DOE guarantees $3.7B in loans for Vogtle nuclear plant construction

Dive Brief:

The Department of Energy on Friday announced conditional commitments for up to $3.715 billion in loan guarantees to companies constructing the Vogtle nuclear plant in Georgia.
The DOE will grant $1.67 billion to Georgia Power, which owns 46% of the project, and $2.015 billion to municipal utilities that own the remainder of the plant — Oglethorpe Power Corporation and subsidiaries of the Municipal Electric Authority of Georgia.
The loans come as Georgia Power parent Southern Co. attempts to convince Georgia regulators to allow it to complete the Vogtle plant, which is billions over budget and years behind schedule. Vogtle is the only nuclear plant under construction in the U.S. after South Carolina utilities abandoned the V.C. Summer expansion in July.

Dive Insight:

After little concrete action for months, the Department of Energy on Friday took significant steps to support baseload power generation in the United States.

First, DOE announced a new proposed rulemaking directing the Federal Energy Regulatory Commission to boost compensation for coal and nuclear generators that hold 90 days of fuel supply onsite. If enacted, the new rules could provide a lifeline for aging generators under pressure from cheap natural gas and renewable power in the nation's wholesale power markets.

The same morning, DOE acted to shore up the prospects for new nuclear as well, approving new loan guarantees for the Vogtle plant. The agency has already guaranteed $8.3 billion in loans to the plant owners.

“I believe the future of nuclear energy in the United States is bright and look forward to expanding American leadership in innovative nuclear technologies,” Secretary of Energy Rick Perry said in a statement. “Advanced nuclear energy projects like Vogtle are the kind of important energy infrastructure projects that support a reliable and resilient grid, promote economic growth, and strengthen our energy and national security."

In late August, Southern Co. leadership recommended that construction of the Vogtle project continue after conducting an internal review of the project's finances. Originally slated to cost $14 billion, the company told the SEC it expects total costs could reach $27 billion by the project's completion.

If regulators allow it to continue, Southern expects to finish Unit 3 of Vogtle between Feb. 2021 and March 2022. Unit 4 would be finished between Feb. 2022 and March 2023.

Cost overruns and delays at Vogtle stem from issues with contractor Westinghouse, which designed and was supposed to construct the new AP1000 reactors slated to be used at Vogtle and Summer. But Westinghouse filed for bankruptcy in March, prompting two South Carolina utilities to abandon construction at the Summer plant.