Thursday, July 1, 2010

Utah’s Blue Castle Project gets $30 million

New York private investment firm stake in nuclear energy project

LeadDogBlue Castle Holdings, the developer of a planned nuclear power plant in Green River, Utah, announced an agreement with LeadDog Capital, a specialist in microcap companies, for private equity funding of $30 million in exchange for common stock in the project. 

The IPO has not yet been scheduled by Blue Castle.  LeadDog has previously made investments in biofuels companies.

The funding will be made available to Blue Castle in a series of transactions over a three-year period. 

Aaron Tilton, CEO of Blue Castle, said in a statement the agreement provides “flexible financing that is tied to our licensing schedule.”

NRC licensing schedule

Blue Castle plans to submit an Early Site Permit Application to the NRC in 2011 and a combined construction and operating license application (COL) about 18 months later.  The cost of preparing and paying for NRC review of these actions could easily cost as much as the entire $30 million. 

Blue Castle has not chosen a reactor design.  By the time the firm files a COL in 2012 or 2013, all of the pending reactor design certifications at the NRC for large units will be done. This gives Blue Castle a wide range of choices.  However, given the time it takes to prepare a COL, it is likely Blue Castle is already having exploratory discussions with reactor vendors. 

Seeking investors a share at a time

raising_capitalTilton has told this blog in prior interviews his plan is to develop a power station with 3,000 MW of power. He’s said elsewhere he has expressions of interest for another 1,500 MW.  Available water supplies in Green River for cooling systems, and economies of scale, suggest a possible tilt toward two of the larger designs rather than three of the smaller units.

Additional financing Tilton has told industry sources, includes selling shares of the new reactors to power utilities in equity stakes of 4-7% of the construction costs. At $3,500/KW, a 3,000 MW power station will cost $10.5 billion making a 3-7% stake worth $315-735 million. 

Blue Castle’s strategy is that by limiting the risk of firms to this level of investment, they are more likely to get them to sign up.  Some investors are also likely to sign power agreements.  Investor interest in the firm will likely ramp up if the firm gets its NRC license.

Tilton said in a statement the firm will “retain a long-term equity position” as a merchant developer of a nuclear power station.

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1 comment:

Jason Ribeiro said...

I'm going to count this as yet more evidence for nuclear myth busting. Private capital does invest in nuclear.