EIB financing for nuclear reactor construction remains off the agenda

Despite a leak of the European Investment Bank’s (EIB) roadmap containing nothing new or concrete on nuclear financing, the industry continues to hold out for new money from the bank to support its planned expansion.

“The European Investment Bank is open to financing for nuclear”, said Yves Desbazeilles, Director General of NuclearEurope, the Brussels-based association for the defence of nuclear power, responding to the leak in comments to CarbonPulse last week.

The EIB document, which outlines its planned work for 2023-2027, does mention that ‘R&D for small modular reactors (SMRs)’ will be supported by the EIB. Desbazeilles argued that the new document is an open door for “several other” options for EIB support, such as for reactor construction, but no such reference seems likely in the final text.

However, several industry observers have told Euractiv that the document’s references are no more significant than those in the current roadmap (2021-2025), which already mentions R&D support for nuclear fission and fusion but nothing on electricity generation.

Technology-neutral approach

The financing of nuclear power is a live topic in Brussels,  mainly since the President of the European Commission, Ursula von der Leyen, spoke positively about the technology at the Nuclear Summit (NES) in Brussels in March 2024. In recent months, the industry and several national governments have made a concerted push for EIB support for nuclear.

The EIB remains cautious about the prospect of financing nuclear energy.

The bank is the EU’s investment arm and between now and 2025, it plans to channel €1,000 billion into environmental and energy projects.

Within this framework, the bank is adopting a technology-neutral approach and is therefore not closed to supporting nuclear power, illustrated by a €145 million loan granted in December 2023 for safety operations in Romania.

However, irrespective of politics, investment in nuclear power is now less financially attractive than it was in the past.

Over the last 24 years, only €1 billion of EIB funds have been earmarked for nuclear power and only for parallel activities (R&D, safety, etc.). The last EIB investments in electricity generation occurred in 1987, for France’s two first Flamanville nuclear reactors.

Plant construction is where finance is most needed – installed nuclear capacity is set to triple between now and 2050 in Europe, including large and small reactors.

Profitability

The construction of reactors faces a severe problem regarding the prospects of EIB support: profitability.

Although it deploys public money, the EIB’s lending operations are intended to generate a return for the bank and the institution’s prestigious ‘AAA’ credit rating allows it to borrow on international markets at low interest rates.

To maintain this rating, the bank cannot lend where there is a significant risk that it will not get a return on the loan. Where the bank deploys riskier loans, it protects itself by seeking guarantees and demanding that the borrowers are financially solid.

While the solvency condition is more easily met when the applicant nuclear company, such as EDF in France, is state-owned, this provision is harder for start-ups and other private companies to satisfy.

Larger reactors built more recently have struggled with systematic cost overruns and delays. This has seriously tested the confidence of financiers, who worry that they will not get back their investments or that it will be too late.

This concern is despite expert arguments that the cost of future large reactors will fall by 20 to 30, as Europe will benefit from serially producing reactors again.

The business model for large reactors is well known, but for SMRs, “which have new applications, the models have yet to be invented”, Valérie Faudon, General Delegate of the French Nuclear Energy Society (SFEN), explained to Euractiv.

Ultimately, the risk of financing nuclear power remains high, as Thomas Ostros, Vice-President of the EIB, put it in mid-March during the Nuclear Energy Summit.

Le consensus

EIB loans must also be approved by national governments. Germany, Italy, Spain, and France have an important voice because of the significant capital they have subscribed to the bank.

As a result, France cannot rely on the support of the ten states members of the nuclear alliance alone, although it does enjoy the support of the institution’s president, Nadia Calvino of Spain. Italy has made positive noises to support SMR but has not yet provided concrete support for new EIB financing.

The EIB declined to comment on the leaked 2023-2027 roadmap.

[Edited by Donagh Cagney/Alice Taylor]

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