Currently, a majority of the world’s nuclear construction is occurring outside of the United States. Driven by climate and energy security imperatives and supplied by a new generation of reactor technologies, the global nuclear energy market is projected to grow to $8.6 trillion through 2050. Billions of dollars in U.S. export content, tens of thousands of American jobs, U.S. influence on global nuclear safety, security and nonproliferation, and broader U.S. foreign policy influence are all at stake in our commercial success overseas.
Essential to U.S. success is financing that is competitive with what rival supplier nations offer. To compete, the United States must use all of the tools in its export financing kit and innovate new ones. Most essential is a robust Export-Import (Ex-Im) Bank, the official U.S. export credit agency. This means long-term authorization of Ex-Im from Congress, a full quorum on its Board of Directors and lending authority that is equal to global demand. Other agencies with a vital role to play include the International Development Finance Corporation and the U.S. Trade and Development Agency, which are now supporting nuclear energy projects.
Why Is the Ex-Im Bank So Important?
Given that a nuclear power plant has modest and stable operational costs and decades of operational life to pay back the investment, one could wonder why nuclear financing is so important. The answer lies in the combination of high upfront capital requirements and long construction periods, which make the cost of financing critical to the viability of a nuclear energy project.
Nuclear energy customers set high requirements for nuclear energy financing. Virtually every nuclear energy tender has official export credit agency support as a bidding requirement, making a competitive Ex-Im Bank vital to U.S. success. Most tenders now require an equity investment as well.
Next-generation reactor designs that have lower capital requirements and shorter construction periods promise to reduce capital costs. But financing will remain critical to U.S. success as emerging markets look to nuclear energy for the first time, and competition among suppliers intensifies.
What Kind of Numbers Are We Talking About?
Over the next decade, exports of more than 15 new nuclear plants could hinge on the availability of Ex-Im Bank financing. At roughly $3 billion to $5 billion per plant, there could be more than $45 billion to $75 billion in U.S. exports that will need Ex-Im Bank support.
Why Is Financing So Competitive?
U.S. nuclear energy suppliers compete against countries, not companies. Russia, currently the world’s dominant nuclear energy supplier, and China, a fast-rising competitor, have made nuclear energy exports a strategic priority for geopolitical reasons. Both nations have used favorable financing arrangements to gain market share from the United States.
Both Russia and China offer equity investment, which no U.S. export financing agency provides, and more favorable loan terms and conditions than what the U.S. agencies normally offer. Neither Russia nor China is constrained by the Organization for Economic Co-operation and Development (OECD) sectoral understanding on nuclear energy export financing. In order to compete against Russia and China, the United States must be competitive on terms and conditions and innovative in its finance offerings.
Current Priorities
Ex-Im Bank, reauthorized by Congress in 2019 for five years, requires the appointment and Senate confirmation of a full slate of directors to ensure that it remains fully operational. While Ex-Im Bank is taking steps to ensure more competitiveness with China on transformational exports, it must also advance U.S. climate goals and national security interests by providing the most competitive terms and conditions for zero-carbon nuclear energy exports.