Liberalized markets investment

The huge investments in both new supplies and new storage which are under way in the UK certainly contradict the views expressed in the late 1990s and early 2000s that multibillion dollar investments would be impossible to finance in a highly liberalized market. For a discussion of such views, see Stern (2002). However, these projects will arrive several years after the market needed them and, even when all of the storage capacity which UK investors are currently seeking to build is complete. 

Contractual and financing arrangements for new nuclear investment in liberalized markets which efficient combination ... 

The objective of this chapter is to study how the risks specific to a nuclear power investment in liberalized markets can be mitigated, how they can be allocated to the different stakeholders, and what financial arrangements are consistent with the alternative allocations of the construction, and operating and market risks. 

Former electricity monopolies traditionally assumed nuclear plant construction risks, which represented less of a burden in a regulated industry. But for nuclear build in liberalized markets the difficulty is twofold nuclear technology is at the stage of industrial relearning in a number of countries with new designs to be tested, and the producers have to support construction and market risks on a very large investment. 

In addition to the nuclear plant orders in US states which are still regulated, some announcements of nuclear projects by non-vertically integrated producers in liberalized US markets in 2006-07 seemed to signal the renaissance of nuclear orders in such markets in a merchant framework. The rationale to invest in nuclear build in liberalized markets lies in the opportunity to earn potentially greater revenues than under the cost of service regulation (Lacy, 2006). As well as the South Texas Project (STP) which is studied next, four other projects have been announced in these liberalized markets. ... 

Let us now consider other candidates for new nuclear plant investment other large companies Suez-Electrabel, EON, RWE and ENEL on the one hand, and some medium-sized or small companies in Eastern Europe and in US liberalized markets. 

Such a transformation is already taking place in the world gas market (Jensen, 2003). More international oil companies are investing in major natural gas infrastructure projects without the security of fully finalized sales for total output volumes. Instead, companies are counting on their own ability to identify end-use markets at some future time, closer in line to the investment pattern that characterizes development of multi-billion dollar oil fields. Expectations of a premium, liquid US market are a key factor encouraging this change as was liberalization of certain European markets which allowed gas sellers to bypass European state gas monopolies and sell directly to large gas customers and power generators (see Shepherd and Ball, 2006). 

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