Stranded cost

Stranded cost

"Demolition of the ECVB power plant" by Stephane Gaudry is licensed under CC BY 2.0

existing infrastructure investments owned by a public utility, which may become redundant due to substantial changes in regulatory or market conditions. An incumbent electric power utility will have made substantial investments over the years and will carry debt, payments on which are included in the whole-life cost of electricity.

Pros

Can be a sign of transition progress.

Cons

Ratepayers can end up paying for lost investments.

Real Talk

In a perfect world, the transition to renewable energy would not cause stranded costs. The fact is we need electricity 100% of the time while we transition. Money invested into phased-out technology will be lost; let's be thoughtful of assets that serve us today and carefully plan for their closure in a controlled way.

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