Filling Nuclear Power’s $5 Trillion Hole Is Beyond the Banks

“We need to find a way to make it predictable, stable, bankable and affordable.”

“The project risks, as we have seen in reality, seem to be very high,” said European Investment Bank Vice President Thomas Ostros. – the world’s biggest multilateral lender recommends that countries needing power quickly focus on renewables and energy efficiency,

Nuclear-energy officials arrived in Brussels this week amid a growing wave of public support for atomic power. They left humbled by the tepid reaction of bankers assessing the price tag of their ambitions.

Bloomberg News, Jonathan Tirone,  https://financialpost.com/pmn/business-pmn/filling-nuclear-powers-5-trillion-hole-is-beyond-the-banks/wcm/0d2062d5-7120-4480-b53a-a52e70ef2b45/amp/ 22 Mar 24,

The International Atomic Energy Agency convened a summit to build momentum for a low-emissions technology that many expect will be critical for hitting climate targets. A group of mostly Western countries pledged to triple nuclear generation by 2050. But lenders balked at the eyewatering cost of doing so. 

“If the bankers are uniformly pessimistic, it’s a self-fulfilling prophecy,” former US Energy Secretary Ernest Moniz said Thursday after listening to a panel of international lenders explain why they’re unwilling to provide the $5 trillion the industry needs by mid-century.

“The bankers are calling for a proven business case,” said Jozef Sikela, the Czech Republic’s industry and trade minister. “We need to find a way to make it predictable, stable, bankable and affordable.”

Projects in Western economies have been plagued by construction delays and ballooning costs in recent decades. The newest reactor in the European Union — Olkiluoto 3 in Finland — started generating power last year, more than a decade late and three times over budget. Similarly in the US, Southern Co.’s Vogtle facility came in seven years behind schedule and $16 billion over estimates. 

“The project risks, as we have seen in reality, seem to be very high,” said European Investment Bank Vice President Thomas Ostros. While the world’s biggest multilateral lender won’t close the door on nuclear, it recommends that countries needing power quickly focus on renewables and energy efficiency, he said.

China and Russia are building the most reactors. But their state-owned model of development is at odds with the European and US emphasis on private capital. That will likely need to change if Western economies want to maintain nuclear’s market share.

“We need state involvement, I don’t see any other model,” Ostros said. “Probably we need quite heavy state involvement to make projects bankable.”

Ines Rocha, a director at the European Bank of Reconstruction and Development, and Fernando Cubillos, a banker at the Development Bank of Latin America, also said their lending priorities lean toward renewables and transmission grids. “Nuclear comes last,” Cubillos said.

Potential new investors could include sovereign wealth funds or philanthropists, according to Charles Oppenheimer, who advocates for nuclear energy at The Oppenheimer Project. 

“If it’s a safe and secure investment with a predictable return, there’s a huge amount of capital,” said the grandson of J. Robert Oppenheimer, the US physicist who ran the Manhattan Project. “What is lacking generally is capital for that risky build.”

Europe and the US have been trying to engineer nuclear out of its malaise, proposing a new generation of smaller reactors that can be factory-made and assembled on-site. Theoretically, that approach could cut costs, but has yet to be proven.

In the meantime, with global temperatures soaring and international climate targets in peril, some nuclear advocates say the focus on such innovations may be misguided. 

“We’ve heard a lot about a leapfrogging to the next generation of nuclear technologies,” Moniz said. “I would submit it might just be better to focus on getting some technologies deployed right now.”

—With assistance from John Ainger.

March 23, 2024 Posted by Christina Macpherson | Uncategorized | energy, news, nuclear, nuclear-energy, nuclear-power | Leave a comment

Glorious new financial jargon from the nuclear lobby – the “International Bank for Nuclear Infrastructure (IBNI)”

International Bank for Nuclear Infrastructure (IBNI) will become the ‘Gold Standard’ of nuclear finance.

the IBNI will have an estimated 30+ sovereign governmental member shareholders, each with aligned views on nuclear energy and other global policy objectives. …….. IBNI – as a specialised ‘global nuclear infrastructure bank’ – will have a global mandate to finance and support nuclear sector projects, programmes and industries in all its member countries .

where the bank aims to achieve the most significant global impacts will be in catalysing a highly significant ‘capital multiplier impact’, which represents the total quantum of global financial markets capital mobilised relative to each dollar of public investment (by sovereign shareholder member states) in the bank.

