The 2005 Energy Policy Act (you remember, the one written in Dick Cheney’s office?) sets up an $18 billion fund to provide loan guarantees to companies that want to build new nuclear plants. Prior to its passage, however, the Congressional Budget Office (CBO) had issued a report in 2003, estimating what the chances were that a new nuke would default on its loan guarantee. Here’s what the CBO said:
CBO considers the risk of default on such a loan guarantee to be very high—well above 50 percent.
Bad as that news is for those wanting to build new reactors, the situation may be worse than that. The CBO made a number of assumptions in its estimates, starting with this:
For this estimate, CBO assumes that the first nuclear plant built using a federal loan guarantee would have … associated project costs of $2.5 billion.
To give you some idea how far this is from current reality, San Antonio’s electric utility, which was poised for a major investment in the new units proposed for the South Texas Nuclear Project, withdrew its participation and sued NRG, the owner of STNP, when the project cost estimates reached $18 billion for the two new units.
Another assumption in the CBO estimate does not bode well for STNP:
We expect that such a plant … would employ a reactor design certified by the NRC prior to construction.
In fact, the two reactors at STNP are scheduled to be Advanced Boiling Water Reactors (ABWR’s), a design not yet certified by the NRC, and of which there are only a handful around the world, all in Japan. And the NRG design differs significantly from the Japanese ABWR’s.