The U.S. government has signed a new $80 billion nuclear energy deal with Brookfield Asset Management (BAM) and Cameco (CCJ), partners in the nuclear reactors powered by Westinghouse Electric.
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The U.S. Commerce Department said that it will arrange financing and facilitate approvals for at least $80 billion in nuclear energy from Westinghouse, which is 51%-owned by Brookfield and 49%-owned by Cameco. Both companies’ stocks are up on news of the government deal.
Analysts were quick to say that the U.S. government’s investment will help to break a logjam that has kept America from building new nuclear power plants for several decades. Only three new reactors have been built in the U.S. this century. Utilities have been reluctant to build nuclear reactors because of the expense involved.
Massive Investment
JPMorgan Chase (JPM) estimates that the $80 billion investment could finance as many as eight large-scale nuclear reactors in the U.S. The bank adds that the government investment could generate cash for a long time. “Each reactor built will require decades of fuel and maintenance services, securing high-margin, recurring revenue streams for Westinghouse and its owners,” wrote JPMorgan in a note to clients.
As part of the deal, the government will receive 20% of any cash distributions over $17.5 billion made by Westinghouse once the $80 billion investment is reached. In most other countries, governments take a more direct stake in building nuclear power plants, usually through state-controlled companies. China is currently building dozens of nuclear reactors with state support.
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