en.Wedoany.com Reported - In 2026, China's nuclear power has entered a new phase of active, safe, and orderly development. As of the end of April, the combined installed capacity of units in operation, approved, and under construction exceeded 125 GW, with the scale under construction ranking first globally for several consecutive years. However, the average market-based settlement price in most provinces has fallen below the approved on-grid tariff for nuclear units. The substantial depreciation of fixed assets and financial costs are difficult to recover effectively through the electricity energy market, while adopting a capacity pricing mechanism presents adaptation deficiencies. Against this backdrop, exploring a new mechanism that can stabilize revenue while balancing market efficiency and system security has become a key proposition for ensuring the sustainable development of nuclear power and supporting the construction of a new-type power system.

I. Challenges of Large-Scale Nuclear Power Development and Marketization in China

Driven by the "dual carbon" goals, China's nuclear power has entered a new phase of active, safe, and orderly development. Currently, there are 62 units in operation with an installed capacity of 66.142 GW, and 50 units approved or under construction with an installed capacity of 59.313 GW. The batch construction of the "Hualong One" is progressing steadily, with advanced reactor types such as the Guohe One and high-temperature gas-cooled reactor being demonstrated. The WANO comprehensive index ranks among the top globally, with excellent safety performance and a highly prominent baseload power source attribute.

At the same time, with the comprehensive rollout of a new round of electricity system reform and the accelerated construction of spot markets, nuclear power participating in market competition has become an inevitable trend. In major nuclear power provinces such as Guangdong, Zhejiang, and Fujian, the proportion of nuclear power entering the market is rapidly increasing. In 2026, due to the sustained decline in medium- and long-term and spot market prices, the average market-based settlement price for nuclear power in most provinces across the country has fallen below the approved on-grid tariff for units. This makes it extremely difficult for nuclear power to cover substantial fixed asset depreciation, financial costs, and reasonable returns solely through electricity energy market revenue. The core challenge has emerged: how to dispatch and discover prices through market mechanisms while ensuring that nuclear power, a zero-carbon baseload source with massive investment, can recover fixed costs and operate continuously. Which path better aligns with the essential characteristics of nuclear power warrants in-depth analysis.

II. Analysis of Participation Paths and Mechanism Adaptation Logic

(I) Generation-Side Reliable Capacity Compensation Mechanism: Capacity-Centric, Insufficient for Nuclear Power Needs

In November 2023, China established a coal power capacity pricing system, providing compensation based on a certain proportion of fixed costs. In January 2026, the National Development and Reform Commission and the National Energy Administration jointly issued the "Notice on Improving the Generation-Side Capacity Pricing Mechanism," continuing the unified national fixed cost recovery standard, gradually increasing the proportion of fixed costs recovered through capacity pricing, and promoting the continuous improvement of electricity market trading and pricing mechanisms. These policies aim to guide coal power toward a transitional and fallback power source role. Some argue that nuclear power could also receive capacity compensation under this framework to alleviate fixed cost pressures.

However, the vastly different cost structures and functional roles of nuclear and coal power make simple transplantation fraught with contradictions. The per-kilowatt construction cost of coal power is approximately 3,800 yuan, and with electricity revenue, it can roughly cover the average fixed costs of coal power. In contrast, the per-kilowatt investment for nuclear power ranges from 16,000 to 20,000 yuan, 4 to 5 times that of ultra-supercritical coal power, with some first-of-a-kind and major special project units costing even more. According to power economics principles and the criteria for selecting capacity marginal units in other countries' electricity markets—such as the ability for large-scale deployment, high economic efficiency, and rapid construction—it is difficult to select nuclear units as marginal units. Applying the same capacity standard would make compensation for nuclear power a drop in the bucket.

(II) Off-Site Contract for Difference Mechanism: Electricity-Quantity Anchored, Matching Nuclear Power's DNA

The off-site contract for difference (CfD) has been validated in practice by multiple nuclear power projects in Europe, and in recent years, China has also applied it to the market-based settlement of new energy units. The principle is: enterprises bid and clear in the electricity market at marginal cost as usual. During contract settlement, if the market reference electricity price is lower than the strike price, the counterparty compensates the difference; if it is higher, the enterprise returns the difference.

