Loan guarantee queue

22 August 2008

The first applications for loan guarantees for new nuclear projects have been submitted to the US Department of Energy (DoE).

The DoE has a total of up to $38.5 billion earmarked for federal loan guarantees, under the auspices of the 2005 Energy Policy Act, for advanced energy technology projects that avoid, reduce or sequester air pollutants or greenhouse gas emissions. Over half of that total is available to nuclear projects: up to $18.5 billion for nuclear power facilities and up to $2 billion for front end fuel cycle facilities. The DoE issued solicitations for the loan guarantees for nuclear projects on 30 June.

Usec, currently looking for funding for its American Centrifuge Plant (ACP), submitted the first part of its two-part loan guarantee application on 25 July. The company said its plant fully meets DoE’s selection criteria for a loan guarantee: amongst other considerations, it represents “the early commercial use of a new or significantly improved technology” (the USA does not yet have an operating centrifuge enrichment plant, although one is being built by Urenco in New Mexico and Areva is also planning to build one in Idaho), and will significantly reduce greenhouse gas emissions (it will use 95% less electricity than Usec’s existing gaseous diffusion enrichment plant). Furthermore, Usec says it currently views a DoE loan as the path for obtaining the debt financing needed to complete the commercial plant. The budget to complete the project is estimated at $3.5 billion, not including financing costs and financial assurances, which would be covered by the loan guarantee.

Meanwhile, two applications have been lodged for loan guarantees for the construction of new nuclear power plants. First in the line was Calvert Cliffs 3 at Constellation Energy’s Maryland site. The application was submitted by Calvert Cliffs-3 Nuclear Project, a subsidiary of Constellation Energy-EDF alliance Unistar. According to press reports, Constellation wants to make a decision on starting site works for the plant in 2009 and is pressing DoE for conditional loan guarantee approval as soon as possible, on the grounds that it would be critical to its decision to proceed with the project.

Dominion Virginia Power announced that it had filed the first part of its application for a guarantee for the third unit at its North Anna plant on 15 August. Dominion Generation president and CEO Mark F McGettrick described the filing as an “important step in the process…to position ourselves to be among the first to get a licence for a new nuclear unit.”

The deadline for the first part of the two-part application process, for both front end and reactor projects, is 29 September, with initial second-part submissions due by 2 December for front end projects and 19 December for nuclear power facilities.

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