Federal loan guarantees for new nuclear power will be increasingly difficult to obtain, the head of the Nuclear Energy Institute says, limiting development of new plants over the next decade to those states that permit costs to be passed through directly to customers.
The four to eight new nuclear power plants planned for the 2016-2020 time frame will go forward, NEI president and CEO Marv Fertel told Breaking Energy, but development of the “hundreds” of new facilities required to replace retiring units and power growing electricity demand will be delayed to the 2020-2050 period.
Before the Fukushima nuclear power plant accident in Japan in early March, the industry was widely perceived to be on an upswing, but the cancellation of planned NRG Energy units shortly after the Fukushima disaster compounded investor consensus that building new nuclear units was now near-impossible.
Fertel says that it is not Fukushima that has changed the industry’s outlook, but that longer-term trends arising from limited federal funding of loan guarantees, broader recessionary impacts on electricity usage and cheap natural gas that have kept more of the proposed nuclear power projects in the US from moving ahead quickly.
“Loan guarantees make sense, but they are going to be difficult to get in the current environment,” Fertel said. “The states where projects proceed will be regulated ones.”
The loan guarantees actually make money for the US Treasury, Fertel stressed, as utilities pay millions of dollars in credit subsidy fees that are intended to act as a guarantee in case of potential default. The fees are not always paid by other industries for other projects that receive loan guarantees, but the nuclear industry pays them despite widespread consensus that companies rarely walk away from nuclear plant investments, Fertel said.
Fertel identified Georgia and South Carolina as regulated states where nuclear power plant projects could move ahead. For more on Duke Energy’s proposal to purchase a share of a planned new unit in South Carolina, see: Duke Proposes New Nuclear Buy.
