The Export-Import Bank of the United States (EXIM) has provided financing for overseas nuclear transactions for over five decades and has world class expertise in analyzing technical, legal, and financial risks in the international nuclear sector. Small Modular Reactors (SMRs) represent a potentially substantial emerging export market for U.S. designed and manufactured energy technologies and EXIM wants to help lead their deployment around the world.
While EXIM considers each application for financing on its own merits, we offer a range of flexible tools that are well-suited to potential buyers of U.S. SMR systems and components.
What can EXIM offer for U.S. SMR export clients?
Subject to the standards applicable to all financings pursuant to EXIM Bank's Charter and other statutory requirements, developed financing standards, and due diligence requirements:
EXIM can offer "enhanced" Letters of Interest to help support a potential exporter's bid.
A Letter of Interest (LI) is a non-binding indication of EXIM's general interest in a proposed transaction or project and provides indicative general financing terms that EXIM is prepared to consider based on a limited review. An "enhanced" LI means that EXIM provides a more detailed letter, which can include a pro forma term sheet indicating its willingness to consider financing the anticipated U.S. exports and can identify a loan officer who has the authority to underwrite the proposed transaction. An enhanced LI can help demonstrate that EXIM stands ready to start underwriting a potential SMR transaction.
EXIM can offer long-term direct finance or guarantees with an expanded repayment term of up to 22 years (post-plant construction). In addition, EXIM can finance: (a) up to 85% of the total U.S. export contract value; (b) up to 40% (or in some cases 50%) local cost support; and (c), consistent with the current terms of the OECD's Arrangement on Officially Supported Export Credits (Arrangement), 100% of the premia plus interest during the construction period. Finance for SMR transactions will require a creditworthy borrower or guarantor, which will most likely need to be a sovereign (government) guarantee from the host country.
EXIM can finance 100% of the premia and capitalize interest costs, such that interest payments are financed until the power plant begins generating power (and revenue) or a negotiated long-stop date. If a transaction qualifies for this flexibility, it means that interest payments by the borrower can initially be deferred.
EXIM can provide pre-export payments, allowing loan disbursements to occur while SMR components are in production and in advance of export. Additionally, EXIM's recently revised definition of the value of work performed - explicitly incorporating pre-manufacturing costs - allows the Bank potentially to provide more financing and do so earlier. This means the borrower does not have to make these contractual payments out of existing cash.
EXIM can co-finance or parallel finance SMR systems with other Export Credit Agencies (ECAs) to help secure financing for SMR components manufactured by partner countries. EXIM already has standing co-financing agreements with Export Development Canada (EDC), the Japan Bank for International Cooperation (JBIC), Nippon Export and Investment Insurance (NEXI), and other ECAs.
EXIM's Engineering Multiplier Program (EMP) can be used to finance pre-construction technical services such as feasibility and similar studies, and pre-construction design, engineering, architectural and environmental services undertaken prior to commencement of an SMR project. An EMP loan can support the awarding of major equipment supply and construction contracts, and the development of technical and environmental and social information that are required to facilitate financing applications.
EXIM's Make More in America Initiative (MMIA) provides access to EXIM financing for capital investment to establish or expand domestic manufacturing facilities or infrastructure projects that facilitate U.S. SMR and SMR-related exports.
Additionally, the updated OECD Nuclear Sector Understanding allows borrowers/obligors to sculpt their repayment schedule to align with the cash flows of the project. Given the high initial capital costs associated with nuclear projects and recognizing that imbalance in funds, additional flexibilities allow borrowers to defer their first repayment of principal and interest up to 36 months after project completion (starting point of credit).
Taken together, these tools mean that for qualifying transactions - EXIM could provide a loan guarantee or direct loan of up to 22 years post-construction, help the borrower finance exposure fees and interest payments during the construction period, support pre-export disbursement of the loan during equipment fabrication, and work with other ECAs to help jointly finance the various components of a given SMR design.
That's a strong, competitive set of export finance tools that can help U.S. SMR designs compete globally and help potential clients secure large-scale, flexible financing to turn projects into reality.
What requirements does EXIM adhere to?
In the case of nuclear sector exports, EXIM adheres to the OECD Arrangement and its Sector Understanding on Export Credits for Nuclear Power Plants.
