Key Issues
Financing New Nuclear Power Plants
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April 2008
Key Points
April 2008
Key Points
- Experts agree that the electric power industry must invest $750 billion to $1 trillion in new generating capacity, new transmission and distribution infrastructure, and environmental controls by 2020.
- The Energy Policy Act of 2005 provides limited investment stimulus for the construction of power facilities, including nuclear power plants.
- A properly priced loan guarantee program enables companies to use project financing on a non-recourse basis.
- Loan guarantees are important to new nuclear plant financing for companies operating in both unreguated and regulated markets.
- The loan guarantee program is not a subsidy. Unlike other federal loan guarantee programs, project developers are required to pay the cost of the loan guarantee, as well as the full cost of administering the program.
- The loan guarantee program provides benefits to consumers of electricity. Because it lowers the cost of capital, the plants produce lower-cost electricity than they would in the absence of the loan guarantee.