The Economics of State Government Assistance to Nuclear Plants

Abstract

Coal was the largest source of electricity generation in the United States for decades before being supplanted by natural gas in 2015. Nuclear plants have also been a significant electricity source in America but now many of them are on the verge of closing. Meanwhile, the amount of electricity produced by renewable sources is growing. The rise of both natural gas and renewables has weakened the financial prospects of nuclear as a long-term power source. In response, executives of nuclear power plants are lobbying government officials for assistance and officials in many states have been receptive. This paper provides a brief background of electricity generation, discusses some of the current proposals to assist nuclear plants, and explains the economics of the proposed government assistance plans.

Keywords: Industry Regulation, Nuclear Energy, Power Plants, Electricity, Subsidies

JEL Classification: H25, L52, L94, Q48