With another post that demonstrates a propensity for overlooking facts, Joe Romm has written a blog on the Energy Collective with his interpretations of the nuclear renaissance.
Romm points to “analysis” conducted by his colleague at the Center for American Progress, Richard Caperton (who appears to have gained his vast knowledge of project finance as a lobbyist) that the correct credit subsidy cost for nuclear power projects is ten percent of the total loan size. There are at least two problems with Caperton’s analysis.
First, Caperton claims to have reached this conclusion by reviewing “publicly available estimates” of how loans for nuclear power projects might perform. Not only does Caperton fail to provide his source information, he also admits that his “analysis” consists of reading the opinions of other anti-nuclear activists. Hardly a model of intellectual rigor. Rather than relying on how anti-nuclear activists believe a loan for a new nuclear power plant might perform, Caperton and Romm would be well-advised to look at actual data from past nuclear power projects. Were they to do this, they would find that the average loss rate associated with the 171 nuclear power projects that have received construction licenses from the NRC is less than 2 percent.
Second, after Caperton states that the “correct” credit subsidy cost is ten percent, he goes on to admit the credit subsidy cost depends on a range of complex inputs that will vary for each project. In fact, each project (regardless of technology) has a unique market profile and a unique set of financial assurances (e.g., equity, guarantees, off-take agreements, etc.). Therefore, it is impossible and intellectually dishonest to suggest there is a “correct” credit subsidy cost. As the details of all loan guarantees are proprietary, Caperton has no knowledge of the financial protections included in any given transactions, and thus no basis to evaluate whether a credit subsidy cost is “correct”.
Add to this the fact that, as discussed above, Caperton also lacks any basis for his generic conclusions about the risk of nuclear and it quickly becomes clear that Caperton did little more than make up a number that he felt served his goal of preventing the construction of new, carbon-free, job generating, low cost electricity, nuclear power plants.
Mr. Caperton and Mr. Romm do little to advance their goals when they attempt to pass their ideology off as analysis.
For another perspective on the same forum, one from a former nuclear navy engineer, Rod Adams also discusses nuclear loan guarantees and the “credit subsidy cost”.
Update: also see the great post on this subject by NEI here.
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