Electricity Imports Versus Nuclear Reactivation in the Thermal Power Transition: The Role of Sustainable Finance

The transition of thermal power systems toward lower-carbon electricity raises a critical strategic question: whether to rely on cross-border electricity imports or reactivate domestic nuclear capacity under supply constraints. This study examines the trade-offs between these alternatives within a sustainable finance framework. A contingent-claim model is developed in which a life insurer provides long-term financing to a biomass-energy supplier, a thermal power plant, and a nuclear power plant operating under carbon-pricing regulation. The framework links electricity-market decisions with financial risk valuation, allowing the joint effects of biomass utilization, carbon regulation, electricity imports, and nuclear-security risks to be evaluated. The results show that biomass integration and tighter carbon regulation reduce short-term profitability in thermal generation but support long-run decarbonization. Cross-border electricity imports improve system flexibility and reduce operational volatility, strengthening the financial position of thermal producers. In contrast, nuclear-security disruptions significantly increase default risk for nuclear assets, reflecting their exposure to operational and regulatory uncertainty. By integrating energy-transition strategies with contingent-claim valuation, the analysis highlights the role of financial intermediation in shaping investment incentives and risk allocation in the electricity sector. The findings suggest that coordinated policies combining market integration, low-carbon transition strategies, and stable financing mechanisms can enhance system resilience.