Paper Titles & Abstracts

EU member states are divided over their energy mix, in particular with a view to renewables and nuclear power. Unsurprisingly, member states have been reluctant to give up autonomy in this regard. In fact, the Lisbon Treaty states that the energy mix is the competence of the member states. The Treaty does, however, also contain a legal basis for trans-European networks. Especially once the new Energy Infrastructure Package enters into force, the development of electricity networks will more and more follow European priorities.This paper demonstrates how, in an increasingly interconnected European electricity market, member states are constrained in their ability to influence the choice between different energy sources in the power sector. In particular, I show that countries that decide to rely heavily on variable renewable electricity (i.e. wind and solar), may deter neighbouring countries from attracting investments in nuclear capacity. I argue that the main underlying mechanism is that renewables with almost no short-run marginal costs put downward pressure on wholesale electricity prices. By exporting low or even negative wholesale prices to other countries, the business case for nuclear suffers. This is accentuated by increasing uncertainty resulting from energy prices that are no longer mainly dependent on the political decisions taken in one country, but rather the result of a complex interplay of decisions taken across the EU. Highly capital intensive nuclear power is vulnerable to these developments. I empirically test my argument by drawing upon market data provided by power exchanges complemented by mainstream energy scenario analyses.