More funds for loan guarantees10 декабря 2010
The US House of Representatives has approved a bill that will provide an additional $7 billion in new loan guarantees for the construction of nuclear power plants. President Barack Obama had earlier requested that $36 billion should be made available.
On 8 December, the House voted 212–206 to approve the funding, which is in addition to the $18.5 billion that was announced with the Energy Policy Act of 2005 and $2 billion that was subsequently added for fuel cycle facilities.
The Senate, which still has to vote on the bill, could increase the amount available in loan guarantees. In July, a Senate subcommittee voted in favour of boosting the funds by $10 billion.
Loan guarantees are meant to help utilities that want new nuclear reactors obtain private finance, which is one of the most challenging and costly parts of new nuclear build. Provided the US Department of Energy (DoE) has confidence in a project, it can guarantee up to 80% of the total debt. This security should entice more lenders and reduce the cost of the loan for the utility, while costing the DoE only for administration.
In June 2010, Southern Company subsidiary Georgia Power formally agreed to accept a conditional federal loan guarantee for the construction of two new nuclear units at its Vogtle site. It was the first loan guarantee to have been approved by the DoE.
However, in October, Unistar partner Constellation declared the terms of loan guarantees ’flawed, unrealistic and unworkable’. In a letter from chair of both Unistar and Constellation Michael Wallace to the DoE, he said the company does not see a path “to reaching a workable set of terms and conditions” for the guarantee of about $7.5 billion in private loans.
In addition to this administrative ambivalence, US prospects for new build have been further hit by a combination of a temporary drop in power demand on the global recession and a related drop in gas prices. Several projects have been put on hold until power demand picks back up.
The vote on the smaller increase in loan guarantees for nuclear power plants came just a day after a forum of nuclear industry executives met in Washington, DC to discuss the future of nuclear energy in the USA and determine the steps needed to revive the country’s nuclear energy industry.
The New Millennium Nuclear Energy Summit — co-hosted by think tank Third Way and the Idaho National Laboratory — brought together more than two dozen industry leaders, labour and non-governmental organizations representatives, and energy investors.
Utility heads at the meeting said that loan guarantees are vital for the economics of nuclear new build.
Carol Browner, director of the Office of Energy and Climate Change Policy, said: “Ultimately, the government continuing to provide loan guarantees is probably not going to be a practical solution.”
However, Michael Rencheck, Chief Operating Officer of Areva Inc, discussing the company’s new US enrichment plant, said: “Without the loan guarantee — and it is a guarantee, it’s not a giveaway; we will repay the loan — we would not have been able to build this facility.”
Speaking from the perspective of investors, James Asselstine from Barclays noted that the cost of Southern Co’s project to construct Vogtle units 3 and 4 is about $14 billion. “The market capitalization of [Southern] is about $32 billion. So this is a very sizeable investment relative to the size of the company … The fact of the matter is, this industry is relatively fragmented and these are very large investments compared to the size of the companies,” he said.
Asselstine added, “I think investors are concerned about the ability on the part of the government to fulfil their contractual obligations to take responsibility for and ultimately ownership for the spent fuel.”
Energy secretary Steven Chu stated, “Without a doubt, the administration believes that nuclear energy is going to have to be part of the energy mix in this century. And we are doing what we can to promote that.”Back to all news