Key financing from Japan unlikely due to Fukushima crisis
NRG Energy (NYSE:NRG) pulled the plug on its development of twin 1,350 MW ABWR reactors for the South Texas Project on April 19th. The firm said in a statement that “multiple uncertainties” regarding investment funding from TEPCO and the Japan Export Bank make it impossible to go move forward.
The firm is writing off $481 million of which $331 million is from NRG and another $150 million is the net investment contributed by Toshiba which was to supply the reactors.
NRG CEO David Crane said in a investor conference call that the firm will stop all engineering and sit preparation work and layoff most of the project workforce.
Crane told the New York Times, “We have concluded that financially this is the end of the line for us.”
Crane held out the hope that the Department of Energy would issue a loan guarantee for the project and that Toshiba would complete the application for a combined construction and operating license from the NRC. Both outcomes are long shots.
DOE has a rigorous due diligence process which could result in a rejection of a loan guarantee for a project where the principal developer has walked away from the table. Also, the NRC is unlikely to give priority to a project that doesn’t have a customer.
In addition to a lack of investors, NRG also has not been able to sign up customers to buy electricity from the reactors. The reason is Texas is swimming in a huge surplus of natural gas which sets the price for electricity. It is cheaper, and faster, to build new natural gas fired electrical generation plants than to build new nuclear reactors.
At one time the firm has been the first mover of the nuclear renaissance in the U.S. filing its application for a license with the NRC in September 2007.