Has Electricity Deregulation Eliminated the Nuclear Option?: Rethinking the Coasian IOS for Project-Finance Investments

Author

Stephen Dansky, Florida Institute of TechnologyFollow

Date of Award

5-2024

Document Type

Dissertation

Degree Name

Doctor of Business Administration (DBA)

Department

Bisk College of Business

First Advisor

B. Andrew Cudmore, Ph.D.

Second Advisor

Alexander R. Vamosi, Ph.D.

Third Advisor

Amitabh Dutta, Ph.D.

Fourth Advisor

Lisa A. Steelman, Ph.D.

Abstract

Installed electric generation capacity in the United States is expected to grow significantly over the next two decades. This raises concern about climate change as several common methods of electricity generation emit greenhouse gases. Nuclear power, which doesn’t create greenhouse gases while generating electricity, has been heavily promoted by the nuclear industry and a segment of the environmental community ever since it was codified by the United Nation’s 26^th Climate Change Conference of the Parties as an acceptable energy source to fight climate change. However, this dissertation establishes that the increased revenue risk and uncertainty created by the deregulation of electricity markets negatively affect the ability of nuclear power to attract the requisite debt and equity financing needed for construction, and in turn, affects the availability of nuclear power as an option to reduce greenhouse gases. The argument herein is constructed on the technical, economic, financial, and regulatory issues that systematically build on each other to support the position that electricity deregulation has increased lender risk, increased equity risk, and reduced the requisite underlying credit needed to support the debt and equity financing of a nuclear plant.

This dissertation proposes a theoretical model that links the availability of debt and equity financing to the revenue risk created by electric deregulation and then tests this model by performing both a qualitative phenomenological analysis and a quantitative experimental design analysis that provides support for the model. Also, to demonstrate the effect of deregulation’s revenue risk on nuclear vs. non-nuclear generation, this dissertation puts forth a new theoretical investment ranking mechanism compatible with Internalization Theory that is more accurate for ranking project-financed investments than the long-standing Coasian Investment Opportunity Schedule. Support is found for this new investment ranking mechanism. Support is also found regarding electricity deregulation’s negative effect on the ability of nuclear power to attract the requisite financing.

Recommended Citation

Dansky, Stephen, "Has Electricity Deregulation Eliminated the Nuclear Option?: Rethinking the Coasian IOS for Project-Finance Investments" (2024). Theses and Dissertations. 1412.
https://repository.fit.edu/etd/1412