Allocation of Risk in Building Capital-Intensive Electricity Generation: What Role for Government?

Presentation to the Harvard Electricity Policy Group, in Boulder, Colo

Matthew Bunn presented "Allocation of Risk in Building Capital-Intensive Electricity Generation: What Role for Government?" to the Harvard Electricity Policy Group, in Boulder, Colorado. Bunn considered the following questions in his presentation:

• What set of policy tools would lead to deployment of low carbon electricity generation at lowest total social cost?
• Do loan guarantees inherently distort markets, making nonguaranteed technologies - including efficiency - less attractive by comparison? How damaging is this?
• How much risk of major defaults are the taxpayers being asked to take on with loan guarantees - For nuclear? For solar? For wind? For carbon capture? Is DOE well-suited to calculating this, to set subsidy cost?
• Are loan guarantees appropriate?
• How could loan guarantees be structured so low-carbon technologies could complete to receive them, rather than Congress picking winners (as in recent bill)?
• What other policies could governments use to make capital intensive low-carbon technologies more competitive?
• For nuclear in particular, will we end up, after EPAct subsidies for first few units, with still-uncompetitive plants?
• What policy tools - and in particular approaches to risk allocation - should be applied to get adequate deployment of electricity infrastructure beyond generation?
• Are loan guarantees an appropriate role for the U.S. government in promoting deployment of nuclear and other low-carbon sources in other countries?