Norton Rose Group understands the need for an innovative approach to financing large scale projects such as nuclear power plants. The new build of a nuclear power station creates unique risk allocation and procurement issues regardless of whether the project is to be financed by its sponsors, government, a development bank or commercial banks.
One of the difficulties facing the developer of a nuclear project is the availability of debt financing. The long construction period and the additional regulatory controls provide a challenge for banks looking to finance a project.
One of the favoured financing methodologies currently adopted by developers for nuclear new build at present is to finance the project through corporate debt and then to refinance once the project is operational. This removes the risks associated with the long construction period, from the banks. However as the market becomes more stable with approved technologies and shorter construction periods it will become easier for banks (and others) to see nuclear new build as a credible and bankable investment.
Other options, which we have experience of in the nuclear market, include ECA financing, debt financing, government guarantees, equity investment and exceltium financing.
Another challenge facing nuclear new build projects, which needs to be overcome before debt financing becomes more generally available, is how the waste and decommissioning funds, which developers are required to set up and ring-fence at the start of a project in a number of countries, fit into the financial model. The operator of a nuclear station is required to make payments into these funds before making any other payments including payments to finance any commercial debt. This needs taking into consideration in any financial model.
We are in discussion with a number of banks on the development of their nuclear practices and in particular project financing models for nuclear new build. We also have experience of various financing models which are currently being used in the nuclear industry.
Norton Rose Group is one of the longest standing legal practices to operate in the banking and finance sector. Our understanding of risk allocation frameworks and the need for projects to be commercially attractive and viable have positioned us as a market leader. We ensure that our clients are at the forefront of procurement innovation as well as providing them with the tools needed to understand the continually changing challenges and priorities involved with financing a nuclear power station.