The loan arranger: Obama triples budget for nuke loan guarantee program… but hasn’t seen a single promising application in two years
"The loan arranger: Obama triples budget for nuke loan guarantee program… but hasn’t seen a single promising application in two years"
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:
- The first (in Georgia) hasn’t even had its reactor design approved as ‘safe’ by the Nuclear Regulatory Commission.
- 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).
- 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.
- 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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