DOE's First Nuclear Loan Guarantee: Harbinger of Things to Come?

On February 16, 2010, President Obama announced that DOE had offered $8.3 billion in conditional commitments for loan guarantees for two new nuclear reactors to be built at the Vogtle Electric Generating Plant in Burke, Georgia. This announcement came on the heels of the release of Obama's FY 2011 budget which proposed tripling the current loan guarantee authority for nuclear projects. These two actions signal a renewed willingness on the part of the Administration to support nuclear power as an essential ingredient in the nation's future energy supply.

The Vogtle Project involves the construction of two new 1,100 megawatt Westinghouse AP1000 nuclear reactors. These reactors will provide base-load electricity for an estimated 1.4 million people. What's more, it is estimated that the project will create up to 3,500 onsite construction jobs and 800 permanent jobs. Now that DOE has offered a conditional commitment for the project, the licensing process for the reactors will proceed before the Nuclear Regulatory Commission and, ultimately, DOE must sign a final loan guarantee agreement.

In addition to DOE's work on nuclear loan guarantees, energy project developers, investors and lenders also should be anticipating DOE's announcement of loan guarantees funded by the American Recovery and Reinvestment Act of 2009 (ARRA). In passing ARRA, Congress appropriated $6 billion to DOE to support loan guarantees of up to $60 billion for renewable energy and electric power transmission projects. Applicants for these loan guarantees included companies involved in alternative energy production (such as solar, wind and hydropower projects), leading-edge biofuel projects, and projects designed to upgrade electric power transmission. Applications for these funds are still being received by DOE.

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