Despite growing policymaker and industry interest in nuclear power, the U.S. has failed to deploy more than one new nuclear power project in the past three decades. Why? The failure to deploy this “clean firm” source of power is the result of financing challenges, which are themselves the result of the brittleness of America’s nuclear power industry. This whitepaper argues that overcoming this challenge requires policymakers adopting a set of targeted solutions specific to the nuclear industry, identifies specific barriers facing nuclear power developers, and proposes a “moonshot” finance and development program to rapidly restore the industry, bringing it into the 21st century.
The chief barrier facing the nuclear power industry is a brittle supply chain that pushes up costs and delays project completion. These rising costs and delays are a significant political risk to public utility commissions and a financial risk to ratepayers.
The tax credits supporting nuclear power development are useful for lowering projects’ final costs of producing power—but do not matter if project developers cannot secure adequate long-term financing or count on a stable supply chain.
Public sector intervention should:
- stabilize supply chains and workforces;
- provide concessional construction financing and stable, long-maturity term financing;
- offer targeted and strategic equity stakes to further derisk projects’ finances;
- create cost insurance mechanisms to soften the impact of potential overruns;
- create an offtake procurement authority that can commit to purchasing power from completed projects and can resell power purchase rights to other interested market actors.
The federal government could use its concessional financing authorities in the Department of Energy to target many of these intervention priorities. For example, a $20 billion credit subsidy for a loan guarantee authority with 1:25 leverage could finance the construction of up to 27 AP1000 nuclear power plants, or approximately 60 GW of nuclear power capacity.
A detailed discussion of these topics follows.