US DOE to loan $17.5 billion to five nuclear reactor projects for long-lead components

The US Department of Energy has made $17.5 billion in conditional loan guarantees to nuclear vendor Westinghouse and a group of unnamed US utilities to acquire long lead-time components for 10 AP1000 nuclear reactors at five sites.

The commitments are being made to ensure that ordering the components can begin soon, speeding the deployment of the nuclear units by two to three years, DOE said in a statement June 23.

The department expects the program to reduce project costs and expand nuclear plant manufacturing capacity in the US, said Greg Beard, the head of the Energy Dominance Financing office at DOE, on a conference call with reporters.

"To get this ball moving again, we are using our loan program ... to pair together with developers who bring equity capital and support these reactor development efforts," Secretary of Energy Chris Wright told reporters. "These are not direct loans to Westinghouse, these are loans used to get a supply chain going so we can build these reactors faster ... and they will be at multiple locations around the country," Wright said.

The individual projects have not been selected, but there are seven candidate partners, which DOE did not name.

The US government, through the Department of Commerce, has agreed with the owners of Westinghouse — Canadian uranium producer Cameco and an affiliate of Brookfield Asset Management — to support the construction of 10 nuclear units with financing of $80 billion. The long-lead loan commitment is "separate, parallel and complementary" with the Commerce effort, Beard said.

Wright said the projects will be supported by power purchase agreements of up to 25 years with hyperscalers at prices high enough to ensure the projects move forward and do not raise electricity costs in areas where they are built.

The loans are structured so that Westinghouse and a utility would partner to secure one set of equipment for two AP1000 reactors, said Julie Kozeracki, acting chief investment officer for the loan office at DOE. The long lead components include the large reactor pressure vessels and steam generators for the AP1000s as well as the prefabricated structural modules, all of which requires years to fabricate.

The loans are being made to five special purpose entities that are "unlocked" once the utility and Westinghouse make a firm equity commitment of $500 million each to the venture, she said.

DOE said there are seven signed letters of intent to participate in the project from utilities or energy companies, with each identifying a site, but that the five that will receive the components have not yet been selected. Kozeracki said the structure allows DOE to switch the component assignment in case a utility "changes course" during the long project development process.

DOE expects to assign the five special purpose vehicles to utility partners by the end of the year, Beard said. It will consider which partners are most like to build quickly and efficiently when selecting utilities or energy companies.

Construction could begin on the first reactors in about five years, with power from the reactors in the program coming in the mid-2030s, Beard said.

Standardizing on one reactor design

The effort is designed to restart construction of nuclear power plants after a period when the industry "had been really in neutral for decades," Wright said. The last two nuclear units built in the US came online in recent years using the AP1000 design, at Georgia Power's Vogtle plant, but struggled with bad planning, supply chain problems, the global pandemic and other issues, he noted.

However the AP1000 design is "robust and sound," and worth replicating, Wright said.

Rising demand from data center operators is driving renewed interest in nuclear energy, and can provide economic incentive to do so, DOE said.

To support the projects, hyperscalers are expected to sign long-term offtake agreements up front, helping to provide financial stability, Wright said. Some hyperscalers may even take equity stakes in nuclear plant projects, he added.

Standardizing on a single reactor design will help lower the capital costs of nuclear power, Beard said. "We are confident that these projects will be economic for utility shareholders, ratepayers and hyperscalers," Beard said.

There will be a competitive process to select engineering, procurement and construction companies to actually build the nuclear units, Wright said.