IBNI will become the ‘Gold Standard’ of nuclear finance.

Why nuclear energy needs exclusive global multilateral infrastructure bank By Daniel Dean, 18 Mar 2024  https://www.nsenergybusiness.com/features/why-nuclear-energy-needs-exclusive-global-multilateral-infrastructure-bank/—

The mobilisation of trillions of dollars of global capital necessary for the nuclear sector to scale in the near-term can be supported by a new kind of financial institution – an international multilateral infrastructure bank focused exclusively on nuclear energy, writes Daniel Dean, IBNI-IO SAG chairman.

Attaining current policy objectives, including 2050 Net Zero, will require global nuclear technologies to scale to an unprecedented magnitude and at breakneck speed.

COMMENT on Lie number 1. Attaining 2050 Net Zero may well be impossible anyway, but there is zero likelihood of nuclear power to have anything meaningful to do with it, other than to slow down real solutions – energy conservation and renewable energy .

This historically unmatched scaling will also require the very rapid mobilisation of multiple trillions of dollars of capital into the sector.quick online loans. Existing nuclear project delivery and financing mechanisms rely mainly on governmental support and attract very limited risk appetite from the global financial markets. Such existing models will be insufficient for catalyzing the very significant quanta of capital necessary required to enable nuclear to scale as quickly as possible to achieve multiple 100s of GW’s of additional global nuclear generation capacity. If the world is going to achieve its ambitious climate, clean energy, energy transition and energy security goals in this short period of time, there simply needs to be a fundamental change in the approach toward financing nuclear infrastructure.

Scaling of the nuclear sector faces numerous and multidimensional impediments. These interrelated impediments span a broad spectrum and include among others: public policy; regulatory, markets and ESG frameworks; social license; geopolitical; commercial and risk allocation models; and perhaps most importantly, affordability and accessibility. Each of the nuclear sector’s impediments is manifested in the form of financial risk. Clearly, the nuclear industry will need to do its part through increased on-time and on-budget performance and other progressive improvements, alongside the key roles of governments, owner-operators, end-users/ratepayers and all other stakeholder groups that will each need to do their part. However, the ‘sum of these parts’ (e.g. what each stakeholder can individually do) does not add up to a solution that will enable nuclear to scale.

The mobilisation of the necessary capital required for nuclear to scale, requires formulation of systemic and multidimensional risk mitigation solutions. The nuclear sector is currently caught in a ‘vicious circle’, whereby nuclear cannot and will not scale without access to a ‘runway’ of cost-efficient capital and such capital is not accessible unless nuclear becomes sufficiently de-risked due to scaling. Nuclear’s ‘vicious circle’ needs to be very rapidly transformed into a ‘virtuous circle’, which will require immediate risk mitigation solutions and unlocking capital flows well before scaling can begin.

From a financial risk management perspective, the nuclear sector poses excessive financial risk as it is measured in the form of the Value at Risk (“VaR”) metric. From a financier’s perspective, VaR can be described simply as: the amount of at-risk capital deployed and the probability of loss.

Because nuclear sector financings are both highly capital intensive and the real and perceived risks of the sector are viewed to be high, it is intuitive that the nuclear sector’s VaR profiles currently compare unfavourably against many other alternative asset classes.

Well that one sure is true!

A new nuclear investor

The proposed International Bank for Nuclear Infrastructure (IBNI) will be a new multilateral nuclear infrastructure bank that will be focused on enabling nuclear technology to rapidly scale and become both highly affordable and accessible within all its member countries, globally. Importantly, IBNI will finance and support both the production and supply chain (supply side) as well as the customer side (demand side) of the nuclear sector in member countries ranging from developing countries to highly developed ‘nuclear mature’ countries. The bank will act as the global early and long-term patient capital provider and it will finance and support all areas of the nuclear value spectrum on a technology-, vendor-, and country-neutral basis including new-build (Gen. III/ III+, Gen IV and future fusion, other); life-extensions and re-starts; refinancing and restructurings; fuel cycle (mining through repository); production and supply chains; nuclear infrastructure; and decommissioning and nuclear waste management projects, programs and industries.

