European energy transition: Decomposing the performance of nuclear power

Abstract

The quest for safe energy in the EU has increasingly led to a policy of zero nuclear power and a shift towards renewable sources. The phasing out of nuclear power is being carefully undertaken, so as not create negative externalities, even though not all countries are ready to make this move, and despite the valuable role nuclear energy can play in backing up intermittent renewables. This paper examines the transition towards carbon-free electrification through the interactions between the various electricity sources, using the Harmonised Index of Consumer Prices and carbon dioxide emissions in countries with nuclear power generation in the European Union and Switzerland. Monthly data, from January 2014 to December 2018 was analysed by means of an Autoregressive Distributed Lag model using the Driscoll and Kraay estimator with fixed effects. This approach allowed the electricity generation processes of the selected countries to be analysed, as well as the long- and short-run impacts. Our findings suggest that nuclear energy can be effective in accommodating renewable electricity into these systems, whereas using fossil generation to back up renewable sources leads to higher prices for consumers.