In a major step for domestic energy security, the U.S. Department of Energy offered a conditional commitment for a $2 billion loan guarantee to facilitate financing of AREVA’s Eagle Rock Enrichment Facility under development near Idaho Falls, Idaho.
Read the news of the announcement here.
By Katherine Berezowskyj
In a recent post on the Energy Collective, blogger Rod Adams provides an interesting take on loan guarantees for new nuclear projects. Proposed nuclear power plant projects could generate some 10,000 direct and indirect jobs, but financing the first few hinges on U.S. government loan guarantees, part of a program created by the Energy Policy Act of 2005.
Adams discusses his perspective on this issue saying, “The elected representatives of the United States of America clearly intended to encourage nuclear energy development when they passed the Energy Policy Act of 2005.” He adds that there has been slow progress toward awarding loan guarantees to qualified projects.
His post delves into the financial components involved in the DOE Loan Guarantee program, including aspects of the credit subsidy cost.
“Even though the nuclear energy projects applying for section 1703 loan guarantees are intensely scrutinized for both technical merit and financial viability by technically qualified and hard nosed evaluators, the budget number crunchers are insisting on using a probability of default that is based on an average of experience from loans to small businesses, students, and homeowners. That assumed average default probability is much higher than the individually calculated probability would be if it was based on just the project specifics. These are sound nuclear technology deployment projects where there are not only strong companies with real money invested, but also participation by financially strong, politically friendly countries like France and Japan.”
Adams’ comments echo the testimony provided recently to Congress by Nuclear Energy Institute President, Marvin Fertel. Speaking about the clean energy loan guarantee program, Fertel said, “These projects, and many more like them, are essential if our nation is to meet our goals for clean energy and job creation.”
We agree that building new nuclear power plants is critical to meeting our nation’s energy challenges. Investing in a combination of nuclear and renewable energy generation is probably the best approach for meeting our demand for clean electricity, creating jobs and protecting our environment.
AREVA has accepted the U.S. Department of Energy’s (DOE) offer of a conditional commitment to issue a $2 billion loan guarantee to support construction of the Eagle Rock Enrichment Facility, AREVA’s $3 billion state-of-the-art gas centrifuge enrichment plant in Bonneville County, Idaho.
The plant will provide American energy security by helping to secure the supply of domestic uranium enrichment to the country’s 104 operating nuclear reactors.
The construction, licensing, and operation of this facility will generate about 5,000 direct and indirect jobs in the United States, while producing more than $5 billion in economic activity in the regional economy.
More information on this announcement here Eagle Rock Enrichment Facility and AREVA’s investment in American energy security here.
