U.S. Department of Energy measure will boost investor confidence in the $2 billion plant.
The long wait is over for Areva. The U.S. Department of Energy has offered a conditional commitment for a $2 billion loan guarantee to AREVA to facilitate financing of its Eagle Rock Enrichment Facility planned for development near Idaho Falls, Idaho. The conditional commitment was offered through DOE’s Loan Programs Office.
Energy Secretary Steven Chu said in a news release . . .
"Increasing uranium enrichment in the United States is critical to the nation's energy and national security."
"Existing reactors will need additional sources of enriched uranium soon. New nuclear plants that could start to come on line as early as 2016 will also need a steady, reliable source of uranium enrichment services. AREVA's project will help to meet that demand."
For its part, Areva was ecstatic.
“AREVA is elated by this decision which will enable us to continue development of our Eagle Rock facility in Idaho and contribute to rebuilding America’s energy infrastructure so we can produce more CO2-free electricity,” said Jacques Besnainou, CEO of AREVA North America. “AREVA has considerable experience building and operating enrichment facilities and is putting that experience to work with the Eagle Rock project.”
Speaking to the Idaho Falls Post Register Bob Poyser, Areva's vice president in charge of Idaho Falls operations, said of the loan guarantee. "It's a great step forward for us. It'll give us the ability to go out and get financing for the project."
Areva has said repeatedly that the construction of the $2 billion facility would be "difficult if not impossible" if the loan guarantee was not offered for the plant.
Last week Areva executives told a conference call of nuclear bloggers the parent firm was selling a 15% stake in the company to Mitsubishi and the sovereign wealth fund of the state of Qatar.
Areva plant will use proven technology
Like its counterpart in New Mexico, when operational, the Eagle Rock plant will produce about 25% of the enriched uranium needed to fuel the nation’s 104 operating nuclear reactors.
Currently, the United States obtains half of its enriched uranium from Russia under the Megatons-to-Megawatts program, in which nuclear materials that were once pointed at the United States are converted to civilian nuclear fuel to power America's economy. The program expires in 2013, after which alternate sources of enrichment services will be required to support the continued and expanded use of nuclear power in the United States
The Idaho Falls facility will use advanced centrifuge technology instead of the more energy-intensive gaseous diffusion process. Although Eagle Rock will be only the second plant to use this technology in the US, it has been employed in Europe for about 30 years to enrich uranium for the commercial power market. The project's technology uses 95% less electricity than the gaseous diffusion technology it replaces, reducing both energy use and environmental effects.
Loan guarantees are not federal spending
DOE loan guarantees are not grants but provide a federal backstop that enables companies to invest in clean energy projects, including smart grids, renewable and nuclear energy projects.
The decision to award the loan guarantee is based on a rigorous due diligence process. It assesses financial and technical factors. The project must satisfy certain conditions before the loan guarantee can be issued, including the receipt of the NRC license and state permits.
AREVA submitted a license application to the Nuclear Regulatory Commission in December 2008 to build the Eagle Rock plant at a site 18 miles west of Idaho Falls. If approved, construction on the 3.3 million SWU (separative work units). The license is expected in mid-2011.
The plant's construction phase is estimated to create 1,000 jobs in eastern Idaho. The plant would also employ 300-400 workers to run it.
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