Market pricing designs for power plants matching: the case of nuclear and renewables
Rodica Loisel  1@  
1 : Laboratory of Economics Nantes Atlantique  (LEMNA)
LEMNA, Institute of Economics and Management, University of Nantes, France
Chemin de la censive du tertre -  France

Load-following with nuclear power on the day-ahead market punctually leads to two different margin variations: price drops when nuclear power is evicted from the market; and price remains constant when the nuclear power is not the marginal technology, acting as a price-taker. This paper analysis the social welfare from nuclear flexibility in the French electricity sector, as the sum of short-run outcomes of the power price variations, net of externalities generated on nuclear plant revenues and on the other operating power plants. By means of a stylized dispatching model, the paper shows that internalizing the flexibility costs to match the long-run cost of nuclear power will change the short-run equilibrium and inflate the renewables profits while decreasing the compensation granted. The deadweight loss of nuclear power operating baseload is under a range of social and system benefits which further support new power pricing designs for load-following incentives. Among options, results highlight the advantage of contracts for differences over spot price uplifts tempting to include cost non-convexity due to ramping.


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