Hammering Out a Nuclear Future

The nuclear renaissance in America, long-heralded, has hit a major speed bump. Constellation Energy last weekend announced that it cannot see eye-to-eye with the federal government on structuring vitally needed federal loan guarantees for a new Maryland reactor. The ripple effects have gone global, straining Constellation's relationship with its nuclear partner Electricite de France, EDF.

The future of nuclear power is one of the largest issues looming over the energy sector. EnergyBiz has lined up a panel of leading nuclear experts to discuss the future of nuclear generation in America in a special webcast on Thursday, November 18 at noon EST. To learn more about the webcast and register, please visit www.energybiz.com/nuclearwebcast.

It is worth considering in depth how foreign players view the potential of the U.S. nuclear sector.

In response to an inquiry from EnergyBiz Insider, EDF said Wednesday, "EDF is extremely disappointed and shocked to learn that Constellation has unilaterally decided to withdraw from the Calvert Cliffs 3 project.  For the past year, EDF has made huge investments of time and resources on the federal loan guarantee process with the Department of Energy for CC3.  Constellation knows that we were at the finish line with the Department of Energy and were making significant progress.  Constellation has withdrawn from CC3 in spite of our repeated efforts to substantially decrease their exposure and risk to the project. "

Prior to the current dust up, I interviewed Jean-Pierre Benque, EDF senior executive vice president and president of EDF Inc., its North American operations. His comments are edited for style and length. The conversation provides insight into EDF's perceptions about the future of nuclear power in America.

EnergyBiz: What is your vision for nuclear power?
Benque: We have two joint ventures with Constellation Energy Group. The agreement forming UniStar was signed in July 2007 to set up a fleet of at least four nuclear plants, beginning with Calvert Cliffs 3. In November 2009, we completed a second joint venture agreement, under which we bought nearly 50 percent of the 3,900 megawatts of existing nuclear plants that Constellation Energy currently operates. That deal was made after the credit crash, when Constellation was not able to stand alone because it had liquidity problem.
EnergyBiz: Since France has been much more reliant on nuclear power than the United States, what do you think your company has to teach us about developing new nuclear power plants?
Benque: Of course, there has been no new nuclear for 30 years in the United States. But during this time period, EDF had the opportunity to continue constructing nuclear power plants all over the world - in China, for instance, and in France. Now we can apply some of the engineering experience in the United States that we have had with Areva and Bechtel.
EnergyBiz: Areva has run into some difficulties in its efforts to build a new generation nuclear plant in Finland. What have Areva and EDF learned from that?
Benque: I would let Areva answer about their experiences. The Flamanville 3 project in France is complex - the first of its kind. We have had six months of delay but the delay and the budget are under control. The experience at Flamanville is very useful for us at UniStar's Calvert Cliffs 3 project. We have 27 engineers from EDF at UniStar who bring the benefits of all their experience at Flamanville.
EnergyBiz: Tell me how much of a loan guarantee are you looking for from the Department of Energy for Calvert Cliffs?
Benque: We are applying for about $7 billion for the loan guarantee.
EnergyBiz: How important is that for the financing of this plant?
Benque: The value of the loan guarantee is that it would provide a way to get an economically feasible credit rate and have an acceptable interest rate from the bank.
EnergyBiz: Would this project go forward without the loan guarantee?
Benque: The loan guarantee is, of course, a necessary component, but it is only one of a number of steps and needs in the process. I'm very confident in our filing with the DOE and I am very confident in the project.
EnergyBiz: How would you respond to those who might say that the federal government should not provide loan guarantees to a project that has substantial foreign investment?
Benque: Areva is already investing in plants in the United States, and, in the very near future, all of the plants that we are designing and working on would create U.S. jobs. We already invested $4.5 billion in Constellation Energy's existing nuclear fleet. We are now planning to invest additional capital in order to develop new nuclear in the United States. We are committed to investing in America and creating jobs and also, of course, tackling the CO2 challenge.
EnergyBiz: EDF plans to build four new nuclear plants by 2020 in the United States.
Benque: We do think that it would make sense to have a standardized fleet of reactors.
EnergyBiz: What is EDF's view of the future of nuclear power in the United States??
Benque: It's very important for EDF to be involved in nuclear plants in the United States. The U.S. market for nuclear is the biggest market in the world.

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