IBNI will be capitalised, governed and operated using models similar to those that have been proven mission-successful by the world’s major global multilateral banks, which have been in existence for many decades. Those models include the World Bank Group (WBG); the European Bank for Reconstruction and Development (EBRD); and the Asian Development Bank (ADB). In other words, the IBNI will have an estimated 30+ sovereign governmental member shareholders, each with aligned views on nuclear energy and other global policy objectives. Whereas those existing ‘multilateral development banks’ like the WBG, EBRD and ADB are generally focused on missions such as economic development and poverty eradication (and generally, within defined geographies, developmental and/or income strata), IBNI – as a specialised ‘global nuclear infrastructure bank’ – will have a global mandate to finance and support nuclear sector projects, programmes and industries in all its member countries (not limited to geography, developmental status or income level). The existing multilateral banks are currently not providing any material support for the nuclear sector. While the change in longstanding policies of these institutions toward nuclear is highly encouraged and would be complimentary (not competitive), these institutions are ill-equipped to be seen as a substitute for IBNI’s proposed role as the global nuclear financing institution.

On the one hand, the bank will use its own capital to directly co-finance and support qualified nuclear projects based on the principle of ‘additionality’ (i.e. ‘bridging gaps’ throughout the nuclear value spectrum where existing public and private funding and financing are not adequately accessible on a cost-efficient basis). It is anticipated that the bank’s main commercial operating arm, the IBNI Ordinary Operations Fund will be a self-sustaining entity that will issue long-term debt in the global ‘sovereign and supranational bond markets’. Based on the strong shareholder liquidity and support offered by the bank’s shareholders, it is envisaged that the fund will achieve ‘triple-A’ credit ratings or the highest credit quality that will allow IBNI to borrow funds at the lowest cost and in turn, pass along lowest cost financing for the benefit of the bank’s programme participants. Certainly, accessing least-cost capital is one critical element that will drive down nuclear generation costs and enable nuclear technologies to achieve affordability targets, which are critical for enabling nuclear to scale.

On the other hand, and most importantly, where the bank aims to achieve the most significant global impacts will be in catalysing a highly significant ‘capital multiplier impact’, which represents the total quantum of global financial markets capital mobilised relative to each dollar of public investment (by sovereign shareholder member states) in the bank. IBNI’s advisory team projects that the bank should reasonably target a ‘capital multiplier impact’ of more than 100x, from the bank’s targeted establishment date in 2024/25 through 2050. Accordingly, the potential for the highly significant ‘capital multiplier impact’ effect targeted by IBNI will provide the highest value for money for each public dollar invested. Thus, a comparative investment in the bank would represent the most efficient means of achieving both national and global policy objectives, relative to strictly inward investments in a countries own nuclear sector’s domestic and bilateral initiatives (which the bank would not compete with).

COMMENT: utterly convincing? Not really.

Managing nuclear risk

In order to accomplish the bank’s core mission of scaling nuclear to attain a sustainable 2050 Net Zero World, IBNI will need to enable multidimensional risk mitigation solutions that will rapidly and sufficiently reduce nuclear sector VaR profiles to levels that become acceptable and in line with other similar infrastructure asset classes.

IBNI will implement programmes and offer customised financial product lines that will be engineered to systemically and progressively ‘flatten’ the VaR curves all across the nuclear sector. This ambition goes well beyond the necessary goal of developing market confidence through the necessary demonstration of global fleet deployments of serialised, repeatable, successful nuclear projects delivered within schedule and budget. IBNI will also serve as a global aggregator of an adopted set of universal nuclear-specific standards and criteria and the bank will aim to become a global institutional repository of nuclear financing expertise, which will become relied upon by investors, lenders and financing institutions for their own evaluation of nuclear sector financing transactions. Borrowing from the World Bank’s phraseology, IBNI will become the ‘Gold Standard’ of nuclear finance. While currently there are discrete elements of nuclear-specific financing standards and expertise available (from the International Atomic Energy Agency, Organisation of Economic Cooperation and Development, and Equator Principles IV, International Finance Corporation Standards, for example), there is, by no means, the necessary comprehensive set of nuclear-specific financing standards and criteria, such as those that pertain to every other asset class which are available from the existing major multilateral financing institutions like the World Bank. Nuclear is a very unique asset class that deserves its own global financial institution that would have deep expertise within the sector and an understanding of the unique multidimensional risk elements of nuclear finance. Such an institution would be able to adopt a set of standards and criteria specific to these unique elements.

