US Nuclear Power Policy | Nuclear Energy Policy USA - World Nuclear Association
US Nuclear Power Policy
(Updated December 2016)
While the USA has more private sector participation in the production of civilian nuclear power than any other nation, the government is heavily involved through safety and environmental regulations, R&D funding, and setting national energy goals.
Beginning in the late 1990s, US government policy and funding decisions have encouraged the development of greater civilian nuclear capacity.
The commitment to nuclear power as part of the USA's long-term energy strategy continues, but there has been a reduction in some nuclear programs as a result of greater emphasis on alternative sources of energy.
The disposal and storage of high-level nuclear waste remains a major unresolved issue.
Over the last 30 years public opinion has steadily grown more positive towards nuclear energy.
Government policy is central to any discussion of nuclear power in the USA. The development of nuclear power began as a government program in 1945 following on from the Manhattan Project to develop the wartime atomic bomb. The first nuclear reactor to produce electricity did so at the National Reactor Testing Station (NRTS) in Idaho in December 1951, as the US government reoriented significant resources to the development of civilian use of nuclear power. In the mid-1950s, production of electricity from nuclear power was opened up to private industry. The world's first large-scale nuclear power plant at Shippingport, Pennsylvania, was owned by the US Atomic Energy Commission, but built and operated by the Duquesne Light and Power Company on a site owned by the utility company near Pittsburgh. Today, almost all the commercial reactors in the USA are owned by private companies, and nuclear industry as a whole has far greater private participation, and less concentration, than any other country.
Yet, the government remains more involved in commercial nuclear power than in any other industry in the USA. There are lengthy, detailed requirements for the construction and operation of all reactors and conversion, enrichment, fuel fabrication, mining and milling facilities. The review process preceding the construction of new reactors can take 3-5 years. The US government, through its own national research laboratories and projects at university and industry facilities, is the main source of funding for advanced reactor and fuel cycle research. It also promises to provide incentives for building new plants through loan guarantees and tax credits, although owners have to raise their own capital. US domestic energy policy is also closely linked to foreign, trade and defence policy on such matters as mitigating climate change and nuclear non-proliferation (of weapons).
As of late 2013, the Nuclear Regulatory Commission (NRC) was reviewing nine applications for combined construction and operating licences (COLs) to build 14 new nuclear reactors, as well as three design certification applications for new reactor types (EPR, ESBWR & APWR) and two design certification renewals (both ABWR). The NRC’s FY 2014 budget for oversight of the 100 operating power reactors was $1055 million, including six reviews of extended power uprate requests (and eight others) and 10 licence renewal applications. The budget includes nuclear materials and waste safety.
State and local governments also have a major impact on the framework and economics of the US nuclear power industry. Deregulation of electricity prices in some states in the 1990s led to greater concentration in nuclear power production. In 1976, a voter referendum in California led to a law that prohibited the construction of new nuclear plants in the nation's largest state and the prohibition still remains in effect. Opposition in the state of Nevada was a key factor in the decision by the new Democratic administration of Barack Obama in early 2009 to abandon the government's long-standing plans for a 70,000 tonne geological repository in that state for disposal of the high-level nuclear waste that has accumulated at reactor sites across the nation.
Energy Policy Act 2005
After much preliminary debate, the Energy Policy Act 2005 comfortably passed both houses (74-26 in the Senate and 275-156 in the House). It included incentives for the domestic nuclear power industry, including:
Production tax credit of 1.8 or 2.1 ¢/kWh from the first 6,000 MWe of new nuclear capacity in their first eight years of operation (the same rate as available to wind power on an unlimited basis).
Federal risk insurance of $2 billion to cover regulatory delays in full-power operation of the first six advanced new plants.
Rationalised tax on decommissioning funds (some reduced).
Federal loan guarantees for advanced nuclear reactors or other emission-free technologies up to 80% of the project cost.
Extension for 20 years of the Price Anderson Act for nuclear liability protection.
Support for advanced nuclear technology.
Also $1.25 billion a was authorised for an advanced high-temperature reactor (Next Generation Nuclear Plant) to be built by 2021 a at the Idaho National Laboratory, capable of cogenerating hydrogen. Overall more than $2 billion was provided for hydrogen demonstration projects. See later section on NGNP .
In 2006, it was spelled out that the 6000 MWe eligible for production tax credits would be divided pro-rata among those applicants which filed combined construction and operating licence (COL) applications by the end of 2008, which commence construction of advanced plants by 2014, and which enter service by 2021.
In October 2007, the Department of Energy (DOE) announced that it would guarantee the full amount of loans covering up to 80% of the cost of new clean energy projects including advanced nuclear power plants under the 2005 Energy Policy Act. The first round of loan guarantees went to renewable energy and advanced gas (e.g. integrated gasification combined cycle) projects, those for nuclear then still had to be authorised by Congress.
The Act also addressed climate change, requiring action on a national strategy to address the issue. In 2008, the USA emitted 5.8 billion tonnes of CO2 from energy use.
