The Effects of Nuclear Power Investments in Real-Time Pricing Framework

Abstract

In this chapter we analyze the potential impact of increase in nuclear power capacity on; the need for other technology capacities; on the price of electricity; on the demand for electricity; and on CO2 emissions. Based on the decisions made by the Finnish government, nuclear power production is going to increase in the Nordic power market in the future. We use the Real-Time Price accounting simulation model in analyzing the effects. We show that due to an outward shift of the supply curve the prices are going to decrease. As a result of this, the total energy demand increases. But the generation structure changes so that the share of mid-merit technologies decreases. As a consequence emissions decrease significantly. Interestingly, decrease in emission is strengthened as the demand becomes more elastic and also with an increase in the share of customers using Real-Time price-based contracts. This confirms the argument of the importance of Real-Time Pricing and price-sensitive demand in reaching the EU-set targets of mitigation in greenhouse gases.KeywordsDiscount RateMarginal UtilityDemand ElasticityFlat RateSocial Discount RateThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.