Analysis of state policy interactions with electricity markets in the context of uneconomic existing resources: A critical assessment of the literature
About the Report:
In this report, we provide a critical assessment of recent studies on the topic of subsidies for uneconomic nuclear generating resources, and identify a number of problematic assumptions and modeling choices that tend to drive their findings and policy recommendations. In the context of two fundamental principles of market design from economic theory, we examine the inherent problems with subsidies as a policy mechanism. This discussion is then related to studies supporting state intervention through subsidies by pointing out three common flawed assumptions that are inconsistent with the peer-reviewed academic literature. Our purpose is to describe how modeling and data choices influence outcomes and policy recommendations of these studies. The report was supported by PJM Interconnection, LLC.