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Summary: www.electricitypolicy.org.uk
Nuclear Power and Deregulated Electricity
Markets: Lessons from British Energy
EPRG Working Paper 0808
Simon Taylor
When the privatised nuclear power company British Energy ran into financial crisis in
2002 and had to be rescued by the government, it appeared to show that nuclear
power could not survive in a deregulated electricity market like that of the UK. This
paper argues that is a false conclusion. The company's crisis was caused by a fall in
power prices but its vulnerability to that collapse arose from mistakes in financial and
corporate strategy that could have been avoided and were not inherent in the fact
that it was a nuclear generator.
British Energy had several problems that were a result of British government policy
choices taken years before. The main ones were; i) a unique British design of
nuclear power station that was unreliable; and ii) a requirement to reprocess the
nuclear waste at high and inflexible cost which made the company's profits even
more sensitive to changes in power prices.
The immediate cause of the company's financial crisis was the collapse of wholesale
power prices in the period 2000-2002. But the company could have withstood a


Source: Aickelin, Uwe - School of Computer Science, University of Nottingham


Collections: Computer Technologies and Information Sciences