Measuring risk and financial support for NPPs using Monte Carlo simulation

Purpose – The purpose of this paper is to work out the risk of cost overruns in nuclear power plants (NPPs) and its mitigation through public financial support. Design/methodology/approach – The stochastic process of overruns is simulated and compared with the private company investment to work out the amount of subsidy. Findings – At higher levels of risk proportionately more public finance is sucked in. Research limitations/implications – International comparison would be valuable. Practical implications – The paper could provide useful guidance in developing countries regarding how to work out the public or international subsidy. Social implications – People may justifiably resist the public subsidy for a foreign investor. Originality/value – The original calculation using Matlab will certainly be of value.