Loan guarantee has nuclear industry glowing

The administration’s conditional approval of a loan guarantee to back construction of two new reactors has the nuclear energy industry beaming.

“We have nothing less than a new political mandate for nuclear energy,” Marvin Fertel, the president and chief executive officer of the Nuclear Energy Institute, told an audience of Wall Street analysts in New York on Friday.

“The phrase ‘strong political support’ understates our position. 2009 was a transformational year for nuclear energy in Washington,” Fertel said. He also noted President Obama’s State of the Union address that called for the construction of new nuclear plants as part of a clean energy future.

The industry's commercial revival, though, is not as far along as its political comeback. Construction on a nuclear reactor hasn't been started in more than two decades. Investors have been reluctant to back the industry, which has a history of cost overruns.

David Crane, president and CEO of NRG Energy, which operates one nuclear reactor but wants to build more, told a Washington audience on Thursday that low natural gas prices could still short-circuit nuclear’s revival. Gas plants are cheaper to build. Nuclear power could make up the difference in lower operating costs, but only if natural gas prices increase or remain volatile.  

If natural gas falls below $3 per 1000 cubic feet, “then we can all go home,” Crane said.

He doubted new gas reserves, however, would push prices that low. Noting the recent political support the industry has won, Crane said the industry’s future was “very bright.”