The Japan Bank for International Cooperation may lend as much as $4 billion for a nuclear plant project in Texas that would be the country’s first state financing for an atomic power station abroad.
Government-run JBIC will probably offer a loan provided that the project is guaranteed by the U.S. government, Tadashi Maeda, head of the bank’s corporate planning department, said in an interview yesterday in Tokyo. The loan may be as large as $4 billion, said Toshiro Kudama, an official at Tokyo Electric Power Co., which has an accord to invest in the initiative.
The $10 billion program led by NRG Energy Co. will use reactors made by Toshiba Corp., the Japanese company that bought U.S. nuclear equipment maker Westinghouse Electric Co. in 2006. A loan deal would encourage utilities to boost investment in nuclear projects abroad, in line with Prime Minister Naoto Kan’s goal of exporting infrastructure technology to spur the economy.
“Japan has sought to lead the nuclear industry through investment, training and reactor sales to Asia,” said Daniel Aldrich, a political science professor at Purdue University in Indiana. “Expansion into the U.S. is only a continuation of this trend.”
JBIC expanded overseas lending during the past three years, moving beyond its previous focus on developing countries. In 2008, it allowed itself to finance nuclear-plant initiatives in industrialized nations. The bank is prepared to lend funds for a high-speed rail project in California that Japan is bidding for, then-Transport Minister Seiji Maehara said last month.
Tokyo Electric
Tokyo Electric is holding talks with JBIC on a loan for the Texas project, aiming to sign a preliminary financing agreement in 2012, Kudama, executive general manager of the utility’s international affairs department, said in an interview yesterday.
Nuclear Innovation North America LLC, a joint venture between Princeton, New Jersey-based NRG Energy and Tokyo-based Toshiba, plans to add two 1,350 megawatt reactors in Texas at a cost of $10 billion or less, with commercial operations slated to begin in 2016 and 2017. Nuclear Innovation Chief Executive Officer Steve Winn has said the partners applied for about $7 billion in U.S. federal loan guarantees and as much as $4 billion of Japanese aid.
The project “has significance for Japan,” said Maeda, 52, who is an adviser to Kan’s Cabinet. “Jordan and other Middle Eastern nations, Turkey, Vietnam, Indonesia and Malaysia will be the growing markets for nuclear plants, in addition to the U.S., which is a huge and well-developed market.”
Help From Banks
Maeda said JBIC may team up with commercial lenders to offer a loan covering about half the Texas project cost, without elaborating. The venture’s cost estimate is preliminary, he said.
NRG Energy Chief Executive Officer David Crane said on Aug. 2 that the partners have opened formal discussions with Japanese government financial institutions to finance the project.
Tokyo Electric, the operator of the world’s biggest nuclear power station, in May clinched a $125 million deal to buy a 9.2 percent stake in the project from Nuclear Innovation. The agreement will close after U.S. loan guarantees are announced, NRG Energy said in May. The Japanese utility also agreed to pay $30 million for an option to double its stake.
A total of 149 new reactors are planned worldwide by 2030, with nine of them to be built in the U.S., where a further 22 are proposed as of Aug. 1, according to data compiled by the World Nuclear Association. The U.S., which hasn’t licensed any new reactors since the 1979 accident at Three Mile Island in Pennsylvania, is trying to revive nuclear-power construction to meet power demand without increasing greenhouse-gas emissions.
Nuclear Renaissance
“Despite claims about a nuclear renaissance, the overall picture of the U.S. nuclear industry is mixed,” said Aldrich of Purdue University. The Obama administration is offering financial incentives to adopt nuclear power as an alternative to coal, while at the same time stopping funding for a planned national repository for nuclear waste in Nevada, he said.
Under the Energy Policy Act of 2005, the federal government guarantees loans in exchange for a fee paid by the borrower once the reactor operation is profitable. The government would repay the banks if the borrower defaults.
“This is going to be a joint U.S.-Japan financing program,” said Kudama of Tokyo Electric. “We are strongly hoping the U.S. government grants a guarantee as soon as possible.”
Japan is facing increasing competition for energy and infrastructure projects. It lost to South Korea last December on a $20 billion atomic plant contract with the United Arab Emirates, and Russia was selected this year to build the first of as many as 13 nuclear power plants planned in Vietnam by 2030.
“Japan can’t be a big fish in a small pond,” Maeda said. “The country needs to break out of the pond by globalizing and standardizing its technologies.”
