French Firm Wins $2 Billion Loan Guarantee for Idaho Enrichment Plant

WASHINGTON, DC, May 24, 2010 (ENS) – The U.S. Department of Energy has approved a $2 billion loan guarantee for French state-owned nuclear power developer Areva to build a uranium enrichment plant in Idaho. The plant will provide fuel for the U.S. nuclear power industry.

Energy Secretary Steven Chu said the conditional loan gurantee is part of a broad effort by the Obama administration “to expand the use of nuclear power in the United States and reduce carbon pollution.”

The $2 billion loan guarantee will support Areva’s $3.3 billion Eagle Rock Enrichment Facility 18 miles west of Idaho Falls, Idaho, which will supply uranium enrichment services to U.S utilities.

“Increasing uranium enrichment in the United States is critical to the nation’s energy and national security,” said Secretary Chu. “Existing reactors will need additional sources of enriched uranium soon. New nuclear plants that could start to come on line as early as 2016 will also need a steady, reliable source of uranium enrichment services. Areva’s project will help to meet that demand.”

Centrifuges for uranium enrichment (Photo courtesy Areva)

The Idaho Falls facility will use advanced centrifuge technology instead of the more energy-intensive gaseous diffusion process.

Although Eagle Rock will be only the second plant to use this technology in the United States, it has been employed in Europe for about 30 years to enrich uranium for the commercial power market.

The Eagle Rock project’s technology uses 95 percent less electricity than the gaseous diffusion technology it replaces, reducing both energy use and environmental effects.

Areva estimates construction of the Eagle Rock facility will create 4,800 direct and indirect jobs through the life of the project and will spur billions of dollars of investment in the regional economy.

“Areva is elated by this decision which will enable us to continue development of our Eagle Rock facility in Idaho and contribute to rebuilding America’s energy infrastructure so we can produce more CO2-free electricity,” said Jacques Besna-inou, CEO of Areva North America. “Areva has considerable experience building and operating enrichment facilities and is putting that experience to work with the Eagle Rock project.”

USEC, which operates the only uranium enrichment facility in the United States, supplying about half the U.S. market, also applied for an Energy Department loan guarantee for its proposed plant in Ohio. But the application ran into a snag last year when the Energy Department decided it was not ready for commercial scale.

USEC is testing new production-ready commercial centrifuge machines and USEC president and chief executive officer John Welch said, “We are targeting to update our application with the Loan Guarantee Office this summer.”

Still, the award of a loan guarantee to the French company drew criticism from Ohio Congresswoman Jean Schmidt, a Republican, who said “The controversial decision contradicts a campaign promise President Obama made to support the American company applicant and build a facility in Ohio, creating some 4,000 jobs.”

“Today is a day we all feared was coming,” said Schmidt. “I find the administration’s decision is a slap in the face and just wrong. I am sure they are celebrating in Paris tonight but in Piketon all we have is the paper that the President’s promise was printed on.”

“Ohio voters will not soon forget what happened today. The pain is as real as we believed his promise to be,” Schmidt said.

Richard Myers, vice president for policy development of the Nuclear Energy Institute, an industry association, said, “The Eagle Rock loan guarantee offer is an extremely positive development for the nation’s electric infrastructure, for the Idaho economy and for U.S. energy security.”

“Most immediately, the federal loan guarantee will help Areva arrange lower-cost debt financing that will reduce the overall cost of the project and mean thousands of good-paying jobs for the Idaho citizenry.

“Longer term, it will strengthen the U.S. supply of competitively priced uranium enrichment services, which will help ensure that the production costs of nuclear energy remain as low or lower than other baseload electricity sources,” said Myers. “That benefits consumers and the U.S. economy as a whole.”

The light-water reactors that generate power in the United States are fueled by low-enriched uranium, in which the concentration of the easily split U-235 uranium isotope is raised from less than one percent found in natural uranium to between three and five percent by weight.

Currently, the United States obtains half of its enriched uranium from Russia under the Megatons-to-Megawatts program, in which nuclear materials that were once aimed at the United States are converted to civilian nuclear fuel.

The program expires in 2013, after which alternate sources of enrichment services will be required to support the continued and expanded use of nuclear power in the United States.

The Eagle Rock project must obtain a Combined Construction and Operating License from the Nuclear Regulatory Commission before the loan guarantee can be finalized.

In addition to the $2 billion in loan guarantee authority under the 2009 Omnibus Bill, the Energy Department has made available an additional $2 billion to support uranium enrichment technology from loan authority provided in 2007.

In a fiscal 2010 supplemental spending request, the Obama administration today proposed an increase of $9 billion in federal loan guarantees available for companies building new nuclear power plants.

The increased loan volume would be derived by accelerating access to a portion of the $36 billion requested by the Obama administration in its fiscal 2011 budget.

Energy Department loan guarantees are not grants but provide a federal backstop that enables companies to invest in clean energy projects.

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