Date of Award

8-2024

Document Type

Thesis

Degree Name

Master of Science (MS)

Department

Economics

Committee Chair/Advisor

Babur De Los Santos

Committee Member

Devon Gorry

Committee Member

Yichen (Christy) Zhou

Abstract

In this paper, I attempt to estimate the true effects of removing nuclear energy on a country’s energy portfolio, particularly how the country substitutes to other fuel sources for electricity generation and how it impacts the country’s marginal electricity prices. In 2011, anti-nuclear sentiment that arose in Japan following the meltdown of the Fukushima prefecture’s nuclear power plant resulted in the country decreasing its nuclear electricity generation from over 30% of its total supply to 0% in under two years. I use the dramatic variation across Japan’s electricity supply regions over the denuclearization period to attempt to estimate the true effect of the removal of nuclear energy on Japan’s energy mix, total electricity demand and electricity prices. I find that Japan primarily substituted nuclear energy with thermal energy sources but did not significantly increase generation from renewable sources after the change. Additionally, I estimate an about 5% increase in marginal electricity price and a 2-7% total decrease in electricity demand due to the removal of nuclear power as an energy source. However, the highly regulated structure of electricity prices and supply in Japan at the time likely resulted in smaller and delayed price increases than would have occurred in a deregulated electricity market. In addition, the price regulation likely prevented a larger drop in electricity consumption than would have resulted with unregulated prices. The results suggest that regions considering major shifts away from nuclear energy, especially in deregulated electricity markets, should expect almost one for one substitution with fossil fuel generation, increases in electricity prices of at least 2% and decreases in electricity demand of at least 5%.

Included in

Econometrics Commons

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