A Century-Old Company The Government Owns Wants To Solve A Big Energy Problem

The Biden administration wants the United States to triple the global supply of nuclear power, with American-designed reactors running on fuel enriched in the West. The goal: Usurp Russia’s near monopoly on atomic energy exports, and keep China from gaining control of yet another green energy industry. 

But there’s one big problem: The U.S. isn’t even building any more reactors at home.

After nearly 15 years of billion-dollar cost overruns and delays, the utility giant Southern Company just hooked the second of two new reactors at a power plant in Georgia up to the grid this week — the only two atomic energy units built from scratch in the U.S. in decades. Developers are shopping around all kinds of novel designs for new-age nuclear plants. Yet few utilities can afford — or persuade investors to put up the cash for — projects that can take a decade or more to complete.

Luckily for President Joe Biden, the federal government owns a massive power utility specifically designed to deploy large-scale infrastructure that remains out of reach for the market’s invisible hand. But building new megaprojects means borrowing money — and Congress hasn’t bothered to adjust the utility’s credit limit for inflation in 45 years. 

Established almost exactly 91 years ago to electrify rural parts of the American South too poor to attract profiteering utilities, the Tennessee Valley Authority today generates and sells power to 153 local distributors that serve 10 million people in Tennessee and the surrounding region. The TVA’s seven reactors, spread out between three nuclear power plants, churned out 43% of its electricity in the past few months.  

The TVA functions like any other independent power company. But the New Deal-era state corporation’s board of directors is appointed by the White House and its shares are owned by the federal government. That makes the TVA the closest thing the U.S. has to the kind of government-controlled entity that other countries have tasked with completing their own years-long nuclear megaprojects.

France, Japan, South Korea, the United Arab Emirates, Poland and Ukraine all use government ownership to build and operate nuclear energy plants. The Kremlin-owned Rosatom has only widened Russia’s lead over the U.S. in reactor and uranium fuel exports in recent years, while successfully deploying new technologies at home. China’s state utilities have built reactors at home faster than any other country, and the country now looks poised to begin exporting its reactor designs in direct competition with the U.S. 

Putting the TVA at the cutting edge of the U.S. government’s nuclear revival strategy is not a new idea. But it’s gaining momentum. The utility is already working on two next-generation projects to build some of the country’s first small modular reactors. Now even the regulator who oversaw construction of the nation’s only all-new reactors in Georgia is encouraging the TVA to take up the challenge of constructing more. 

On a call with reporters Tuesday, TVA chief executive Jeff Lyash reversed his past opposition to building more of the large reactors that just came online in Georgia, saying he would no longer rule it out. 

But the TVA’s atomic ambitions are hurtling toward a major roadblock.

In the 1970s, the TVA started work on 17 nuclear reactors to meet growing electricity needs. But it ended up constructing just seven, as increasingly efficient electric technology and the growth of fossil fuels kept demand flat, despite a rising U.S. population. Faced with soaring debt from unfinished projects that would never earn money, Congress set the utility’s debt limit at $30 billion. 

If Congress had set that budget to automatically rise to account for inflation, that same dollar value would now surpass $137 billion. And with demand now surging from data centers and as the world races to replace fossil fuels with electricity, two-thirds of the TVA’s credit line is used up. 

Since its debt levels reached $24 billion at the end of 2016, the TVA has steadily shaved billions off its negative balance sheets, in part with contracts that direct revenues directly to paying down debt, John Thomas, the TVA’s chief financial officer, said on the call. 

He insisted the debt “doesn’t inhibit our ability” to get started on more projects, such as a proposal to build two or more BWRX-300 nuclear reactors — newer, smaller generators designed by North Carolina-based GE Hitachi Nuclear Energy — in Tennessee. 

Due to its federal ownership, the TVA is legally barred from receiving money from certain…