The Trump administration just went all-in on nuclear energy, committing this week to lend $17.5 billion to companies that build new reactors.
But utilities—the companies that own and operate reactors—don’t appear to have much interest in building new ones. Their investors are too worried about the high cost and long delays of nuclear construction. Unless they get on board, the U.S. nuclear renaissance will remain an aspiration.
Duke Energy, which operates more nuclear reactors than any other regulated utility, has no current plans to build more, CFO Brian Savoy said at a Reuters Global Energy Forum on Tuesday.
“The potential risks actually with launching a new nuclear project today outweigh the investor benefits,” he said. “If I wanted to scare away my investors I’d announce a new nuclear project today. We’re not announcing a new nuclear project today.”
Duke, which is based in North Carolina and operates in six states, has 11 gigawatts worth of nuclear capacity, enough to power at least 10 million homes. Duke is extending the permits for those reactors so they can operate for 80 years. But otherwise the company is more focused on building other generation sources.
“We believe in an all-of-the-above approach,” he said. “Right now it’s heavy natural gas solar and batteries.”
Entergy, a utility in the Southeast that operates four nuclear plants, has made similarly cautious comments about building new reactors this month. The company hasn’t applied for loans for the Department of Energy, a spokesman said, and would need to have “a customer partnering with us to help cover the construction costs,” to move forward.
It’s not a great sign that two of the country’s top nuclear players sound so cautious. Utilities will have to buy in to the process if nuclear is going to get off the ground.
It’s not that they don’t like the tech. Nuclear energy is carbon-free and much more reliable than other kinds of electricity-generation, running at nearly full capacity year-round. And with electricity demand rising because of data centers and electric vehicles, policymakers say nuclear is one of the best sources to meet the need.
But recent attempts to build plants have come in over budget and behind schedule, with the latest plant expansion in Georgia costing more than $15 billion above expectations. Customers were on the hook for much of those overruns, and they were not good for investors either.
The Trump administration said this week that it will lend $17.5 billion to companies building large reactors, in an attempt to jump-start the process of building up to 10 of them. The money can be used to pay up-front for equipment that utilities will need to build the plants, which are expected to be co-owned by utilities and nuclear designer Westinghouse. The Department of Energy says Westinghouse has seven partners who have signed letters of intent. But it didn’t name the partners, which one analyst took as a sign that the utilities involved are concerned about a negative reaction from their investors.
“The fact that the companies do not announce their participation indicates to us that they are wary about being associated with new nuclear,” wrote Jefferies analyst Julien Dumoulin-Smith in a note. “If the companies expected positive reactions, they would likely issue their own press releases.”
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