Stabilization Mechanisms for Nuclear Investments vs. Electricity Market Liberalization: The Case of Contract for Difference. Lessons from the United Kingdom and Romania

European Energy and Environmental Law Review, Vol 27, Issue 6, 2018, pp 223-235

13 Pages Posted: 23 Apr 2019

Date Written: December 26, 2018

Abstract

The article addresses Contracts for Difference (CfD) as state aid and price stabilization mechanisms needed to mitigate the risks stemming from the incompatibility of liberalized electricity markets and nuclear energy investments. It starts by defining CfD mechanism as state aid required to support nuclear investments. It continues by analyzing the issue of state aid in relation to the nuclear sector, with focus on the "market failure" argument as it transpires from both the European Commission's assessment of the state aid scheme and the decision of the Grand Chamber of the Court of Justice of the European Union. Attention is dedicated to the uses of the same support scheme in two similar nuclear projects in Hinkley Point (United Kingdom) and Cernavoda (Romania). The article concludes that given the systemic differences between the two national energy markets, CfD might not be a suitable solution for both.

Keywords: Nuclear, Market Liberalization, Stabilization, Contracts for Difference, Hinkley Point, Cernavoda, State Aid, Market Failure

Suggested Citation

Stanescu, Catalin Gabriel, Stabilization Mechanisms for Nuclear Investments vs. Electricity Market Liberalization: The Case of Contract for Difference. Lessons from the United Kingdom and Romania (December 26, 2018). European Energy and Environmental Law Review, Vol 27, Issue 6, 2018, pp 223-235, Available at SSRN: https://ssrn.com/abstract=3360890

Catalin Gabriel Stanescu (Contact Author)

Centre for Market and Economic Law (CME) ( email )

Njalsgade 76
Copenhagen S, 2300
Denmark
+4520935996 (Phone)

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