Without an IBNI, and despite the valiant combined efforts of individual governments, sporadic international cooperation and the nuclear industry itself, the nuclear sector’s ability to scale will most likely continue to be constrained and the ‘vicious circle’ will persist unbroken.

COMMENT. Yes – agreed – the nuclear sector’s ability to scale will most likely continue to be constrained and the ‘vicious circle’ will persist

IBNI offers a unique ‘whole of the world’ proposition that will enable the global nuclear sector to rapidly and efficiently break the ‘vicious circle’ that persistently plagues the sector. Only through a global and systemic approach toward mitigating nuclear’s multidimensional risk elements and sufficiently ‘flattening’ the nuclear sector’s VaR curves can the sector’s ‘vicious circle’ be transformed into a ‘virtuous circle’. IBNI offers this unique global risk mitigation solution which will enable the mobilisation of trillions of dollars of global capital necessary for the nuclear sector to scale in the near term.

This article first appeared in Nuclear Engineering International magazine.

March 21, 2024 Posted by Christina Macpherson | Uncategorized | energy, news, nuclear, nuclear-energy, nuclear-power | Leave a comment

UK Nuclear financing comes unstuck

‘It would be madness to give Sizewell C the final go-ahead while the questions of whether Hinkley C can be finished, and who pays, are not resolved.

It all seems a bit desperate.

All in all, despite attempts to talk it up at COP28, nuclear seem to be facing a real problem with finance, if nothing else, a problem not shared by renewables- they are mostly getting cheaper.

SMR’s look likely to be an expensive diversion.

February 17, 2024,  https://renewextraweekly.blogspot.com/2024/02/uk-nuclear-financing-comes-unstuck.html

The Prime Minister Rishi Sunak says that nuclear power is the ‘perfect antidote to the energy challenges facing Britain’, but things seem to be going a bit amiss with nuclear finance. Basically, not many want to fund new nuclear projects any more, as costs and delays escalate along with political sensitivities. 

For example, China’s CGN has halted funding for UK’s part-built Hinkley Point C European Pressurised-water Reactor. CGN may yet restart payments, but, if not, its developer, the French company EDF, will have to fund the completion of the plant alone. 

 Some portrayed CGNs withdrawal from Hinkley as due to China being ‘miffed’ by its exclusion from the Sizewell project. The UK government had earlier taken over CGN’s initial stake in EDF proposed next project, Sizewell C, after concerns about over-reliance on Chinese funding. That would not have gone down well in China. But it was also claimed that CGN was upset by the large Hinkley overrun costs and delays. Well maybe that’s true too, but CGN was within its rights to exit.  It was contractually allowed to only meet any cost overruns on a voluntary basis. And it’s evidently decided not to. Though of course it will still own a share of any profits, if the project still goes ahead.

However, Hinkley prospects now looks even more uncertain, with EDF saying its start date could be delayed from 2027 to 2031 and it cost expand to £35bn or even more, with knock-on effects also likely for Sizewell C.  

So some plans seem to be coming adrift, with France and the UK potentially falling out over what happens next. France has already called on the UK to pay more for Hinkley. It could even be that it will pull out of financing Sizewell. Certainly, even if that is avoided, nuclear funding all looks a bit uncertain, with China out of it and EDF strapped for cash. 

Under the UK’s proposed RAB funding  system, consumers are set to be tapped to in effect provide some of the up-front  capital needed for Sizewell, thus talking on some the risk faced by this investment. But as Alison Downes of the Stop Sizewell C campaign group said: ‘It would be madness to give Sizewell C the final go-ahead while the questions of whether Hinkley C can be finished, and who pays, are not resolved. Sizewell C is bound to take longer and cost more, but this time it would be we consumers who would bear the risk and pay the price through the “nuclear tax” on our energy bills.’

However, new private investors are still being sought, and to keep the show on the road the UK government has provided an extra £1.3bn, bringing the proposed UK tax payers funding so far to £2.5 bn.

