Nuclear, Renewables

NY and the UK: A Juxtaposition in Nuclear Financing

Issue 4 and Volume 9.

  By Sharryn Dotson, Editor

New York was the home of the first U.S. capital in 1788. It also boasts the most iconic and recognizable landmark, the Statue of Liberty. The Empire State even has its own style of pizza and cheesecake! The National Baseball Hall of Fame calls New York home, as does the American side of Niagara Falls, Harlem, the Apollo Theatre and Ellis Island, just to rattle off more useless trivia. With New York at the forefront of so much, it’s no wonder the state would be the first to properly value nuclear for its carbon-free generating attributes.

The NY State Public Service Commission took a giant leap for nuclear-kind when it passed a Clean Energy Standard that gives nuclear plant operators all they have been asking for: A level playing field among renewable sources that seem to catch all the financial breaks. Solar and wind are the mainstay of the state’s mandate of generating half of its electricity from renewables by 2030, but now nuclear is being recognized as necessary to help cut emissions as well.

Some call it a bailout, or say the state is throwing money at a dying and outdated industry. Renewables have been rewarded so many incentives to build new projects that now the materials cost next to nothing. So why when a nuclear plant operator asks for the same type of help that renewables get is it considered a bailout for nuclear? Besides, it is unrealistic to think the country can run on only renewables or natural gas. We need all – nuclear, renewables, gas and yes, even clean coal – to keep this country going. No one source is better than the other, and not every region can use every source. We need them all. New York commissioners gave the same reasoning behind passing the standard: Fuel diversity is important in keeping the grid reliable and resilient.

The American Nuclear Society (ANS) released a two-part toolkit aimed at getting governments, industry groups, utilities and anyone else involved with the U.S. nuclear industry on the same page to try to save the remaining operating nuclear plants. One of the suggestions the authors made was to do exactly what New York did: create policies that help to boost the value of nuclear power since it is clear the federal government will sit back and let these plants fail.

While the U.S. is struggling to keep nuclear plants alive, the UK can’t decide what it wants to do with Hinkley Point C. Though France-based utility company EDF voted to move on with building the 3.2-GW project, the British government stepped in to do a little more digging into the details. Reasons they have given range from hesitation over Chinese involvement to whether EDF’s finances can handle the $27 billion project. Allegedly, EDF’s CEO Jean-Bernard Lévy knew that newly-appointed British Prime Minister Theresa May wanted time to familiarize herself with the details the same day he called for the board vote. Reuters reports he was warned again on July 27–the day before the vote-that May would delay the project. This is purely speculation, but maybe Lévy knew that if May’s concerns were made public, the 10-7 vote to build Hinkley Point would have swung the other way (it would have been 10-8 save for a board member resigning in protest right before the meeting).

One thing I do know, however, is that Hinkley Point C cannot be built in its current financial form. I’m no expert in what needs to be done to bring down costs and reconfigure the incentives package, but from my point of view, the project either has to be reworked from scratch or scrapped all together.

“But what about all the cost overruns at projects like Plant Vogtle? Why are you okay with those?” Glad you asked. According to Georgia Public Service Commissioner Tim G. Echols, the bill that allowed Georgia Power to collect the costs of Vogtle during construction actually “reduced the certified costs of the project by $300 million and reduced the company’s borrowing costs by tens of millions of dollars.” Add in production tax credits and a federal loan guarantee and you’ve got a project that costs a lot now, but will pay for itself in the near future.

The juxtaposition of financing a nuclear power plant is an interesting study of sorts. In one country, the federal government won’t give out any incentives for nuclear plants. In another country, the national government has given out too many incentives for a nuclear plant. In the end, everything will work out one way or the other, but it’s interesting to see how nuclear financing is dealt with in different parts of the world.

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