nuclear-news

Nuclear finance will rely on consumers’ stomach for risk.

 Projects prove too tricky to fund through normal financing methods.

Western governments have flip-flopped on nuclear power for decades. But the current enthusiasm for atomic energy in countries such as the Czech Republic, Sweden, the US
and the UK now also appears to be spreading to the private sector.

This week, 14 of the world’s biggest banks and financial institutions pledged
to increase their support for nuclear power. Nuclear power projects prove
too tricky to fund through normal project financing methods.

Upfront costsare high and construction is lengthy. If the company set up to construct
the project defaulted, a half-built nuclear plant would be pretty worthless
as security. The interest lenders would demand for that level of risk would
simply make projects unviable, says Jens Weibezahn, assistant professor at
the Copenhagen Business School.

Projects running overtime and budget, such
as EDF’s Hinkley Point C plant in south-west England, have hit
confidence. On the French utility’s last estimate, the initial £18bn
budget for the 3.2 gigawatt plant had ballooned to £31bn-£35bn in 2015
prices (£41.6bn-£47bn in today’s money).

Several other countries are also considering models such as the regulated asset base, involving consumers paying towards the construction of nuclear power plans before
they start operating. Microsoft’s deal points to another way in which the
private sector can support a nuclear renaissance — although its agreement
is notably not for a new build.

 FT 25th Sept 2024
https://www.ft.com/content/0608e36e-51cd-4ab7-bd18-62a536808536

September 27, 2024 - Posted by Christina Macpherson | business and costs