Tepco buys into STP expansion project

10 May 2010

Japanese utility Tokyo Electric Power Company (Tepco) has agreed to take a 9% stake in the project to construct two new reactors at the South Texas Project (STP), with an option to later increase this stake to some 18%.


STP 3 and 4 (STPNOC)
How STP Units 3 and 4 could look (Image: STPNOC)
Nuclear Innovation North America (Nina) - the nuclear development company jointly owned by NRG Energy and Toshiba - was formed in March 2008 to market the Advanced Boiling Water Reactor (ABWR) in North America. Toshiba received a 12% stake in Nina, in return for a $300 million investment over six years. Half of this investment is to support the proposed new ABWRs at STP through Nina Investments Holdings. The other half is for new ABWR projects in North America with other potential partners. Nina holds a 92.375% stake in the project to build STP Units 3 and 4, with the remaining 7.625% held by CPS Energy. The project had originally been a 50-50 venture between Nina and CPS, but CPS decided to withdraw from the project altogether. However, in February an agreement was reached under which CPS would retain a small stake.


Under an agreement approved by the boards of both companies, Tepco will invest $155 million for a 10% share of Nina Investments Holdings, once a conditional commitment for US Department of Energy loan guarantee is secured for the project. This $155 million includes a $30 million option payment to Nina enabling Tepco to buy an additional 10% share of Nina Investments Holdings for an additional $125 million within about one year.


With the initial transaction, Tepco would hold a super-precise 9.2375% interest in the two new STP units, bringing Nina's down to 83.1375%. The Japanese utility would also be responsible for 10% of all STP expansion capital costs. Should the company choose to use its option to acquire a further 10% in Nina Investments Holdings’ stake in the project, it will then own about 18% of the project itself and will have to cover 20% of the development costs.


According to Tepco, it received a two-fold request from NRG in August 2006 to provide technical consulting services and to invest in the project. Tepco said that it has been providing technical consulting services to the project since March 2007 and "now commits to investing in the project." The company, NRG said, "has provided the benefit of its experience achieved in developing, constructing, commissioning and operating the ABWR" in Japan. Tepco noted that its investment in the STP project marks the first time a Japanese utility has invested in an overseas nuclear power project.


David Crane, chairman of Nina and president and CEO of NRG, commented: "Tepco has brought two advanced technology nuclear units online, on time and on budget and literally wrote the book on training the workforce for Advanced Boiling Water Reactor technology." He added, "Their ownership participation in STP will be invaluable to the technical and financial viability of the project and will help ensure that STP 3 & 4 is part of the vanguard of new advanced nuclear projects in the United States."


In addition to US loan guarantees, Nina is seeking to diversify financing for the STP project by actively pursuing additional loan guarantees through the Japanese export credit agencies. According to Steve Winn, CEO of Nina, "Tepco will be instrumental in helping to secure Japanese financing support through Japan Bank for International Cooperation and Nippon Export and Investment Insurance."


The South Texas Project currently consists of two pressurized water reactors (PWRs), which together produce some 2700 MWe. The reactors were brought online in August 1988 and June 1989. The facility is operated by STPNOC and owned by NRG Texas (44%), CPS Energy (40%) and Austin Energy (16%).


Construction of the two new ABWRs at STP is expected to begin in 2012, with the first 1358 MWe unit coming online in 2016 and the second in 2017.


Researched and written

by World Nuclear News