WASHINGTON -– Energy Secretary Ernest Moniz traveled to Waynesboro, Ga., Thursday to announce the finalization of a $6.5 billion loan guarantee for the Vogtle Electric Generating Plant -- the first nuclear loan guarantee that the Obama administration has completed.
"The president," said Moniz in a speech at the Press Club on Wednesday, "sees nuclear energy as part of the portfolio of low-carbon energy."
The agreement was reached with the plant's co-owners, Southern Company subsidiary Georgia Power and Oglethorpe Power Corporation. The Department of Energy is also working on a $1.8 billion loan guarantee with another partner in the project, the Municipal Electric Authority of Georgia. The loan will fund two additional reactors at the Vogtle site, the only reactors to win Nuclear Regulatory Commission approval in the United States since 1978. The first reactor at the site is expected to come online in 2017 and the second in 2018.
The Vogtle loan guarantee isn't new; conditional approval was first announced in February 2010. The loan guarantee "will reduce costs for customers while advancing U.S. nuclear development," said Southern Company in a statement ahead of Thursday's event. "Our partnership with the Department of Energy supports an all-of-the-above energy strategy and enhances America’s energy security."
In some ways, the Vogtle announcement is also a reminder of how slow the Obama administration's progress has been on its nuclear goals. When the conditional loan for Vogtle was first announced four years ago, then-White House climate adviser Carol Browner said it was, "just the first of what we hope will be many new nuclear projects."
Since then, the DOE has issued just one other conditional loan guarantee for a nuclear project: Areva Enrichment Services for the Eagle Rock Enrichment Facility in Idaho in May 2010. Areva has not been finalized and construction plans have been indefinitely delayed. The DOE also offered a loan guarantee to a project in Maryland, but the company turned it down in October 2010 because it said the government's cost for the loan was too high.
The DOE argues that the Vogtle loan took time because the process is very thorough.
"The Department conducts rigorous due diligence that is comparable to, if not more stringent than, what is done in the private sector," Dawn Selak, a spokeswoman for the Department of Energy, said via email. "This due diligence process takes time, and there are often many rounds of exchanging information as the Department works with a company to finalize a conditional commitment."
Critics of the loan guarantees have seized on the program's delays as evidence that it is misguided. Edwin Lyman, a senior scientist in the global security program at the Union of Concerned Scientists, noted that the cost of nuclear energy has climbed over the years to as much as $9 billion per reactor, according to UCS, while the cost of natural gas, solar and wind power is dropping. "Put simply, nuclear power has been priced out of the market," said Lyman in a statement.
Allison Fisher, the outreach director for the energy program at Public Citizen, noted that the construction at the Vogtle plant is behind schedule and cost projections have increased. "This not only calls into question the decision to underwrite this risky project with taxpayer dollars, but proves that the same issues that plagued reactor construction more than three decades ago have not been resolved," said Fisher.
In his speech Wednesday, Moniz emphasized that there is a "first-mover challenge" in getting new nuclear plants built -- and said that the loan guarantees are intended to help address that.
A nuclear industry representative dismissed a question about how long the loan took to finalize. "It took the amount of time it took," said Steve Kerekes, spokesman for the Nuclear Energy Institute. "The loan guarantees for a variety of technologies inside the electric sector and outside are a proven mechanism for stimulating investments in projects and helping to bring down project costs for the benefit of customers," said Kerekes. "It would benefit our nation as a whole if, for the projects that merit loan guarantees, that there be loan guarantees available."
Jonathan Silver, a clean energy investor who was head of the DOE's loan program from November 2009 to October 2011, said the Vogtle announcement is "another win for the DOE loan program" and "shows that the agency has always been focused on a wide range on innovative technologies."
He also dismissed concerns about the amount of time it took to finalize. "The time frame required to reach final close reflects the dedication and attention to detail agency professionals use on all projects as careful stewards of taxpayer funds."