The suppressive effect of renewables on nuclear energy: implications for OECD countries

Abstract

This paper studies the impact of renewables on nuclear energy consumption in 15 OECD countries over the period 1991–2015. We find that the share of renewables (in total electricity production) has negative long-run effects on both nuclear energy consumption per capita and the share of nuclear energy (in total electricity production) while controlling for real GDP per capita, the proportion of carbon emissions from electricity production, and energy dependency. By taking proper account of both cross-section dependence and heterogeneity in the error-correction models, we find that a one percentage point increase in the share of renewables is associated with a 1.8% decrease in nuclear energy consumption per capita and a 2.7% decrease in the share of nuclear energy. Two main implications emerge. First, our results indicate a suppressive effect of renewables on nuclear energy in electric power generation, raising the possibility of restraining installed nuclear capacity through sustained penetration of renewables in OECD countries. Second, our results suggest the limited ability to replace nuclear energy with renewables in electric power generation. As a consequence, raising the share of renewables by rapidly deploying renewable energy technologies on a massive scale may not lead to the intended outcome of greatly reducing the dependence on nuclear energy in OECD countries.