investing sufficiently in nuclear capacity. The optimal production scheduling determined by the social welfare maximization problem and the optimal inter-temporal production problem are totally opposite.

Suggested Citation

  • Pascal Gourdel & Maria Lykidi, 2014. "How to manage a large and flexible nuclear set in a deregulated electricity market from the point of view of social welfare?," Post-Print halshs-01053480, HAL.
  • Handle: RePEc:hal:journl:halshs-01053480
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01053480
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    References listed on IDEAS

    as
    1. Pascal Gourdel & Maria Lykidi, 2014. "The optimal short-term management of flexible nuclear plants in a competitive electricity system as a case of competition with reservoir," Post-Print halshs-01053474, HAL.
    2. Lauren Pouret & William J. NUTTALL, 2007. "Can Nuclear Power be Flexible?," Working Papers EPRG 0710, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    3. Soledad Arellano, 2004. "Market Power in Mixed Hydro-Thermal Electric," Documentos de Trabajo 187, Centro de Economía Aplicada, Universidad de Chile.
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    Keywords

    electricity power; nuclear power plant; flexibility; nuclear fuel stock; thermal generation; social welfare; total cost minimization;
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