Uncovering Displacement between Nuclear and Renewable Electricity Generation for G7 Countries by Novel Wavelet-Based Methods

Abstract

ABSTRACT Under the pressure of climate-related issues, importance of clean electricity generation (EG) has been developing in ensuring sustainable environment. Accordingly, countries have been trying to increase clean EG. Although increasing clean EG is important, it is also critical that clean EG alternatives should not cause displacement. Otherwise, there may not be certain progress in stimulating clean EG. So, this study aims to investigate displacement between nuclear and renewable EG types. In this context, the study considers four clean EG sources (i.e. nuclear, hydro, solar, and wind), analyzes G7 countries, uses high-frequency daily data between 1 January 2019 to 30 December 2023, applies novel Wavelet Local Multiple Correlation (WLMC) method as the main model, and performs Wavelet Transform Coherence (WTC) for the robustness check. The study defines that (i) hydro and wind EG have a displacement (supporting) effect on nuclear EG at short (long) term; (ii) solar EG has a supporting (displacement) effect on nuclear EG at short (long) term; (iii) the most critical EG source is nuclear for France and United States and hydro for Great Britain and Japan; (iv) the WTC method reveals the robustness. The study determines that renewable EG has a displacement (supporting) effect on nuclear EG in short (long) term. Therefore, there are certain conflict between nuclear and renewable EG in the short term, whereas they support each other in the long term. Thus, there is a need for comprehensive and balanced energy transition policy so that choices should not cause a displacement among alternatives.