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What is a Stranded Investment (Costs and Benefits)? |
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An investment in a power plant or demand side management measures or programs, that become uneconomical due to increased competition in the electric power market. For example, an electric power plant may produce power that is more costly than what the market rate for electricity is, and the power plant owner may have to close the plant, even though the capital and financing costs of building the plant have not been recovered through prior sales of electricity from the plant. This is considered a Stranded Cost. Stranded Benefits are those power provider investments in measures or programs considered to benefit consumers by reducing energy consumption and/or providing environmental benefits that have to be curtailed due to increased competition and lower profit margins.
U.S. Department of Energy
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