President Obama's $8 billion loan guarantee will give the US its first nuclear power plant in three decades. But economic hurdles are high.
If President Obama hopes to push the United States into a new age of nuclear energy, he has a high hurdle to overcome: Nuclear power plants are too costly and risky for companies to build in much of the developed world.
For example: the two-reactor plant near Augusta, Ga. – touted by the president Tuesday as the first new US nuclear plant in 30 years – would cost $14.5 billion to build. That's a huge bill for investors to foot, given all the uncertainties, such as the lengthy construction, operating costs, potential profits from shifting electricity prices, and costs of decommissioning the reactors.
By one European physicist's estimate, most nuclear power plants in Europe have to run for 20 years before they break even.
In offering Southern Co. "roughly $8 billion in loan guarantees to break ground on the first new nuclear power plant in nearly three decades," Mr. Obama is trying to overcome that hurdle for US power companies.
The administration has $18.5 billion available in loan guarantees for nuclear plants and its budget calls for a tripling of that figure.
Still, that is nowhere near the amount needed to build the dozens of nuclear plants that some experts say is needed just to keep up with the nation's growing electricity needs, much less boost reliance on nuclear power. Nuclear energy today supplies about 20 percent of US electricity needs.