On the Effect of the Fukushima Nuclear Accident on European Power Futures
16 Pages Posted: 5 Mar 2013
Date Written: February 7, 2013
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: Suggested Citation