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Role of the state in implementation of strategic investment projects: The SaHo Model for nuclear power

Łukasz Sawicki

Łukasz Sawicki

Ministry of Climate and Environment, Nuclear Energy DepartmentWarsaw, Poland
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Sawicki, Łukasz
 and 
Bożena Horbaczewska

Bożena Horbaczewska

Collegium of World Economy, SGH Warsaw School of EconomicsWarsaw, Poland
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Horbaczewska, Bożena
  
Oct 13, 2021
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Article Category: Conceptual Paper
Published Online: Oct 13, 2021
Page range: 343 - 359
Received: May 05, 2021
Accepted: Aug 27, 2021
DOI: https://doi.org/10.2478/ijme-2021-0020
Keywords
© 2021 Łukasz Sawicki et al., published by Sciendo
This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Figure 1

Median of investment costs for various electricity sources (USD′2019, millions).Source: Own elaboration based on [Projected Costs…, 2020, pp. 43–44].CCGT – Combined Cycle Gas Turbine; mln, million; PV - Photovoltaics.
Median of investment costs for various electricity sources (USD′2019, millions).Source: Own elaboration based on [Projected Costs…, 2020, pp. 43–44].CCGT – Combined Cycle Gas Turbine; mln, million; PV - Photovoltaics.

Figure 2

Predevelopment costs for various electricity sources in the UK (GBP′2018/MWh).Source: Own elaboration based on Electricity generation costs [2020, p. 26].CCGT – Combined Cycle Gas Turbine; PV - Photovoltaics.
Predevelopment costs for various electricity sources in the UK (GBP′2018/MWh).Source: Own elaboration based on Electricity generation costs [2020, p. 26].CCGT – Combined Cycle Gas Turbine; PV - Photovoltaics.

Figure 3

Changes in the ownership structure in the SaHo Model at subsequent stages of the project (basic scheme).Source: Own elaboration. SPV, Special Purpose Vehicle.
Changes in the ownership structure in the SaHo Model at subsequent stages of the project (basic scheme).Source: Own elaboration. SPV, Special Purpose Vehicle.

Figure 4

Changes in the ownership structure in the SaHo Model at subsequent stages of the project (detailed scheme).Source: Own elaboration. SPV, Special Purpose Vehicle.
Changes in the ownership structure in the SaHo Model at subsequent stages of the project (detailed scheme).Source: Own elaboration. SPV, Special Purpose Vehicle.

Advantages and disadvantages of business models – the EU investor's perspective

Model Advantages Disadvantages
Electricity market Compliance with EU state aid rules No offtakeHigh price volatility, negative pricesHigh investment risk
PPA OfftakeStable selling prices No compliance with EU state aid rules
CfD, CEAC Stable selling pricesState loan guarantees No offtakeEC acceptance required case by case
CfD (Czech version) OfftakeStable selling pricesState loan guarantees Model waiting for EC acceptance
RAB Stable selling pricesCharging consumers from the beginning of constructionState loan guarantees No compliance with EU state aid rules (probably)No offtake
PTC Fixed state subsidy for every megawatt hour (MWh) of electricity generatedRegulatory risk insuranceState (federal) loan guarantees No offtakeHigh price volatility, negative pricesNo compliance with EU state aid rules
ZEC Relatively stable selling prices No offtakeNo compliance with EU state aid rules
CES A subsidy in market revenue No offtakeNo compliance with EU state aid rulesSubsidy value is set by (dynamic) market
CM Covering of fixed production costs No offtake (for energy)High price volatility, negative pricesEC acceptance required case by caseShort-term auctionsUnfavorable to units with high fixed costs
Carbon tax/ETS Increasing of costs for coal- and gas-based competitorsCompliance with EU state aid rules No offtakeHigh price volatility, negative prices
Exeltium OfftakeContracted sales of large electricity volume at relatively stable (indexed) price Price volatility in the long term, dependent on the wholesale market price indexOfftakers have a right to withdrawEC acceptance required case by case (probably)
Mankala OfftakeSelling price covers all production costsCompliance with EU state aid rules High risk before and during constructionThe model requires a perfect cooperation of dozens of shareholders
Language:
English
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4 times per year
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Business and Economics, Political Economics, Economic Theory, Systems and Structures, Business Management, Management Accounting, Financial Controlling, Cost Calculation, Investment
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