Loan guarantee expansion

Tuesday, 2 February 2010

There will be a $56.5 billion pot of loan guarantees available to support nuclear power projects after a massive boost from the FY2011 US budget.

 

An extra $36 billion in guarantees has been proposed, on top of $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 financial support cannot come soon enough for the US nuclear industry, which is still waiting for allocation of the 2005 guarantees.

 

"Nuclear energy    currently provides   approximately 20% of   the nation's electricity   and 70% of the nation's   clean non-carbon   electricity. Over 100    nuclear power plants    [reactors] are offering    reliable and affordable    baseload electricity in   the USA, and they are   doing so without air   pollution and    greenhouse gas   emissions."     The Department of Energy's    summary of the nuclear sector

Loan guarantees are meant to help utilities that want new nuclear reactors obtain private finance, which is the most challenging and costly part 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.

 

US prospects for new build have been hit hard 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. Utility heads now say loan guarantees are vital for the economics of new build, but none have yet been announced despite rumours about DoE shortlists.

 

More welcome news for nuclear in yesterday's proposed US budget was a commitment to continue funding the Next Generation Nuclear Plant (NGNP), which is to be an advanced reactor with co-generation capability at Idaho National Lab. This was originally meant to actually operate in 2010, but its priority has fluctuated. NGNP is part of the 'Reactor Concepts RD&D' program, which will also begin working on small modular reactor concepts with a total budget of $195 million.

 

All funding for the former Yucca Mountain project has now been officially ended, with the Office of Civilian Radioactive Waste Management wound up and responsibility for meeting the goals of the Nuclear Waste Policy Act of 1982 now passed back to the main Office of Nuclear Energy. The license application submitted to regulators by the Office of Civilian Radioactive Waste Management has also been officially discontinued. The DoE noted: "The administration has determined that developing a repository at Yucca Mountain, Nevada is not a workable option... The nation needs a different solution for nuclear waste disposal." Yesterday a 'Blue Ribbon' commission was named to develop a new strategy and correspondingly the DoE today increased fuel cycle research by 47% to $201 million.

 

Overall, the DoE is to undergo management changes meant to make it more 'results-oriented'. Changes are to be made across all departments as well as the office of the secretary.
  
Researched and written

by World Nuclear News