Carbon pricing not enough to help nuclear power
Politically feasible carbon pricing is not likely to provide the long-term revenue needed to support existing or new nuclear power projects. Instead, project-specific activities should be undertaken to keep existing nuclear in operation and to drive investment in new nuclear power plants - with the cost of these activities recovered as a cost of controlling carbon, writes Edward Kee.
Economic analyses of nuclear power projects reflect carbon price revenue, but only as a low-probability upside scenario for equity investors. The benefits, timing, level and certainty of carbon prices will need to change if nuclear power project investors and lenders are to consider carbon price revenue as a key part of project economics.
Carbon prices provide no direct benefit to nuclear power, but increase the cost of fossil fuel electricity in ways that may result in indirect benefits for nuclear power. Higher costs for combustion-based electricity due to carbon prices will make nuclear electricity appear more competitive for traditional electric utilities.