Entergy says industrial customers must help finance new nuclear plants

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(The Center Square) — Entergy says it cannot build new nuclear power plants without financial backing from large industrial customers, underscoring the economic challenges facing Louisiana's push to expand nuclear energy as electricity demand surges.

"Nuclear generation is going to be essential to meet the rapid growth we're seeing through 2050," Jeremy Hilsabeck, an Entergy representative, said Tuesday. "We recognize the significant financial commitment of nuclear, and we're going to require the backing of a large customer in order to pursue that."

"We don't want to put it on the backs of traditional ratepayers, so the industrials are going to have to help us make that happen," he added.

The comments highlight a central obstacle to the renewed enthusiasm for nuclear power: While the technology promises reliable electricity around the clock, its enormous upfront costs and lengthy construction timelines make new projects difficult to finance without customers willing to commit to purchasing their output for decades.

Entergy, which operates Louisiana's two commercial nuclear power plants, is evaluating several technologies for expanding its generation fleet, including conventional large-scale reactors, small modular reactors and advanced designs that use alternative cooling technologies.

Hilsabeck said the utility has signed several memorandums of understanding with potential partners to explore nuclear development opportunities. The company is also examining federal financing programs that could help offset construction costs and reduce its financial exposure.

The utility is particularly concerned about avoiding the cost overruns that have plagued recent nuclear construction projects. Hilsabeck pointed to Georgia's Vogtle expansion, which cost approximately $30 billion, as an example of the financial risks involved.

"We want something that's a little bit more cost-effective," he said.

The company's caution comes as Louisiana officials accelerate efforts to attract nuclear investment and lay the groundwork for additional power generation.

On Thursday, two days after Hilsabeck's remarks, the Louisiana Public Service Commission approved a program allowing utilities to begin exploring advanced nuclear technologies, with some preliminary expenses potentially recoverable through customers' electricity bills.

The Louisiana Advanced Nuclear Exploration program authorizes utilities to spend up to $2 million on preliminary nuclear development work, replacing an earlier proposal that would have imposed a 20-cent monthly surcharge on utility customers.

Utilities could subsequently seek regulatory approval to recover those expenditures through electricity rates.

The money could support feasibility studies, site assessments, economic analyses and preliminary licensing preparations. The program does not authorize the construction of nuclear facilities, but it establishes a regulatory mechanism for utilities to begin evaluating potential projects.

The distinction between funding preliminary studies and financing construction is significant. While the commission's program could eventually shift some early development expenses onto customers, Entergy says the much larger financial risks of building nuclear plants must be shared with industrial partners.

Entergy already operates River Bend near St. Francisville and Waterford 3 in St. Charles Parish. The company has increasingly identified nuclear power as a potential long-term solution to rising electricity demand, particularly from energy-intensive industries and data centers.

During an April earnings call, Entergy CEO Drew Marsh said the company did not expect to meet electricity demand through 2050 without adding nuclear generation, though he cautioned that construction costs remain a major uncertainty.

The utility's position closely tracks the nuclear strategy unveiled by Gov. Jeff Landry in March.

Louisiana's Nuclear Strategic Framework identifies advanced reactors, including small modular reactors, as potential sources of future electricity generation while acknowledging the financial obstacles facing conventional nuclear construction.

The framework also emphasizes the need to recruit large electricity consumers willing to enter long-term purchasing agreements that could make new nuclear projects economically viable.

Data centers are considered particularly promising customers because of their substantial electricity requirements and potential willingness to pay a premium for dependable power.

But the governor's strategy extends beyond generating electricity. It also seeks to establish Louisiana as a manufacturing and fuel-processing hub for the broader nuclear industry, with priorities including nuclear component production, uranium conversion and uranium enrichment.

Those investments could proceed independently of new nuclear construction in Louisiana, allowing manufacturers to supply reactors elsewhere in the country.