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The loan arranger: Obama triples budget for nuke loan guarantee program… but hasn’t seen a single promising application in two years

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"The loan arranger: Obama triples budget for nuke loan guarantee program… but hasn’t seen a single promising application in two years"

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Nuclear remains slow, risky, and expensive

Sean Pool is a special assistant for energy policy at American Progress.

Riddled with ever-escalating cost overruns, years of delays, and a lack of public support, its baffling why the nuclear industry continues to enjoy the support of so many “fiscally conservative” members of the US legislature.

Earlier this week CAP’s Dan Weiss blogged here about Obama’s nuclear error, explaining that the President has proposed in his 2011 budget to triple loan guarantees for the nuclear industry — from$18.5 billion to $54 billion — without extracting any concrete promises from nuke proponents to support comprehensive climate and clean energy legislation in return.

The other problem is that there weren’t any credible applicants even before the funding increase, let alone for a program three times the size, as this  NGO analysis reveals:

According to experts from around the United States, … the U.S. Department of Energy (DOE) faces today [an] extraordinarily weak crop of four reactor project candidates vying for loan-guarantee bailouts.  The four proposed projects at the top of the list for $18.5 billion in federal bailout support are: the Southern Company’s Vogtle reactors in Georgia (widely believed to be the current front runner); the NRG reactor project in Texas; the VC Summer reactors in South Carolina; and the Calvert Cliffs reactor in Maryland.

The local experts are far from being alone in their negative assessment of the viability of the four bailout candidates.  According to the independent Taxpayers for Common Sense, the four finalists all exhibit some combination of “rising cost estimates, delays related to reactor designs, and credit downgrades.”  Making matters even worse: The four deeply flawed reactor projects are reputed to be the best of the options available, which means that there are no viable candidates in the pipeline to justify the tripling to $54 billion in nuclear reactor bailouts proposed under the White House budget released this week.

This is the latest bad news for the setback-plagued nuclear power industry, which is coming off of one of its worst months ever in January 2010, including: a major court room squabble between NRG and the City of San Antonio over a surprise $4 billion estimated cost increase for two proposed reactors in Texas; the rejection of $1 billion in rate increases by Florida regulators that has caused the two state utilities to announce a slowdown on their nuclear projects; and a growing scandal in Vermont over carcinogenic tritium leaks into the water supply that threaten to derail state approval of the extension of the Vermont Yankee reactor.

To summarize, of the 19 applications that the DOE recieved for the Title XVII nuclear loan guarantee program, only four were even worth looking at, and of those four:

  1. The first (in Georgia) hasn’t even had its reactor design approved as ‘safe’ by the Nuclear Regulatory Commission.
  2. The second (in South Texas) is already $4 billion over budget, though they haven’t even put a shovel in the ground yet (and let’s not forget about NRG’s last failed attempt to build a reactor in Texas, where the initial cost estimate of $6 billion ballooned to a staggering $22 billion within two years of planning).
  3. The third (in South Carolina) is not-yet certified as ‘safe’, built mostly from imported foreign components, is more than 18 months behind schedule, and is half a billion dollars over-cost.
  4. The fourth (in Maryland) is so far over budget that the executive director for Nuclear Information and Resource Service said it would end up costing $9,000 per kilowatt (that’s roughly double the cost of developing an equivalent amount of wind power in the same region).

If you were reading these applications, would you approve them? Taxpayers for Common Sense found that none of these four “top-tier” project proposals for the existing loan guarantee program inspire confidence, and the Congressional Budget office  itself “considers the risk of default on such a loan guarantee to be very high””well above 50 percent.”

In general, besides (and partly because of) its risks, nuclear power is simply more expensive than other low-carbon alternatives. It is embarrassing when lawmakers incoherently argue that nuclear energy is a more affordable way to produce electricity when is certifiably is not. A report published last June by economist Dr. Mark Cooper at the Institute for Energy and the Environment at Vermont Law School found that

… it would cost $1.9 trillion to $4.1 trillion more over the life of 100 new nuclear reactors than it would to generate the same electricity from a combination of more energy efficiency and renewables… [and that] the likely cost of electricity for a new generation of nuclear reactors would be 12-20 cents per kilowatt hour (KWh), considerably more expensive than the average cost of increased use of energy efficiency and renewable energies at 6 cents per kilowatt hour.

So much for Lamar Alexander’s (R-TN) call to build a 100 nuclear plants in 20 years. But wait, it gets worse. The Political Economy Research Institute puts nuclear in last place in terms of job creation potential, with only 4.2 jobs per $1 million invested. By comparison they estimate that wind and solar generate roughly four times as many jobs. Perhaps that’s because many of the key components for nuclear reactors must be forged overseas and imported, along with 84 per cent of the Uranium used in them.

If the (non-partisan) CBO says nuclear energy is too risky, the market says it is too expensive, economists say it doesn’t create enough jobs, and it the DOE admits that it relies more heavily on imported fuel than even oil-fired energy, then why Obama has banded with self-ascribed ‘fiscal conservatives’ in congress to throw billions of taxpayers’ dollars down the tubes on these disastrous boondoggles is beyond comprehension.

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9 Responses to The loan arranger: Obama triples budget for nuke loan guarantee program… but hasn’t seen a single promising application in two years

  1. SecularAnimist says:

    Sean Pool wrote: “If you were reading these applications, would you approve them?”

    Well, no, I wouldn’t.

