Thursday, January 28, 2010

Obama to triple nuclear loan guarantees

Bloomberg wire service reports the increase will be requested in the 2011 budget

DOE logoTwo people familiar with the Department of Energy budget for 2011 have told the Bloomberg wire service that the President’s budget for 2011 will include a request to add $36 billion to the nuclear energy loan guarantee program. Bloomberg also reported that Southern’s Vogtle plant, which plans to build two Westinghouse 1,150 MW AP1000 reactors, will be the first loan guarantee approved in 2010.

The federal budget for FY2011 is being officially transmitted to Congress this week. Details will be on the DOE web site once the documents are released to the public.

The news comes one day after President Obama added a line to his first State-of-the-Union address in support of nuclear energy. In his speech on Jan 27, he said, “to create more of these clean-energy jobs, we need more production, more efficiency, more incentives, and that means building a new generation of safe, clean nuclear power plants in this country.”

Both actions come just three weeks after Carol Browner, a senior White House advisor on energy and environmental issues, gave an online video interview Jan 6 in which she said, “The President believes that nuclear needs to be part of our energy future.”

"If you believe as we do that climate change is a serious problem ... then you need to be open to what are all of the ways in which we can produce energy in a clean manner. And so nuclear is obviously one of those.”

StevenChu_at_G8The statement also comes just a week after Secretary of Energy Steven Chu (right) told a Senate Energy & Natural Resources Committee at a Jan 21 hearing that the White House supports nuclear energy.

“Right now 20% of our electricity is from nuclear; we would like to maintain that, possibly grow that. For that reason we are working aggressively to help restart the American nuclear industry with loan guarantees with research in the out years that will lead to more advanced, safer nuclear power.”

The action to triple the size of the loan guarantee program would, if enacted by Congress, increase the insurance coverage for new nuclear power plants, but not federal spending. An increase of $36 billion in loan guarantees could cover six-to-eight new reactors. There are currently more than a dozen viable license applications now pending at the NRC.

The current loan guarantee program of $18.5 billion could cover three-to-five new plants. the number depends on how much coverage each one needs to gain confidence from investors to lower the cost of capital.

Taken together, the two elements of the loan guarnatee program could cover nine-to-thirteen new nuclear reactors. Assuming plants average 1,200 MW, the increase to the nation's supply of carbon emission free electrical generation capacity would be on the order of 11 to 16 GWe of power.

Energy Secretary Chu has complained to Congress that getting the long-delayed first round of loan guarantees out the door has turned out to be a lot more complicated than he expected. Much the recent round of delays has centered on a difficult dialog with OMB about how to price the premiums utilities must pay to get the guarantees relative to the risk of default.

Aside from bureaucratic issues, the nuclear energy industry has sought a significant increase in the level of loan guarantees. It was rebuffed when the economic stimulus package was put together, but now new political drivers appear to be gaining the attention of the White House.

Polls tell a story

VoteAccording to ABC television news pollster Gary Langer, Obama’s call for more support for nuclear energy is aimed at bolstering his support in areas where he is the weakest. Langer’s analysis of polling data show “sharp divisions” in support for nuclear energy segmented by partisanship, ideology, age, and sex.

  • 61% of Republican support it along with 55% of independents. Langer says these two areas are in the “crucial center” where Obama has political trouble. Similarly, conservatives favor nuclear energy by 23% margin compared to liberals.
  • Seniors favor nuclear energy by an enormous margin. 67% support it compared to 28% who oppose it. By comparison, young adults, who are critical to Obama’s electoral base, oppose nuclear energy by similar margins.
  • Men support nuclear energy by a 2:1 margin, but women oppose with a 17% gap between anti-and-pro positions.

Langer concludes that Obama’s support for nuclear energy is a calculated political call to groups that are outside of his political base because it appeals to them and gives them a reason to pay attention to his administration’s policies.

Nuclear energy does not contribute to the growth of greenhouse gases. The rush by green groups to get capital for their solar and wind projects puts them in competition for investors with new nuclear energy plants. That's why one of the first objections green groups have to new nukes is cost. Loan guarnatees will level the playing field. Now solar and wind will have to compete based on the cost of electricity delivered to rate payers.

Next step is up to Congress

In Congress Republicans have told Senate Democrats the price of their votes on a climate bill is a strong section in the legislation on nuclear energy. Now the House and Senate Appropriations Committees will get a chance to put cash on the barrel head, so to speak. The provisions of the Energy Policy Act of 2005 will also have to be updated by the relevant House and Senate committees. It will be a complex legislative effort.

The proof of the Obama administration’s support for nuclear energy will be in a drive to get Congress to approve a provision in the budget to vastly expand the loan guarantee program. The wheel is finally turning. Let’s see how far it rolls.

Bonus video – Steve Winword “Roll with It”

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crf said...

The difference is support between men and women is interesting. I wonder if women don't support nuclear because of the reasons why men support it?

Clearly, support or opposition is not likely based on a cooly objective view. There wouldn't be such a gender split if there were.

Having a huge gender and political split on nuclear energy is really BAD. The nuclear industry and nuclear scientists need to consider addressing this problem. Long term, it will cripple the industry if the female employment pool is limited to the small number of women supporting nuclear.

Luke_C (UK) said...

There was some intersting discussion on this, and the possibly related racial split in support, on a blog by Alexis Madrigal

Which sparked a thread on energyfromthorium

You may not aggree with Alexis's explanation, but there is certainly a divide that needs some explaining.

SteveK9 said...

Both sides of the aisle stood and applauded the comment on nuclear energy. You are underestimating Democratic support. The real opposition comes from the fossil fuel industry, channeled by their influence in Congress.

Brian Mays said...

Alexis has a point. It must be all of those white males in China, Japan, Korea, India, Argentina, UAE, etc., that are driving most of today's new nuclear construction.

I think that Alexis needs to get out more.

"Nuclear proponents have failed to grasp that all the studies about nuclear safety in the world don't mean a thing to the people who ..." don't bother to use their heads for anything other than a hat rack. For those people, there's Greenpeace, and nothing is going to change their minds.

Fortunately, intellectual laziness is often indicative of other forms of laziness. Take a lesson from politics: you don't have to convince all of the people that your policies are best, just the ones who bother to vote.

neil craig said...

The AP1000 cost $1 billion off the shelf. So a $36 billion guarantee to build a dozen of them shows how much of the cost is regulatory. I am assuming the contractors also put up a significant amount of money. If Obama would cut through the paperwork he could fund more than 36 new reactiors & since the building time is 3 years, get them running a lot earlier than 2020.

M. Simon said...

You should study War of the Currents between Westinghouse and Edison.

Decisions on big systems are hardly ever made on rational grounds although rationality eventually wins in the end.

Wind fights nuclear, solar fights coal. Plus all the permutations in between. And they all do it in the media, by funding "enviro" groups, economic interest groups, State Houses and the halls of Congress instead of in the marketplace.

BTW keep your eye on Polywell Fusion. We Will Know In Two Years or less.