How to finance new non-carbon, alternative nuclear energy.
This is simply a wish-list of how I'd like to see new non-carbon producing nuclear energy develop. None of this really involves new taxes and is different from the Production Tax Credit subsidy that wind and solar (and some fossil) gets today.
The issue of financing all forms of energy these days is the single most important issue in energy. There ARE more important ones for sure: reliability, accessibility, 'price', sustainability, etc etc. The issue of costs and how to finance nuclear, wind, solar, tidal, geothermal, coal, gas and so on is motivated primarily for two reasons itself: because despite world wide economic melt-down, the load is expected to grow, even in the United States where the crunch is most severe.
Secondly, because any growth in the productive capacity of new energy generation, right now, means an increase in carbon. And carbon is THE priority bullet item for elimination as it's single most important environmental issue in the world today.
So...back to the money. What follows is only one proposal. There are others and even I have others. But short of a truly national public power entity: the TVA on steroids minus any private equity, which is REALLY what I am for, there are several transitional forms of financing we can consider.
My current favorite is the National Nuclear Development Bank. This would be a wholly owned and financed U.S. government agency that would stream line loans to new nuclear builds, favoring public power entities over investor owned ones, and regulated utilities over merchant entities. But that is not mandatory and reflects my own ideological prejudice in terms of public vs private.
The NNDB could be run in a similar way as the Nuclear Regulatory Commission or other agencies run with appointments by the President with approval by Congress. The point, however, is the mandate. A non-carbon replacement of all fossil-carbon spewing generation mandate.
The Mandate is to phase out all coal and natural gas plants in the United States. Before anyone asks, this model could be imprinted internationally as well, but since that is so complex, I'm hesitant to address this here, for the moment, anyway.
The Mandate would be based on a locally/regionally negotiated plan for the building of new nuclear plants, designs approved by the NRC and regulated as such by same, as it is now, with local and regional ISOs and Energy Commissions with input from traditional stakeholders: ratepayers, high energy using industrial concerns, agriculture, education, community groups, etc.
The Mandate of the NNDB would declare that any new build of a NPP would eliminate a minimum of 60% of equivelent fossil capacity. So for every 1000MWs/1GW of a new NPP, at least 600MWs of fossil fuel generation would have to be shuttered. Since nuclear is the only baseload energy source that can shutdown fossil, it makes sense to approach such plans on a state-by-state basis but it's possible to do it on a utility-by-utility basis as well since utilities cross ISO jurisdictions.
The NNDB would be financed by Congress. Upto $200 billion a year as part of a national nuclear alternative energy initiative can be allocated to the NNDB. Essentially this would be a different version of what is called "Loan Guarantees" and which are hated by both so-called "left environmentalists" and "right-wing Libertarians". The point of the Mandate is to BUILD THEM, period. This is because the backers of such a Mandate believe it's that important that nuclear begin the national coal/gas phase out as soon as possible. [If you have a chance, do a google search for "Dirty coal" and read the links].
The way a loan would work is that any loans are approved at prime rate never to exceed 4%. The loans do not have to start being paid back until the new nuclear reactors go on line as "COD" (Commercial On-time Delivery). That COD is a negotiated date after which the borrower is obligated to begin monthly payments on the loan whether they are online or not. Additionally, payments will also start should the NNP go on line before COD. This means that the nuclear builder can procure the loan for construction and not make payments until there is a revenue flow back into the operator, based on sales of power to the ratepayers.
Conditions for any loan include the absolute exclusion of such loan costs into the rate base until AFTER COD or the unit comes on line, which ever is first and only for costs of the loan itself. This removes the public obstacle of having utilities seek reimbursement for the loan years ahead of the plant coming on line. Since the loan is at prime, costs for the loan are low and subsequent, post-COD rate increases are par with the actual cost of the plant as it delivers real, not "promised", power. All administrative costs cannot be paid either by the rate payer until COD.
A special R&D fund, jointly administrated by the NNDB and the DofE for the purposes of deployment of the Liquid Fluoride Thorium Reactor will also be part of this Mandate and dispersed to both the National Laboratory system and/or to university labs to lauch LFTR/MSR re-development under DofE regulation.
As a condition for any loan, 3% of the subsequent generated revenue, in addition to repayment under terms of the loans, will be garnered by the NNDB so it can contribute to the self-financing of the NNDB. This 3% may not not be recovered as part of the rate base is but is a post-rate base calculation. Should any borrower fail to make timely payments per the conditions of the load, the property for which the loan was procured will default to the NNDB, with ownership transferred to the people of the United States via the NNDB and other U.S. entities to continue operation of the facility. Should failure to make payments occur during construction and before COD, the same conditions would apply.
The goal, the immediate goal of the Mandate, is to replace the over 350 GWs of coal fired generation in the United States with new LWRs and future LFTRs. This will be the policy of the United States of America. Any financing of alternative non-carbon generation is not relevant to the institution of the NNDB but has to be developed via other forms of legislation. No monies lent, or received, from the NNDB may go to any other form of power generation in the United States with the following ONE exception: Joint projects with other non-carbon electrical generation for purposes of joint grid development (UHVDC, HVDC, HVAC, SG, etc) can have, on a case-by-case basis, receive financing from NNDB but within and in support of this Mandate.