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The last of the loan guarantees?

nukes-hungryThe First – And Last – Nuclear Loan Guarantees? Power Engineering, By Sharryn Dotson, 19 Feb 1Many in the nuclear industry finally exhaled their bated breath as the U.S. Department of Energy finalized $6.5 billion loan guEnergy Secretary Ernest Moniz made the announcement at the National Press Club during a speech about the nation’s “all of the above” energy strategy. Moniz finally said what the industry had been waiting for: that nuclear is, in fact, a part of that strategy. Finalizing at least two of the loan guarantees solidified that point. Co-owners Georgia Power and Oglethorpe Power finalized their loan guarantees, while co-owner Municipal Electric Authority of Georgia (MEAG) is scheduled to finalize a $1.8 billion loan guarantee by July 31, 2014.

With a $15.5 billion price tag attached to the new builds in Georgia, the loans cover half of the projected costs, which still have a chance to increase before construction is completed in 2017 and 2018, respectively. Friends of the Earth said a credit subsidy fee of between 0.8 percent and 1.5 percent is supposed to insulate against default on the loan, but barely covers risks in major nuclear construction.

In the four years that talks have gone on, five nuclear plants announced they would be permanently shut down and plans for at least two new builds were canceled due to low natural gas prices and low wholesale market prices. Dropping costs of natural gas, wind and solar will not help make new nuclear look more attractive financially in the short-term, and plant operators will not be too keen to jump through the hoops to receive government incentives. ……

I have a feeling that these will probably be the last loan guarantees used to fund new nuclear power projects for a while. Southern Co. CEO Tom Fanning reiterated the issues surrounding talks with the DOE in a June 2013 article with our media partner GenerationHub. Fanning said that the DOE was treating the loans as “project financing” instead of “corporate financing,” and the backlash from the Solyndra bankruptcy in 2011 helped stoked the flames of fear that surrounded any future loan guarantees…..

February 21, 2014 - Posted by | Uncategorized

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