Unlike capacity compensation, which pays based on a unit's "available status," the CfD settles based on actual electricity generation. It does not alter the "priority dispatch" status of nuclear power due to its extremely low marginal cost, while precisely covering per-unit electricity costs through financial contracts, making nuclear power revenue clear, stable, and predictable. At the same time, it institutionally isolates nuclear power from direct conflicts with flexibility demands.

(III) Three Core Logics of Off-Site CfD Adaptation for Zero-Carbon Baseload Power Sources

First, the baseload power source with the lowest carbon emissions should receive corresponding incentives.

According to data from the "Announcement on Publishing 2023 Electricity Carbon Footprint Factor Data" jointly released by the Ministry of Ecology and Environment, the National Bureau of Statistics, and the National Energy Administration, the full lifecycle carbon emission intensity of nuclear power is approximately 6.5 gCO₂e/kWh, far lower than that of wind and solar power. When the grid requires regulation due to fluctuations in new energy output, prioritizing the reduction of nuclear power output would instead significantly increase system carbon emissions. From a global carbon reduction perspective, nuclear power should be ensured to operate as much as possible with minimal power reduction. Under the capacity compensation model, nuclear power's electricity revenue is exposed to electricity energy market price signals. The CfD can ensure relatively stable revenue for nuclear projects, reducing the economic pressure to voluntarily cut output. Nuclear power will always have the incentive to maintain full output, fully realizing the environmental value of zero-carbon baseload power.

Second, using electricity generation as an anchor to precisely recover high fixed costs.

Nuclear power is a typical high-capital-density industry with long construction periods and massive total investment, with fixed costs accounting for over 70%. The total investment for a million-kilowatt-class "Hualong One" project can reach around 20 billion yuan, with heavy rigid expenditures such as depreciation, financial costs, and labor, while fuel variable costs account for a very small proportion. Capacity pricing typically sets a unified standard based on industry average fixed costs, making it difficult to reflect the vast differences in project costs and financing conditions across projects. Moreover, it is decoupled from electricity generation, failing to incentivize the dilution of fixed costs through increased generation. The CfD, on the other hand, focuses on "per-unit electricity." During the project approval stage, based on actual construction costs, financing structure, and designed utilization hours, the levelized cost of electricity can be calculated, and a reasonable profit margin added, to derive a project-specific strike price. The more electricity generated, the more fully fixed costs are recovered. This aligns perfectly with the baseload characteristics of nuclear power and positively incentivizes operators to optimize refueling cycles and extend operating time, achieving both safety and efficiency improvements.

Third, off-site arrangements can isolate nuclear power's flexibility shortcomings and consolidate system baseload resources.

Although modern third-generation nuclear units possess some load-following capability, frequent and significant power changes can increase stress fatigue on fuel elements, complicate primary circuit water chemistry control, reduce safety margins, and impose additional waste treatment burdens and maintenance costs. At the system level, nuclear power has extremely low fuel costs and is a zero-carbon electricity source with near-zero variable costs, making its optimal role that of a baseload provider.

If a capacity pricing model is adopted, nuclear power would often need to assume obligations such as frequency regulation and start-stop cycles commensurate with capacity revenue. This would directly expose the physical shortcomings of nuclear power, placing it in a dilemma between seeking capacity revenue and ensuring baseload safety.

In summary, nuclear power combines three characteristics—high fixed costs, zero-carbon baseload, and flexibility shortcomings—requiring a mechanism that stably anchors revenue to electricity generation while isolating short-term market fluctuation pressures. The off-site CfD, in a precise, stable, and baseload-respecting manner, fully addresses the core demands of nuclear power's market-based survival. During the critical period of electricity market reform toward building a new-type power system, customizing a CfD mechanism for nuclear power does not weaken competition but rather rationally confirms the strategic value of clean baseload assets. It will effectively safeguard the stable, safe, efficient, and economical development of China's nuclear power, laying an indispensable zero-carbon foundation for achieving the "dual carbon" goals.

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