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An $18.5 billion federal loan guarantee program intended to revitalize the nuclear energy industry certainly got that sector’s attention.
The Energy Department announced last fall that it received applications from 17 power companies to build 14 nuclear power plants. The companies sought a total of $122 billion in loan guarantees.
One doesn’t have to be a nuclear engineer to see a disconnect between what’s being sought and what’s being offered. So it’s not surprising to learn that lobbyists for nuclear power plan to begin lobbying Congress this year to raise the cap on the guarantee program to around $100 billion.
But don’t call it a bailout. These are loan guarantees, not loans, industry lobbyists point out. Although budget rules require lawmakers to appropriate some money as a hedge against a default, they don’t have to come up with the total.
Representatives for the Nuclear Energy Institute (NEI) told reporters in a briefing late last year that the number of applications is good news. It shows power companies are serious about building new plants. There hadn’t been a new application to construct a nuclear power plant in three decades, although 17 are now before the Nuclear Regulatory Commission for review. With Congress getting serious about limiting greenhouse gas emissions to curb global warming, nuclear power plants, which don’t emit carbon dioxide when operating, may be on the verge of a renaissance. Not all 17 applications will be built, but the industry foresees four to eight new plants by 2018.
What’s more, the revival could extend to Washington. Alex Flint, NEI’s lead lobbyist, called the level of political support for the industry, including from the two presidential candidates, “remarkable.”
But if nuclear power is no longer the boogeyman it was after the Three Mile Island accident, it still faces a big hurdle that critics say is highlighted by the popularity of the loan guarantee program — i.e., financing. Loan guarantees, industry backers argue, will help power companies get favorable financing rates with savings ultimately being passed on to consumers. But cost estimates for nuclear power plants are soaring, and investors are still nervous about backing an industry with a history of cost overruns, critics say.
“It shows the financial community is not willing to put its money up to pay for these plants,” said David Schlissel, of Synapse Energy Economics, an energy research and consulting firm. The question lawmakers will have to answer, when it comes to nuclear power, is whether there are less expensive ways to address global warming, Schlissel said.
They don’t have to answer that question immediately, because nuclear power plants won’t be ready to be built in a few years. Still, how much the government should support nuclear power will likely be one more energy issue President-elect Obama will have to tackle.
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