Energy finance in free markets: an open conundrum
A question which has occurred to me lately revolves around the oft-heard objection that, "Nuclear has always been a state enterprise." In other words, the high up-front capital cost (and attendant front-loaded risk from construction delays and potential intervenors) makes nuclear a tough pill to swallow for liberalized energy markets, despite the extremely low operating costs (and hence, low back-end risk).This problem seems to extend well beyond nuclear energy itself; rather, it would seem to indict any capital-intensive energy projects where a given rate of return on investment is not guaranteed. It provokes the question - in a completely free market for electricity (as opposed to the admixture we have now), what would energy investment look like?
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