There’s a fascinating insight into the way the nuclear industry works in the news that Exelon Nuclear has dropped plans in the US to build an Economic Simplified Boiling Water Reactor (ESBWR) at Victoria, Texas. The company is looking for an alternative reactor design.

The reason Exelon give for their decision is that the ESBWR design is neither complete nor approved. With the clock ticking on the need to secure federal loan guarantees to build their nuclear plant, the company are looking for a design that will be ready sooner.

Loan guarantees made available by the US Department of Energy (DoE) to nuclear and other clean-energy technologies help would-be builders raise the necessary finance for their projects by acting as a catalyst and reducing financing cost.

Or, to put it another way, nuclear power station builders can’t or won’t build new facilities without bailouts from the taxpayer. Exelon is in a race with other builders because the available government guarantees are not sufficient to cover all of the submitted 19 new reactors proposals. Adopting the ESBWR and the associated delays would have meant Exelon risking losing its government cash and so it has dumped the design.

It’s also worth looking at how these loan guarantees work:

Should the project be delayed because of troubles with government-related consents, such as safety regulation or planning permission, the DoE would cover excess finance costs to the utility from the delay in repaying its loans.

In other words, once a guarantee is issued, the Department of Energy has to approve safety regulations and planning permission in a given time period or risk a financial penalty. Does a safety and planning system under such pressures inspire confidence? An incentive to rush or cut corners is built into the loan guarantee system.

Of course, if the nuclear industry could stand on its own two feet these concerns wouldn’t exist. But as it is, the industry has the best of both worlds – government money and the government slave to its wishes.