On the Effect of the Fukushima Nuclear Accident on European Power Futures

16 Pages Posted: 5 Mar 2013  

Philipp Stroehle

Karlsruhe Institute of Technology

Christoph M. Flath

Karlsruhe Institute of Technology

Date Written: February 7, 2013

Abstract

The March 2011 accident at the Fukushima Daiichi nuclear power plant (the “event”) in Japan has had global repercussions. We conduct a detailed event study on German and French power futures’ prices and returns and find that price responses for different underlyings are not significantly different between the two countries. This is a surprising result, as the anticipated policies in the aftermath of the event regarding nuclear power were markedly different for France and Germany. Furthermore, we identify a cumulative abnormal return of approximately 10 percent during the event window (5 days), whereby futures with delivery dates further in the future are less affected than futures with shorter time to maturity. We conclude that the decision to subsequently phase out nuclear power in Germany was expected by market participants and efficiently processed by the electricity market institutions, as price reactions were instantaneous.

Keywords: Electricity Markets, Power Futures

JEL Classification: G14, L94

Suggested Citation

Stroehle, Philipp and Flath, Christoph M., On the Effect of the Fukushima Nuclear Accident on European Power Futures (February 7, 2013). Available at SSRN: https://ssrn.com/abstract=2228083 or http://dx.doi.org/10.2139/ssrn.2228083

Philipp Stroehle (Contact Author)

Karlsruhe Institute of Technology ( email )

Kaiserstraße 12
Karlsruhe, Baden Württemberg 76131
Germany

HOME PAGE: http://www.im.uni-karlsruhe.de/Default.aspx?PageId=842&lang=en

Christoph M. Flath

Karlsruhe Institute of Technology ( email )

Kaiserstraße 12
Karlsruhe, Baden Württemberg 76131
Germany

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