AREVA Supports Loan Guarantees to Spur Investment in Nuclear Energy Projects | AREVA North America: Next Energy Blog


The nuclear energy industry is not unique in its ability to apply for loan guarantees. The federal government has decades of experience administering loan guarantees and other financial support for critical infrastructure projects. These projects span a broad array of industries from energy to shipbuilding to transportation to affordable housing. In fact, the $20.5 billion allocated for new nuclear energy facilities is less than 2 percent of the government managed loan guarantee portfolio, which exceeds $1 trillion. (This includes $18.5 billion for new nuclear power plants and $2 billion for fuel cycle facilities, such as enrichment plants.)

Loan guarantees do not represent a subsidy, let alone free money to the nuclear industry as some claim. The loan guarantee program is self-financing, requiring the companies that seek the guarantees to pay all costs to the government for providing them. A well managed loan guarantee program will cost tax payers nothing and yet provide them with the benefits of affordable, emission-free electricity and reduce our reliance on imported sources of energy.

The loan guarantee program was created under Title XVII of the Energy Policy Act of 2005. It was created in direct response to the monumental energy challenges we face, in order to spur investment in “innovative technologies” that “avoid, reduce or sequester air pollutants or anthropogenic emissions of greenhouse gases.” The U.S. EPR™ reactors under consideration here in the United States would do just that, and we are gaining experience from the EPR reactors already under construction internationally. 

The interest in the U.S. government program has been tremendous, with DOE announcing applications for guarantees for 21 new reactors totaling $122 billion, more than six times the allotted amount.

Nuclear facilities are capital intensive projects, often requiring investments equaling half the market cap of the companies that seek to build them. Although nuclear power plants require more of an investment upfront, they have proven wise long-term investments because of low operating and maintenance costs. They also provide predictable revenue streams, not to mention clean and reliable baseload generation for electricity customers. Loan guarantees are essential to offset the disparity in scale between project size and company size. Such assurances also mitigate risks of charting the waters of licensing and regulatory processes which have been effectively revised but still could give pause to the investment community.

President Obama has expressed a clear goal to lift our country out of the current economic crisis and strengthen our position as leaders in the 21st century by way of a clean, green and more energy independent economy. The loan guarantees for nuclear energy reinforce this vision by encouraging investment in domestically produced energy, capable of helping the country tackle our ambitious climate goals and employ thousands of well-trained, well-paid Americans.

Share TAGS: AREVA EPR Reactor, Clean Energy, Eagle Rock Enrichment Project, , Enrichment, EPR, , Loan Guarantees, , Nuclear Energy, Nuclear Power, Nuclear Power Plants

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