Skip to main content

Financing the “Nuclear Renaissance” and Why California Should Be More In the Game

Expert attorneys in the finance field at the law firm Latham and Watkins in California have been chewing on ways that advance the thinking and research of how to finance the construction of new nuclear plants in restructured markets (pdf). For the finance nerds out there (me being one of them), the document is definitely worth thumbing through to find some of the latest ideas on how to use project finance (instead of rate-base) to pay for building these large nuclear beasts. Since the authors of the report are from California, they provided insights on how and why the west coast state should be more involved in the nuclear discussion. Below are a few snippets worthy of your attention:

p. 497 - To effectively promote private financing of what some have termed the nuclear renaissance under a financing model that internalizes these unique risks rather than relying on ratemaking for risk mitigation, federal incentive programs should be re-evaluated in accordance with these structuring considerations and state level programs should be implemented to fill in the gaps in federal incentive programs, particularly in restructured energy markets.

p. 498 - California’s involvement in the nuclear dialogue could focus part of that conversation on a principal topic addressed in this article: how to best structure federal and state programs to promote the development of new nuclear power facilities by both utilities and independent power producers under a project finance model that does not necessitate the ability to pass developing costs on to ratepayers irrespective of cost overruns or failures to successfully commission a new project.

p. 506 - This article is written from the perspective of discussing financing structures under which nuclear power can be privately financed applying the Independent Development Model, and what this means for our traditional ways of approaching project finance.

p. 545 - We write this article with a full awareness of the sensitivity that surrounds the nuclear power question. However, we write with an assumption that California’s policy makers will ultimately conclude, in the face of the scientific evidence and policy discussions cited above, that California must inevitably pursue new nuclear energy projects or else fail to meet its goals.

p. 546 - While the energy industry is touting a nuclear renaissance in the United States, there is little evidence of it in California. If California does choose to pursue new nuclear power as part of the answer to clean base load power, then unless California acts quickly, the emergence of the nuclear renaissance may be no more to California than a sign post to read California’s existing moratorium as a lost opportunity to achieve California’s energy goals.

p. 547 - California may well decide that the moratorium on nuclear power development should stay in place because nuclear power as a concept is not an acceptable solution to the state’s power needs. But with high fiscal and energy policy stakes, this decision should not be made inadvertently because of a 1976 legislative moratorium that has effectively forestalled thoughtful discussion in California while the rest of the nation embarks on a nuclear renaissance.

p. 550 - The failure of California to engage in the dialogue on new nuclear power to ensure that federal programs fit the State’s energy market paradigm has the danger of creating a real and enduring shortage of power and a lost opportunity to capture billions of dollars in federal programs at a time when the state is working to develop green industries to meet its economic needs and energy policy goals for reducing carbon emissions.

Don’t let me give you the impression that the 56-page document is all about California. It’s not. The nuggets highlighted above are just some of the more provocative statements in an other-wise dry and detailed subject. Check it out.

Comments

Bryan Kelly said…
"The United States may be behind Europe and Asia in the development and deployment of new nuclear technologies for energy production, but it could be at the forefront of harnessing the private sector to build and finance this development." (pg. 507) I could not agree more.

A good start might be by privatizing the "finger-pointing risk(s)" (pg. 505) of cost and schedule overruns using Surety Bonds for Nuclear Energy Facility Construction Cost-Savings.

Popular posts from this blog

Missing the Point about Pennsylvania’s Nuclear Plants

A group that includes oil and gas companies in Pennsylvania released a study on Monday that argues that twenty years ago, planners underestimated the value of nuclear plants in the electricity market. According to the group, that means the state should now let the plants close.

Huh?

The question confronting the state now isn’t what the companies that owned the reactors at the time of de-regulation got or didn’t get. It’s not a question of whether they were profitable in the '80s, '90s and '00s. It’s about now. Business works by looking at the present and making projections about the future.

Is losing the nuclear plants what’s best for the state going forward?

Pennsylvania needs clean air. It needs jobs. And it needs protection against over-reliance on a single fuel source.


What the reactors need is recognition of all the value they provide. The electricity market is depressed, and if electricity is treated as a simple commodity, with no regard for its benefit to clean air o…

How Nanomaterials Can Make Nuclear Reactors Safer and More Efficient

The following is a guest post from Matt Wald, senior communications advisor at NEI. Follow Matt on Twitter at @MattLWald.

From the batteries in our cell phones to the clothes on our backs, "nanomaterials" that are designed molecule by molecule are working their way into our economy and our lives. Now there’s some promising work on new materials for nuclear reactors.

Reactors are a tough environment. The sub atomic particles that sustain the chain reaction, neutrons, are great for splitting additional uranium atoms, but not all of them hit a uranium atom; some of them end up in various metal components of the reactor. The metal is usually a crystalline structure, meaning it is as orderly as a ladder or a sheet of graph paper, but the neutrons rearrange the atoms, leaving some infinitesimal voids in the structure and some areas of extra density. The components literally grow, getting longer and thicker. The phenomenon is well understood and designers compensate for it with a …

A Billion Miles Under Nuclear Energy (Updated)

And the winner is…Cassini-Huygens, in triple overtime.

The spaceship conceived in 1982 and launched fifteen years later, will crash into Saturn on September 15, after a mission of 19 years and 355 days, powered by the audacity and technical prowess of scientists and engineers from 17 different countries, and 72 pounds of plutonium.

The mission was so successful that it was extended three times; it was intended to last only until 2008.

Since April, the ship has been continuing to orbit Saturn, swinging through the 1,500-mile gap between the planet and its rings, an area not previously explored. This is a good maneuver for a spaceship nearing the end of its mission, since colliding with a rock could end things early.

Cassini will dive a little deeper and plunge toward Saturn’s surface, where it will transmit data until it burns up in the planet’s atmosphere. The radio signal will arrive here early Friday morning, Eastern time. A NASA video explains.

In the years since Cassini has launc…