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
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Link to Publisher's Edition
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.