Original scientific paper
FROM MARKET UNCERTAINTY TO POLICY UNCERTAINTY FOR INVESTMENT IN POWER GENERATION: REAL OPTIONS FOR NPP ON ELECTRICITY MARKET
ŽELJKO TOMŠIĆ
orcid.org/0000-0002-4948-964X
; University of Zagreb Faculty of Electrical Engineering and Computing Department of Energy and Power Systems
Abstract
In the electricity sector, market participants must make decisions about
capacity choice in a situation of radical uncertainty about future market conditions.
Sector is characterized by non-storability and periodic and stochastic demand
fluctuations. Capacity determination is a decision for the long term, whereas
production is adjusted in the short run. Paper looks on the main contributions in
investment planning under uncertainty, in particular in the electricity market for
capital intensive investments like NPP. The relationship between market and nonmarket
factors (recent UK policy example) in determining investment signals in
competitive electricity markets was analysed. Paper analyse the ability of
competitive electricity markets to deliver the desired quantity and type of
generation capacity and also investigates the variety of market imperfections
operating in electricity generation and their impact on long-term dynamics for
generation capacity. Paper analyses how price formation influences investment
signals. Number of factors (including market power, wholesale price volatility, lack
Ž. Tomšić, From market uncertainty to policy uncertainty for investment in power generation: real options for NPP on electricity market, Journal of
Energy, vol. 64 (2015) Special Issue, p. 178-197
of liquidity in the wholesale and financial market, policy and regulatory risks etc.)
contribute to polluting the price signal and generating sub-optimal behaviour.
Keywords
power generation; nuclear power plant; electricity market; market uncertainty; investments; generation capacity
Hrčak ID:
199283
URI
Publication date:
15.9.2017.
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