    But then again, I’m not a “fiscal conservative” who believes in “small government” and “the free market” — like the Republicans and so-called “moderate” Democrats who support bailing out the failed nuclear power industry with tens of billions of taxpayer dollars.

  2. James Newberry says:

    It is NOT beyond comprehension why the president has endorsed the poisonous, fiscally unfeasible, intractably burdened, public health damaging, national and international security threatening, fraud of atomic fission. He is representing the same centralized global corporatism that is leading him to transfer public wealth of future US Treasury revenues to plutocrats of an elite and corrupt centralized transnational “banking” system of wealthy, politically powerful, warmongering, corporations based on an “economy” of fraud.

    A further example, his new “Obama Plan” calls for using half of future corn crop production for the fraud of “bioethanol” (formerly known as spirits, grain alcohol), which will lead to further starvation in many nations. This will be enabled by hundreds of billions of deficit spending over the coming years for this scam, through the rubric of more Farm Bill corporatism. Coastal Dead Zones, petroleum based pesticides, loss of forests, loss of top soil, decreasing public health, increasing federal debt, more climate change and “renewable energy” here we come.

    The Humpty Dumpty of war for profit, petroleum for profit and global corporatism is broken and we have the “honor” of living in this era (error) of kleptocratic plutocracy by non-sovereign financial corporatism and the “national insecurity state”, in my personal opinion.

  3. Leif says:

    If memory serves me correct, Lester Brown pointed out in Plan B 4.0 that the amount of corn required to fill the tank of an SUV just once with ethanol would feed a third world person for a year. Is it any wonder that our world standing is on the wain? That there might be folks out there willing to die to hasten our demise?
    Humanity First, Status Quo, NO!

  4. Word salad says:

    All funding for wind turbines is pre approved.
    They can be built for either decoration or for real electric.

  5. drt says:

    So here’s a cpl. of ideas:
    1. Expand this loan guarantee program to include all green/carbon neutral energy projects, taking care to make sure the definition of green doesn’t get perverted or co-opted.
    2. By fiat, executive order, and law as needed, declare that the federal govt. will only purchase 100% green electricity by some date, maybe 2015.

  6. WHY THE POLITICAL RIGHT REJECTS GLOBAL WARMING

    We view the Right, the conservative elements in the country, as ignorant, and worse, for rejecting the reality of global warming and the fact that it is human-driven. It seems to me that it is natural for the political Right to reject the proven fact of global Warming because – The fear of change is their core belief.

    Let’s try to understand rather than accuse. The basic component of the political Right, the Republican Party and Conservative Democrats, is based on fear. Fear of the “others”; fear of minorities; fear of change; fear of gays; fear of “the enemy”. They want to retain what they have; it is understandable desire.

    The political Right is “conservative”, meaning: no change. Let us stay in the past, the imagined “glorious” past that the US had. Therefore they have a fear of government and fear of regulations. Let “free market forces” determine our economy. Have the “freedom” to have guns to protect ourselves from any enemy. Every one should be “free” to do what he believes in – the old wild West of John Wayne is still in their blood. In our national blood too.

    The “Conservatives” are not “bad” people. We all have some measures of this fear of the unknown, fear of the future. Because of this fear-based approach to life, the “conservatives” also fear global warming. And they are justified to fear GW because it would be very upsetting to our mostly comfortable, even luxurious way of life. To effectively fight global warming, the US, like other wealthy nations, would have to reduce its wasteful ways and would have to cooperate with other nations to help sustain the global climate. We will have to have “sissy” green energy, rather than “solid, reliable” coal and we will have to drive smaller, more energy efficient cars.

    We must understand this fear. This is not a joke to them, it induces considerable fear of the unknown, the lost of the imagined “solid” reliable past of their lives.

    How can we help them deal with this justifiable fear?

  7. Chris Winter says:

    Word salad wrote: “All funding for wind turbines is pre approved. They can be built for either decoration or for real electric.”

    Assuming that’s true (a citation would be welcome), and some firm builds a wind turbine “for decoration,” what happens to their reputation once this fact is discovered? What happens to their bank account?

    It once was true (as Christopher Flavin observes in the foreword to Wind Energy Comes of Age) that wind turbines were once “a glitzy tax shelter for wealthy dentists and Hollywood moguls.” But now they produce “real electric” in ever-growing amounts, and represent a major segment of the alternative energy industry that threatens to produce the world’s next crop of millionaires and billionaires.

  8. John Stevens says:

    Conservative don’t fear change. They fear change when it is based on bogus science. They fear change when it leads to socialism. They fear change when all personal control is given to a few in the state. They fear change when it is based on lies. I guess that you are correct. Conservatives do fear change.

  9. fftf says:

    The fundamental aspect of nuclear energy that the rest of us need to understand is that fission heat is actually quite cheap. The average total production cost from a US nuclear power plant today is just 1.86 cents per kilowatt-hour. That total is normally broken into two pieces – fuel costs and non-fuel Operations and Maintenance costs. For 2008, nuclear plant owners in the US spent an average of just 0.49 cents per kilowatt hour for fuel and 1.37 cents per kilowatt hour for non-fuel O&M.

    Nuclear Energy Is Cheap and Disruptive; Controlling the Initial Cost of Nuclear Power Plants is a Solvable Problem
    http://atomicinsights.blogspot.com/2010/02/nuclear-energy-is-cheap-and-disruptive.html