A fifth is a “runner up”
The Department of Energy (DOE) has finally produced a short list of new reactor projects that will likely be eligible for billions in loan guarantees. The federal insurance is paid for by the applicants. It does not guarantee funding for the projects, and only covers 80% of the costs.
No federal funds are expended except in the case of default. The operative principle is that by picking the best projects for eligibility for the loan guarantees the agency is also taking on very little risk that taxpayers will ever have to cover a default.
According to a report by Reuters on May 10 DOE selected projects for final due diligence and negotiations that may lead to a commitment for a conditional loan guarantee. There is $16 billion in federal coverage available, but increases in the cost of steel and concrete since the Energy Policy Act of 2005 was enacted could reduce the number of plants getting the coverage from four to three.
The agency has not formally identified the short-list firms, but Reuters reported that officials at a Texas nuclear project, one in Maryland and one in South Carolina confirmed earlier this year that they were among the five finalists for DOE loan backing.
Those projects included NRG Energy's (NYSE:NRG) twin Toshiba/GE-Hitachi ABWR expansion at the South Texas Project in Texas; Unistar/Constellation Energy's (NYSE:CEG) Calvert Cliffs 3 Areva EPR in Maryland; and SCANA Corp's (NYSE:SCG) twin AP-1000 expansion at the Summer station in South Carolina in conjunction with state-owned utility Santee Cooper. Also believed to be on DOE's short-list is Southern Co's (NYSE:SO) twin AP1000 reactor expansion at the Vogtle nuclear station in Georgia.
A fifth project, Luminant’s Comanche Peak project in Texas, which calls for two Mitsubishi 1,700 MW reactors, is listed as a “first alternate” in case one of the final four were to fail DOE’s due diligence process.
When DOE first announced the loan guarantees, it received a total of $122 billion in applications for $188 billion worth of projects. The overwhelming response sends a clear message from the industry to Congress that the current program falls way short of the nation’s needs for new nuclear power plants.
Second round of projects starts to form
The projects included in the first round of applications represent the entire pool of COL license applications now on file at the NRC. While the individual projects within this group sort out their financial destiny, a second round of projects has begun to emerge.
For instance, Florida Power & Light has committed to filing a COL for two AP1000 reactors in 2010. That state allows the utility to allocate construction costs to the rate base as the plant is being built.
Despite its setback with the legislature this year, Ameren has two more sessions with the statehouse until the NRC completes its review of the utility’s license in 2011. If Ameren can convince the legislature to approve the “construction while in progress” bill, which would allow it to recover construction costs while the reactor is being built, then it won’t need loan guarantees.
Other reactors on the NRC expected list of COL applications are in various stages of development.
Nuclear reactor for Colorado?
Even further out is a project that could see daylight toward the end of the next decade. The Denver Post reported May 10 Xcel Energy (NYSE:XEL) would like the option to build nuclear power plants in Colorado after 2020. However, the utility knows it is up against a considerable array of opponents who favor wind and solar power and energy conservation measures.
"There's a negative attitude in the state (about nuclear power), something we need to turn around," Xcel chairman and chief executive Dick Kelly said during a panel at a Denver energy conference.
Power needs for Colorado’s Front Range, which now stretches from Ft. Collins in the North to Colorado Springs in the South, continue to grow despite the current economic downturn.
"The demand for power is not going away — individuals are buying plasma televisions, businesses are growing and using more power," Kelly said. "We have to come up with a solution."
Interestingly, the "green voice" at the meeting came from a Department of Energy national laboratory perhaps representing a policy line from the new Obama administration.
"We have to deal with waste and nonproliferation to make sure nuclear materials aren't used as a terrorist threat, and only then sign up for nuclear as part of our energy mix," said Dan Arvizu, director of the National Renewable Energy Laboratory (NREL).
Colorado's only prior experience with nuclear energy, the Ft. St. Vrain plant, ended as a commercial failure in 1989. The reactor was decommissioned and the spent fuel remains stored at that site north of Denver.
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