The Energy Department announced Wednesday that it is closing on a multibillion-dollar federal loan guarantee to help finance construction of the first new nuclear reactors in the United States in more than three decades.
Energy Secretary Ernest Moniz said his department will finalize $6.5 billion of the $8.3 billion loan guarantee it offered electric utility Southern Co. in February 2010 through the federal stimulus to build two advanced reactors at the Vogtle power plant in Waynesboro, Ga. Another $1.8 billion loan guarantee is outstanding.
The reactors, which at 1.1 gigawatts each would power 1.5 million homes, would be the first constructed since the 1979 Three Mile Island accident. While the Obama administration has backed nuclear as a means to address climate change -- it provides 20 percent of the nation's power and doesn't produce any carbon emissions -- some green groups worry about how to store its waste.
"The president did make it clear that he sees nuclear energy as a part of America's low-carbon energy portfolio, and of course it already is a major part," Moniz said.
The loan, which is divvied up in three tranches, is the largest from a federal program that generated fierce backlash from Republicans who said the initiative picked winners and losers in the energy market. Conservatives mostly aimed that criticism at the green energy ventures in that portfolio, which included the $535 million awarded to now-bankrupt solar panel-maker Solyndra.
That flop produced a political firestorm for the Obama administration, as House Republicans put the program under the microscope by alleging the White House awarded political allies with stimulus funds. A GOP probe later found no such wrongdoing.
In recent months, Moniz has taken to defending the loan guarantee program, and the administration has noted it has experienced fewer losses than what Congress budgeted for. Moniz on Wednesday pointed to the Vogtle project as one of the effort's main successes, as he suggested it would help "stimulate development of next generation reactors."
But that's not to say the Vogtle project has gone smoothly. Cost overruns have plagued the project, which carried an initial price tag of $14.1 billion — Southern Co. estimated in August that the reactors would now cost $15.5 billion. It's also nearly two years behind schedule, as Southern now predicts it will finish construction in January 2019.
And while the loan guarantee intended to jump start and drive down the cost of new nuclear technology, the energy landscape in the U.S. has made that scenario increasingly untenable as a wealth of new natural gas supplies has provided stiff competition for nuclear. As a result, few utilities have plans to build new power plants, which have high capital costs, in the face of cheap natural gas.