Dive Brief:

• A private investor is trying to breathe life into a moribund Alabama nuclear project, but its fate could rest with the municipal utility in Memphis.

• Nuclear Development LLC bought the defunct Bellefonte nuclear project at auction from the Tennessee Valley Authority in November 2016 for $111 million, but now says it faces a mid-November deadline to move forward with the project.

• At this point, the fate of the project appears to hang on a power purchase agreement with Memphis Light, Gas and Water (MLGW), which could be a crucial step for securing a federal loan guarantee for the nuclear project.

Dive Insight:

Building new nuclear in the U.S. has proven to be very challenging, with the only current project — the Vogtle expansion in Georgia — beset by significant cost overruns, and the V.C. Summer expansion halted last year in South Carolina over cost concerns. But that hasn't stopped some companies from pursuing other projects, such as Bellefonte.

Memphis Light, Gas and Water in January signed a non-binding letter of interest to purchase the electrical output from the Bellefonte nuclear plant at a cost of $39/MWh plus variable operations and maintenance charges when Nuclear Development brings the project online.

Nuclear Development now wants MLGW to sign an additional letter that would bind the muni to the terms of a power purchase agreement if it were to go forward with that transaction, an official at the muni told Utility Dive via email. MLGW says it would be "premature" to sign a new agreement until it completes its due diligence and receives "independent feedback on a multitude of concerns."

Nuclear Development, in an op-ed in USA Today, said it needs to supply the Department of Energy with the updated letter from MLGW "plus a nonbinding power purchase agreement" to secure a "critical" federal loan.

"Without those documents on or before mid-November, this offer to Memphis could go away," Bill McCollum, CEO of Nuclear Development, wrote in the op-ed.

There is about $10 billion in the DOE's loan guarantee program for new nuclear plants, including $3.8 billion conditionally committed to the Vogtle project under construction by Southern Co. and its partners.

The DOE does not comment on the status of applications to the loan program, but "generally, we do not have deadlines for applicants to reach," Brian Mahar, a spokesman for the DOE's loan office, told Utility Dive. "Generally, most deadlines are driven by the applicant."

Nuclear Development says its proposal could save MLGW about $487 million a year.

"It is not possible at this time to confirm any claims of savings for the Bellefonte transaction," MLGW said while noting that there would be no savings until the Bellefonte project is in operation. In addition, the amount of savings would depend on a number of factors, including the actual cost of completing the nuclear project. MLGW management and its consultants, GDS Associates, are evaluating those costs, as well as the feasibility that the plant will be completed.

MLGW said several of the assumptions in documents provided by Nuclear Development raise questions such as the 1.5% escalation estimate used for TVA power prices. MLGW said its experience is that TVA's price increases over the past seven or eight years have been "relatively flat" at about 0.6%.

MLGW's report on Nuclear Development's offer is not scheduled to be completed until December.