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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.
© Emerald Group Publishing Limited
2012
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