But will it still happen? As Utility week noted ‘The Sizewell C plant, which has yet to receive a final investment decision by the government, will not be fully commissioned until 2038’. And that could be rather optimistic. More like 2040! All of which could mean that future security of supply may also be uncertain. With Hinkley delayed, EDF now says it wants to keep its old AGR plants running (even) longer, despite their safety issues, to maintain output and its cash flow! It is also talking about running the (already existing) Sizewell B PWR an extra 20 years. 

It all seems a bit desperate. Prof. Rob Gross, director of UK Energy Research Centre, said the delays to Hinkley made increasing gas burn in the meantime ‘almost inevitable’. He added Wind or solar are unlikely to plug the gap because the UK is already ‘struggling to connect all the renewables schemes already in the pipeline for 2027/28’.  But surely we can do better than that – if we stop wasting money on nuclear dead ends and focus instead on linking up new renewables. 

For example, there are new grid technologies which can help green power network integration, including advanced composite-core conductors which, according to a US study, ‘can cost-effectively double transmission capacity within existing right-of-way (ROW), with limited additional permitting’. It claimed that ‘this strategy unlocks a high availability of increasingly economically-viable RE resources in close proximity to the existing network’, and it could upgrade the system very cost effectively. However, it’s not just a matter of better grid technology, or even less money. It also about reducing bureaucracy and getting rid of policy blocks, for example, in the UK context, in relation to on shore wind, which, despite pronouncements otherwise, is still in effect, being blocked. 

Cost over-runs and delays with nuclear projects are of course not just British issues. As Counterpunch noted, reactor construction delays and costs hikes are also common elsewhere. ‘The cost of EDF’s EPR reactor being built in France at Flamanville and still incomplete, has more than quadrupled to close to $15 billion. Another EPR, at Olkiluoto in Finland, went from $3.2 billion to more than $12 billion and launched 12 years late. On U.S. soil, two AP 1000 reactors at the Vogtle nuclear power plant site in Georgia, will likely come in at a total price tag of at least $35 billion, $20 billion more than originally estimated, with the second of the two reactors still not on line’.

All in all, despite attempts to talk it up at COP28, nuclear seem to be facing a real problem with finance, if nothing else, a problem not shared by renewables- they are mostly getting cheaper. The nuclear lobby’s last ditch hope is small modular reactors- still a very long shot, with none yet in existence. So far SMR’s look likely to be an expensive diversion. And too late to be much help meeting climate/energy targets. For example, the chair of the UK’s Environmental Audit Committee has said that ‘the first SMR is unlikely to be in operation by 2035, the date ministers have set for decarbonising the electricity supply. So, what role will SMRs have in an energy mix dominated by renewables and supplemented by existing and emerging large-scale nuclear?’ 

Arguably, ‘big nuclear’ is also unlikely to be favoured for new capacity in many places: potential financiers are more likely to stick with what already works well and is cheaper …At COP28, 22 countries, including the UK, talked about tripling nuclear by 2050. But over 117 committed to tripling renewables by 2030. Arguably a much more credible and useful target. 

February 19, 2024 Posted by Christina Macpherson | Uncategorized | energy, news, nuclear, nuclear-energy, nuclear-power | Leave a comment

Exploding Alberta’s Myths about Small Nuclear Reactors

Small nuclear reactors are unproven and years away from being in use. But the Alberta government is presenting them as a way to keep fossil fuels flowing. 

The untested technology is more about greenwashing than about cutting emissions.

Tim Rauf 15 Feb 2024, The Tyee

Alberta’s government is really excited about nuclear power.

More specifically, about novel and unproven small modular nuclear reactors. It hopes to use these to help lower the province’s carbon emissions while letting the energy industry continue operating as usual — an enticing prospect to the government given its intention to increase oil and gas production, while still having the energy sector get to net zero by 2050.

Small modular nuclear reactors produce less than one-third of the electricity of a traditional reactor.

The premise is that small reactors are easier to place and build, and cheaper.

Alberta hitched its horse to this wagon with Ontario, New Brunswick and Saskatchewan in 2022, taking part in a strategic plan for small modular reactor development and deployment. Alberta Innovates, the province’s research body, had a feasibility study conducted for it by Pacific Northwest National Laboratory. The study focused on using the reactors for greenhouse-gas-free steam emissions for oilsands projects, electricity generation in our deregulated market and providing an alternative to diesel when supplying power to remote communities.