Federal loan guarantees for new plants (and renewable energy projects)
In mid-2008, the Department of Energy (DOE) invited applications for loan guarantees to support the construction of advanced nuclear power plants (up to $18.5 billion total) and uranium enrichment plants (up to $2 billion initially, but then $4 billion). A further $78.5 billion was offered for renewable energy projects, and $8 billion for 'clean coal'. Loan guarantees are to encourage the commercial use of new or significantly improved energy technologies and "will enable project developers to bridge the financing gap between pilot and demonstration projects to full commercially viable projects that employ new or significantly improved energy technologies." 1 , b They are a form of support that allows companies to finance debt at reduced rates.
Any preliminary approvals issued in 2010-11 were to be conditional upon the applicant receiving a combined construction and operating licence (COL) from the Nuclear Regulatory Commission, and in the event none were issued.
Applications were lodged in 2008, with a fee of $200,000 for the first part and $600,000 for the second part. The DOE received 19 initial applications from 17 utilities to support the construction of 14 nuclear power plants involving 21 new reactors of five different designs. The total capacity involved was 28,800 MWe. The total requested came to $122 billion, significantly more than the $18.5 billion offered. The aggregate estimated construction cost involved the 14 projects was $188 billion. The DOE also received two applications for enrichment plants, total $4 billion, against $2 billion initially on offer.
In the light of the interest shown and the fact that the scheme is borrower-funded, the industry called for the amount available for power plants to be increased to $100 billion. In February 2010, the Administration added $36 billion to its FY2011 budget proposal to expand the reactor part of the scheme to $54.5 billion, covering 6 to 8 projects involving up to 13 reactors of several different designs, but this ws not approved by Congress. In February 2011 the request was repeated for FY 2012, but was again refused. The FY 2013 budget proposal contained no such request. In the meantime, DOE conditionally granted the applications for one project (Vogtle) and sought to increase the $8.3 billion sum available before October 2010 by $9 billion through other legislation, so that it could approve the other three short-listed power plant applications involving five reactors. It offered a loan guarantee to Unistar for Calvert Cliffs, but Constellation rejected this due to the high costs imposed. Meanwhile the loans for the three Vogtle partners have not been finalized. So far the DOE has issued $6.5 billion in loan guarantees to Georgia Power and to Oglethorpe Power for Vogtle, and subsequently $1.8 billion for MEAG Power, so that 98.4% of the project equity is covered.
As time passes without further loan guarantees being granted, criticism of the program has been that it is too focused on project-based financing instead of the corporate finance that dominates nuclear projects. Also, DOE has faced opposition from other federal agencies, including the Office of Management and Budget, Department of Labor, and the Federal Financing Bank, which have brought the program for nuclear capacity to an effective standstill. In March 2013 the Government Accountability Office said that three nuclear applications totalling $8.3 billion were still being considered.
In August 2011 Solyndra, a company which designed, made and sold solar PV panels and had received a $535 million DOE loan guarantee, went into bankruptcy and laid off all employees. This plus high levels of government debt, clouded the prospects for further loan guarantees for energy projects.
Nevertheless, under the same program and within the $18.5 billion authorized, in December 2014 the DOE formally issued a solicitation for $12.6 billion loan guarantees for advanced nuclear energy projects, notably advanced nuclear reactors, small modular reactors, uprates and upgrades at existing facilities, and advanced nuclear facilities for the front end of the nuclear fuel cycle – $10.6 billion for reactors and $2 billion for front end of fuel cycle, notably enrichment. Applications were due by 18 March 2015. This was the fourth open solicitation from the department's loan program office, alongside solicitations for projects for advanced fossil energy, renewable and efficient energy, and advanced technology vehicle manufacturing.
The amount for enrichment plants was increased to $4 billion early in 2010, evidently to allow for both applicants to receive perhaps $2 billion each. While Areva's technology obviously qualifies, and USEC's as yet doesn’t, Areva is effectively a French government enterprise, so choosing between them would be politically fraught. LES c then asked DOE to reopen the solicitation to it "and others", i.e. Global Laser Enrichment (GLE), on the basis of fair and open competition d . Neither LES nor GLE has yet applied for a loan guarantee, though GLE has said it would do so for its proposed Wilmington plant, and LES was intending to do so for the expansion of its plant in New Mexico over 2014-17.
In November 2014 the Nuclear Energy Institute pointed out that the $10.6 billion remaining loan volume is clearly not sufficient to cover the needs of pending projects, much less any new projects that might apply under the new announced solicitation. The industry considers the loan guarantee program “an essential and indispensable financing platform,” since new nuclear plants – at $7 billion to $8 billion per gigawatt – are enormous undertakings relative to the size of even the largest electric companies. “Given the scale of the investment required by the electric power industry in the 2020s and beyond, [the industry] believes the Title XVII loan guarantee program should be a permanent financing platform endowed with substantial permanent loan authority. Like the US Export‐Import Bank, a well‐managed, permanent clean energy loan guarantee program could generate substantial revenues for the federal treasury, thanks to the credit subsidy costs and other fees paid by project sponsors.”
In the light of failure to award any of the $12.5 billion available, in November 2015 the DOE said it would "supplement" the loan guarantee programme so that projects eligible to apply for a loan guarantee could include construction of advanced nuclear reactors, small modular reactors, uprates and upgrades at existing facilities.
Loan guarantee applications: first tranche