Stabilization Mechanisms for Nuclear Investments vs. Electricity Market Liberalization: The Case of Contract for Difference. Lessons from the United Kingdom and Romania

The article addresses Contracts for Difference (CfD) as state aid and price stabilization mechanisms needed to mitigate the risks stemming from the incompat- ibility of liberalized electricity markets and nuclear energy investments. It starts by defining CfD mechan- ism as state aid required to support nuclear invest- ments. It continues by analyzing the issue of state aid in relation to the nuclear sector, with focus on the ``market failure'' argument as it transpires from both the European Commission's assessment of the state aid scheme and the decision of the Grand Chamber of the Court of Justice of the European Union. Attention is dedicated to the uses of the same support scheme in two similar nuclear projects in Hinkley Point (United Kingdom) and CernavodaÆ (Romania). The article concludes that given the systemic differences between the two national energy markets, CfD might not be a suitable solution for both national energy markets.