Maryland’s Calvert Cliffs, once a keystone of the “reactor renaissance,” is on the brink of a stunning cancellation.
In 2005 George W. Bush hailed the atomic project as a symbol of Franco-American cooperation in bringing on a new nuke age.
Just 40 miles south of the nation’s capitol, it’s instead become a fiscal embarrassment and, potentially, one of the most critical reactor cancellations in decades.
Maryland’s Calvert Cliffs, once a keystone of the “reactor renaissance,” is on the brink of a stunning cancellation.
In 2005 George W. Bush hailed the atomic project as a symbol of Franco-American cooperation in bringing on a new nuke age.
Just 40 miles south of the nation’s capitol, it’s instead become a fiscal embarrassment and, potentially, one of the most critical reactor cancellations in decades.
Technically Constellation Energy says it’s still “in negotiations” with the Energy Department for a $7.6 billion loan guarantee. But the terms that have prompted this “impasse” are absurdly lenient.
In tandem with the Office of Management and Budget, the government wants a mere $880 million in up-front fees--- about 12% of taxpayer’s liability---extremely favorable terms when compared to the usual 20% for a home loan.
DOE has offered to waive even that if Constellation will agree to buy just 75% of the energy from the plant it wants to build.
But Constellation won’t do it. Nor will it and its partner, Electricite de France, commit to a firm construction schedule.
That Constellation would not sign a power purchase agreement for its own reactor is a stunning admission that atomic energy cannot compete with natural gas or renewables.
That it can’t accept financial penalties for coming in late is a bow to the industry’s very long history of hugely expensive delays, playing out even now at chaotic construction fiascos in Finland and Flamanville, France.
Constellation says the DOE/OMB’s fee and schedule structure would doom “the economics of any nuclear project.” Coming from a major cheerleader for the reactor renaissance, that could read as a stunning obituary on the economics of atomic energy.
Constellation may be playing a game of blackmail. It has argued for up-front fees of just 1%, and for no penalties on how long the reactor takes to build or how much energy it must buy from it. By threatening to kill the project---a special pet of powerful US Rep. Steny Hoyer (D-MD)---it may hope to win concessions from Congress.
But many believe Constellation wants to dump what is shaping up to be an atomic turkey before it gets swallowed by soaring costs and an inability to compete with gas and renewables. The solar panels slated for the White House roof this spring will deliver usable power far cheaper than Calvert Cliffs, many years before the new reactors could ever open.
Tensions with EDF were underscored by the French utility’s admission it was “extremely disappointed and shocked to learn that Constellation has unilaterally decided to withdraw from the Calvert Cliffs 3 project.” A DOE spokesperson also expressed surprise.
Constellation has said EDF could proceed with Calvert Cliffs on its own. But federal law would require it to find another American partner. Similar gyrations have struck two very contentious proposed reactors in Texas, which may or may not have potential Japanese backing.
A double-reactor project at Vogtle, Georgia, has received $8.33 billion in loan guarantees from the Obama administration. But that project is being underwritten in advance by Georgia ratepayers, who’ve already suffered a $100 million rate hike, and now face $1 billion more---which may be just for starters on a project barely begun.
However it plays out, Constellation has dealt a body blow to the nuclear renaissance. Bush’s 2005 visit to Calvert Cliffs was the first by any president to a US reactor site in 30 years. Obama’s request for more guarantees cannot be helped by words like these from the next utility in line to get one.
Whether this is an actual cancellation or a game of chicken Constellation is playing with the Congress, there’s no upside for an industry now careening off an economic cliff.
Calvert Cliffs, says Michael Mariotte of the Nuclear Information & Resource Service, makes “no economic sense.”
The squeeze being put on the nuclear industry by long construction lead times and cheaper competing sources like gas, renewables and efficiency “surely had far greater effect on Constellation’s decision than the terms of the proposed taxpayer loan.”
“This is a great day for Maryland,” adds Mariotte, and for a “nuclear-free and carbon-free energy future.”