Depending on the size and type, the building of new power plants can cost hundreds of millions or even billions of dollars. These power plants mostly run for over 40 years. However, future is unpredictable. Many of the industry regulators and electricity industry planners are unable to predict how stringent the rules regarding greenhouse emissions will be. Knowing this is vital because today’s investment will be affected by policies that may be implemented in the coming years.
Carbon Tax Could Reduce Profit for Power Plants if Implemented
If carbon tax is implemented for instance, it can reduce the profit of power plants that use of fossil fuels. Investments in power plants will also affect consumers. For instance, in South Carolina, utilities were charging customers extremely high, so as to cover the cost of two new nuclear reactors, which were abandoned on account of less demand for electricity and construction delays.
Emission Targets May be Difficult to Meet
If utilities rely on coal instead of wind or sun, it will be extremely difficult to meet emission targets, not to mention very expensive too. Many non-carbon electricity sources such as the wind, solar, coal, and nuclear are comparatively expensive than conventional coal plants. If too much is invested on non-carbon generation, utilities are bound to overspend on expensive energy sources.