Department of Economics
Electricity-market price and nuclear power plant shutdown: Evidence from California
Japan's Fukushima nuclear disaster, triggered by the March 11, 2011 earthquake, has led to calls for shutting down existing nuclear plants. To maintain resource adequacy for a grid's reliable operation, one option is to expand conventional generation, whose marginal unit is typically fueled by natural-gas. Two timely and relevant questions thus arise for a deregulated wholesale electricity market: (1) what is the likely price increase due to a nuclear plant shutdown? and (2) what can be done to mitigate the price increase? To answer these questions, we perform a regression analysis of a large sample of hourly real-time electricity-market price data from the California Independent System Operator (CAISO) for the 33-month sample period of April 2010-December 2012. Our analysis indicates that the 2013 shutdown of the state's San Onofre plant raised the CAISO real-time hourly market prices by $6/MWH to $9/MWH, and that the price increases could have been offset by a combination of demand reduction, increasing solar generation, and increasing wind generation. © 2014 Elsevier Ltd.
Electricity market, Energy policy, Nuclear shutdown, Prices
Source Publication Title
Woo, C. K., T. Ho, J. Zarnikau, A. Olson, R. Jones, M. Chait, I. Horowitz, and J. Wang. "Electricity-market price and nuclear power plant shutdown: Evidence from California." Energy Policy 73 (2014): 234-244.