EXIM's nuclear sector credits are also subject to compliance with the following:
- EXIM's Environmental & Social Due Diligence Procedures and Guidelines (ESPGs);
- International Atomic Energy Agency (IAEA) safety standards and guides for regulatory regime, licensing, siting, design, construction, commissioning, and operations;
- International Finance Corporation (IFC) Environmental and Social Performance Standards;
- the Equator Principles (EP4);
- any relevant third country (exporter or host country) and internationally accepted safety and performance standards, and other applicable U.S. laws, U.S. government policy and applicable EXIM lending policies.
EXIM also requires host governments to enter into the agreement required under Section 123 of the US Atomic Energy Act of 1954 (123 Agreements) and expects them to be parties to the Convention on Supplementary Compensation (CSC) and other applicable civil nuclear liability conventions as a condition for financing support.
EXIM also requires design approval by the U.S. Nuclear Regulatory Commission or an equivalent foreign regulatory authority acceptable to EXIM.
Finally, it is important to understand that EXIM's Charter requires that a 'reasonable assurance of repayment' be determined for each loan or guarantee it offers. This is why, as previously noted, a creditworthy source of repayment needs to be identified at the time each application for financing is submitted.
Resolution Approved by the EXIM Board of Directors, November 30, 2023
WHEREAS, The Export-Import Bank of the United States (EXIM Bank) has provided financing for overseas nuclear transactions for over five decades and has world class expertise in analyzing technical, legal, financial and environmental & social risks in the international nuclear sector;
WHEREAS, Small Modular Reactors (SMRs) represent a potentially substantial emerging export market for U.S. designed and manufactured nuclear technologies;
WHEREAS, EXIM Bank can consider offering a range of flexible tools that are well-suited to potential buyers of U.S. SMR systems and components;
WHEREAS, subject to the standards applicable to all financings pursuant to EXIM Bank's Charter and other statutory requirements, developed financing standards (including a creditworthy corporate or sovereign borrower or guarantor), and due diligence requirements (including design approval by the U.S. Nuclear Regulatory Commission or an equivalent regulatory authority acceptable to EXIM), EXIM Bank can consider:
- offering either "standard" Letters of Interest (LOIs) or "enhanced" LOIs with more detailed terms, in each case as a non-binding indication of EXIM interest in a potential financing of SMR and related exports intended to help support a potential exporter's bid for qualified transactions;
- offering long-term direct finance or guarantees with an expanded repayment term of up to 22 years post-plant construction for qualified transactions;
- financing up to 85% of the total U.S. export contract value and up to 50% local cost support in some cases; and
- potentially financing up to 100% of the premia and capitalize interest costs, such that interest payments are financed until the power plant begins generating power or a negotiated long-stop date; and
WHEREAS, EXIM Bank has the ability to support pre-export payments, allowing loan disbursements to occur while SMR components are in production and in advance of export; and
WHEREAS, EXIM Bank's Engineering Multiplier Program (EMP) can be used to finance preconstruction services such as feasibility and similar studies, and pre-construction design, engineering, architectural and environmental services undertaken prior to commencement of an SMR project, supporting the awarding of major equipment supply and construction contracts, and the development of technical and environmental and social information that are required to facilitate financing applications; and
WHEREAS, EXIM Bank's recently revised definition of the value of work performed - explicitly incorporating pre-manufacturing costs allows the Bank potentially to provide more financing and do so earlier; and
WHEREAS, EXIM Bank's Make More in America Initiative (MMIA) provides access to EXIM financing for capital investment to establish or expand domestic manufacturing facilities or infrastructure projects that could facilitate U.S. SMR and SMR-related exports; and
WHEREAS, in addition to working with other lenders generally, EXIM Bank can co-finance or parallel finance SMR systems with other Export Credit Agencies (ECAs) to help project parties secure financing from them for SMR components manufactured by partner countries;
NOW THEREFORE, the Board of Directors of the Export-Import Bank of the United States, resolves to:
FIRST, recognize EXIM Bank's aforementioned financing tools flexibilities as well-suited for exporters of United States SMR systems and components, and related services;
SECOND, strongly encourage and welcome requests to support the export of qualified SMR systems and components; and
THIRD, urge U.S. exporters to pursue all necessary regulatory approvals and compliance needed to ensure a safe and competitive suite of U.S. SMR technologies for export.
ENVIRONMENTAL AND SAFETY GUIDELINES FOR NUCLEAR POWER PLANTS