What if the market does not put sufficient value on power from CFPP?
If UAMPS is successful in establishing Power Purchase Agreements for delivery of electricity from the SMR, then participating UAMPS members will be less impacted by commodity prices for electricity from natural gas. However, competing natural gas prices may have an impact on the ability of UAMPS to establish satisfactory power contracts in the first place.
In the absence of power contracts or one or more direct and indirect market fixes (as suggested below by the Nuclear Economics Consulting Group), market forces may have a major impact on implementing the CFPP.
NOTE: The following comments are taken from report #14 entitled “Market Failure and Nuclear Power,” published by the Nuclear Economics Consulting Group (NECG), which can be found here.
“U.S. nuclear power plants provide significant public benefits, but get no compensation for these public benefits. The owners of nuclear power plants make decisions based on the market value of commodity electricity and capacity.”
“Market failure, an economic concept, is when the market does not support activities that provide net public benefits. This can happen when firms decline to undertake activities or investments that result in private losses, even though these activities would provide net public benefits.”