More recently, Ontario Power Generation and Capital Power out of Edmonton entered into an agreement to assess SMRs for providing nuclear energy to Alberta’s grid. Nathan Neudorf, Alberta’s minister of affordability and utilities, was gleeful. “This partnership represents an exciting and important step forward in our efforts to decarbonize the grid while maintaining on-demand baseload power,” he said of the announcement.

All of this buzz makes it seem like SMRs are just over the horizon, an inevitability that will allow the province to evolve to have a cleaner, modern energy landscape.

But small modular reactors are nowhere near ready for deployment, and won’t be in Alberta for about a decade. That means for 10 years, they’ll provide no GHG-free steam to mitigate emissions.

“It’s still in the design phase,” Kennedy Halvorson said, speaking about the reactors. Halvorson is a conservation specialist with the Alberta Wilderness Association. The reactors are “so far off from being able to be used for us,” Halvorson added. “The earliest projections would be 2030. And we need to be reducing our emissions before 2030. So, we need to have solutions now, basically.”

With SMRs unable to stem the emissions tide for years, it’s confusing as to how they could make enough of a difference to get Alberta to net zero by 2050 (in line with United Nations emissions reduction targets to keep global warming to no more than 1.5 degrees).

Capital Power made similar projections………………………………………………………………………..

Construction itself is only one piece. Adding to that is the need to build a regulatory framework, which Alberta doesn’t have for nuclear…………………………………………………….

Ontario’s nuclear troubles

Listening to these public voices is prudent. We can look east to see what happens when the government and power utilities sidestep the process of getting explicit consent from communities that stand to be affected.

With its status as the nuclear activity hub in Canada, we can use Ontario as a litmus test of sorts and gauge Canada’s track record of care with nuclear. The report card isn’t great. There have been multiple cases of improper consultation with Indigenous Peoples on whose lands the waste, production or extraction sites are placed………………………………………………………………………..

Small reactors face a critical economic challenge

Adding to the timeline troubles are questions as to whether small reactors truly offer that much of an economic advantage, if any, compared with their larger counterparts.

In a previous article Ramana wrote, he pointed to the first reactors as an indication of the answer.

The first reactors started off small. Their size, though, coupled with the exorbitant price tag of nuclear development, meant they couldn’t compete with fossil fuels.

The only thing they could do to reduce the disadvantage was to build larger and larger reactors, Ramana said.

A large reactor that could produce five times as much electricity didn’t cost five times as much to build, he said, improving the return from the investment.

Economically the SMR can’t seem to compete with its larger sibling. Adding this to the delays abundant with nuclear, controversies around construction and communities, and the misalignment of timelines for meeting climate commitments, we need to ask why we’re seeing such a fervent enthusiasm for small modular reactors.

Greenwashing by any other name

The answer is likely a simple one: The Alberta government wants to keep the taps on. Their friends in the energy industry do too. Like carbon capture and sequestration before it, SMRs are the next way to stave off pesky talk of divestment and transition…………………………………………………………….

Deflecting and delaying isn’t the only greenwashing happening either, Halvorson argued. She noted there’s a special kind of tactic that comes with nuclear and other “clean” technology, where only carbon dioxide and greenhouse gas offsets are counted.

“When we reduce it all to just how much CO2 something emits, we’re not getting the full picture of environmental impacts,” Halvorson said. She pointed to water use in nuclear as an example.

“Most nuclear technologies require a massive input of water to work. And as we know, right now we’re in a drought in Alberta. Our water resources are so precious. We already have industries that are using way too much water as is, in a way that’s not allowing our environments and ecosystems to replenish their reserves, like their water resources,” she said.

Despite the cheerleading for nuclear Alberta, where small nuclear reactors will let us enjoy the fruits of fossil fuels (and even produce more) in a cleaner way, the bones don’t read that way. The argument that we can keep on drilling so long as we have that newest silver bullet hasn’t stood up to scrutiny before, and it doesn’t now.  https://thetyee.ca/Analysis/2024/02/15/Exploding-Alberta-Myths-Small-Nuclear-Reactors/

February 19, 2024 Posted by Christina Macpherson | Uncategorized | energy, news, nuclear, nuclear-energy, nuclear-power | Leave a comment