Areva and others beat loan guarantee deadline

30 September 2008

Areva has submitted an application for a US government loan guarantee for its proposed Eagle Rock uranium enrichment facility. Would-be reactor builders Duke Energy and PPL also managed to get their applications in by the 29 September deadline.


Earlier this year, the US Department of Energy (DoE) invited applications for a share in up to $18.5 billion of loan guarantees for new nuclear power plants, and up to $2 billion for advanced front-end nuclear fuel cycle facilities. As of 19 September, five utilities had registered their intent to apply, and DoE had also received a full application for one fuel cycle facility - Usec's American Centrifuge enrichment plant.


Areva says its proposed Eagle Rock centrifuge enrichment plant supports the DoE objective of maintaining a reliable and competitive US enrichment industry. "It achieves a critical next step in building the infrastructure for long-term US energy security, reduces our nation's reliance on imports of enrichment services, while promoting clean nuclear energy to reduce greenhouse gas emissions," said Sam Shakir, general manager of Areva's Strategic Enrichment Program. The company intends to submit a licence application for the Idaho plant before the end of 2008.


Duke and PPL apply


Duke Energy and PPL Corporation also managed to submit the first parts of loan guarantee applications for their proposed new nuclear plants by the deadline. Duke's application is for the William States Lee III nuclear power station, for which it has already submitted a combined construction and operating licence (COL) application to the US Nuclear Regulatory Commission (NRC).


PPL's loan guarantee application is for a new plant to be called Bell Bend (previously referred to as Susquehanna). The new plant, which would be built in conjunction with the Unistar consortium, would be situated near the existing Susquehanna nuclear power site, and PPL says it expects to file a COL application for the reactor by the end of the year.


The latest applications join those from Unistar for Calvert Cliffs 3 and Dominion for North Anna 3, both plants for which COL applications have already been submitted. Exelon is reported also to have filed loan guarantee applications for its two proposed units at Victoria County in Texas, for which it submitted its COL application earlier this month.


Loan guarantees are being made available to a raft of 'clean energy' technologies, not just to nuclear projects. The presence of a guarantee from the US government is intended to boost the confidence in nuclear build plans and help would-be builders raise the necessary finance for their projects by acting as a catalyst and reducing financing cost, without cost to the taxpayer. Should the project be delayed because of troubles with government-related consents such as safety regulation or planning permission, the DoE is to cover excess finance costs to the utility from the delay in repaying the loans it had taken. If there are no delays, the DoE will not pay out at all.


According to Duke CEO Jim Rogers, "Loan guarantees allow utilities to lower capital costs for new nuclear construction, which ultimately leads to lower electricity prices for consumers."


Rogers' sentiments were echoed by PPL executive vice president and CEO William Spence. "Without federal loan guarantees, companies like PPL will not be able to secure financing for the substantial cost of building new, advanced-design nuclear energy plants that will help this country achieve challenging limits on carbon dioxide emissions, as well as energy independence," he said.


Applicants face a one-off fee of $800,000 to make the two-part applications, plus annual loan maintenance and other fees. The second part of the application is due by 19 December 2008. Any preliminary loan guarantee approvals issued in 2009 will be conditional upon the applicant receiving a COL.