Open AccessEconomic Solutions to Nuclear Energy's Financial Challenges
Author(s) -
Zachary Robock
Publication year - 2016
Publication title -
michigan journal of environmental and administrative law/michigan journal of environmental and administration law
Language(s) - English
Resource type - Journals
eISSN - 2375-6284
pISSN - 2375-6276
DOI - 10.36640/mjeal.5.2.economic
Subject(s) - nuclear power , cost of electricity by source , revenue , capital cost , business , cost of capital , environmental economics , finance , offset (computer science) , electricity generation , economics , industrial organization , power (physics) , computer science , microeconomics , ecology , physics , macroeconomics , quantum mechanics , programming language , biology , profit (economics)
This Note presents a legal, economic, and regulatory roadmap to drive long-term innovation in sustainable energy generation. Next-generation nuclear power, which fundamentally mitigates many safety and nuclear waste issues, is the focus of this Note; however, the economic concepts can be applied to encourage solar, wind, advanced battery, and other sustainable technologies with high upfront costs and low long-term variable costs. Advanced nuclear energy generation is economically competitive on a long-term levelized cost basis, but suffers from a timing issue—a large amount of capital is needed upfront, with repayment over several decades, during which time significant capital costs can accrue (e.g., compounding interest, often at unfavorably high interest rates). This Note offers solutions to offset capital costs in both regulated and deregulated energy markets, including tools to accelerate recognition of future revenue and to reduce interest rates.