On Tuesday, the White House announced an $80 billion deal with Westinghouse to finance construction of eight large new reactors in the U.S. There is not enough in the way of actual details about the deal, resulting in even more unanswered questions. But the promise of a large, direct investment in a pack of new reactors has predictably revved up talk of yet another “Nuclear Renaissance” and made it look like the DJT 2.0 administration is making good on big nuclear power goals from a group of executive orders issued in May.
$80 billion sure sounds like a lot! And the news that the announced $80 billion is going to come from Japanese taxpayers and not U.S. taxpayers sounds like a sweet deal!
If we were talking about just about any other energy source, it would be a lot. $80 billion could build:
- 58,000 megawatts of solar power, or
- 38,000 MW of wind power, or
- 48,000 MW of wind and solar combined, or
- 14,000 MW of geothermal power plants.
Any of those options would produce about the same amount of electricity each year as 14-16 large-sized nuclear reactors – twice as many as the Westinghouse deal promises to build.
But $80 billion is only enough to build, at most, four Westinghouse AP1000 reactors. That’s because the cost of building nuclear reactors is four to 10 times more than wind, solar, or geothermal power. Even wind and solar paired with battery storage are still several times cheaper than new nuclear reactors.
But where would the other $80+ billion for eight reactors come from? U.S. taxpayers? Ratepayers? In this case, probably taxpayers. The reactors would probably receive low-interest loans from the Department of Energy’s (DOE) loan guarantee program, and, following construction, they would be eligible to claim the Clean Energy Investment Tax Credit, which provides a 30-50% subsidy for the cost of a new energy project. That would mean $80 billion or more in loans up front, and, later, $48-80 billion in rebates from U.S. taxpayers.
That still means someone will have to pay the cost of $80 billion-112 billion, plus interest, for loans and/or investor returns, plus the costs of operating, fueling, decommissioning, and nuclear waste storage. Taxpayers will likely pay that cost, too. One of the projects that would probably be included in the deal is the proposed four-reactor Donald J. Trump Nuclear Power Plant (DJT NPP), which former Energy Secretary Rick Perry’s new company Fermi, Inc. has proposed. Fermi’s stock price surged on Tuesday after the Westinghouse deal was announced. The DJT NPP is to be built at the DOE’s Pantex nuclear weapons plant in Texas, to power AI data centers that Fermi also plans to build there. The reactors and data centers are likely to be categorized as “critical defense facilities”, per Executive Order 14299. Presumably, federal taxpayers would pay for the data centers and their power bills through DOE’s budget.
Another feature of the deal is a U.S. government profit-sharing and partial ownership in Westinghouse. The company’s Canadian owners – Brookfield Renewable Partners (BRP, an equity investment firm) and uranium company Cameco – would give the U.S. government a 20% share of Westinghouse profits, after the company earns its first $17.5 billion. Then, if Westinghouse’s corporate value reaches $30 billion, Brookfield and Cameco would have to take Westinghouse public on the stock market – and give the U.S. government at least 8.3% of the company’s stock.
This would benefit Brookfield and Cameco, but not U.S. taxpayers. Another Brookfield affiliate bought Westinghouse from Toshiba when it went bankrupt in 2017 due to soaring costs of building four AP1000 reactors for utilities in South Carolina and Georgia. The South Carolina reactors (V.C. Summer 2&3) were canceled, and the Georgia reactors (Vogtle 3&4) were completed in 2024, seven years late and $23 billion over budget. Brookfield Business Partners (BBP) was unable to sell Westinghouse after pulling it out of bankruptcy, but after countries started sanctioning Russia over its war on Ukraine, it looked like Westinghouse could replace Russia as the largest supplier of reactor fuel and services, so BBP sold the company to Brookfield Renewable Partners and Cameco.
Westinghouse’s value hasn’t exactly seen explosive growth, so it has been seeking deals to sell AP1000 reactors in Poland, Ukraine, Slovenia, the Czech Republic, and other countries, in partnership with the U.S. government, which has become increasingly convinced that it must retake global leadership in reactor construction from Russia and China. The Biden administration tried to convince states and utilities that all of the problems with Westinghouse’s AP1000 reactor had been resolved. But still, no state or utility has taken the plunge.
By now, it is evident that no one is buying Westinghouse’s reactors, so it must be up to the U.S. government to do it. But why? Japan’s offer to pitch in $80 billion will soften the blow to U.S. taxpayers. It may even be enough to build the four reactors Rick Perry wants to name after the president. But we would still end up paying the rest of the cost of too-expensive power and never-ending nuclear waste storage, from reactors that mostly will not be providing electricity to our homes and businesses, but to data centers to power AI. Westinghouse is being passed around like a hot potato and we’ll likely be on the hook when the music stops.