Active market seen in U.S. nuke plant financing

HOUSTON, Feb. 13 (Reuters) - Banks and private equity firms are keen to finance the construction of nuclear power plants in the United States, despite public opposition to the projects, an investment banker said on Tuesday.

"It's not something lenders are scared to stick their toe in," William Montgomery, head of the natural resources group at investment bank Goldman Sachs Group Inc. (GS.N), told the Cambridge Energy Research Associates CERA Week conference in Houston.

Montgomery described the market as "very active" and said the funding offers were coming from banks and project-oriented private equity funds.

Andrew Safran, global head of energy, power, chemicals investment banking at Citigroup (C.N) said that nuclear power would have to be a part of any viable future energy policy in the United States.

"I think nuclear will happen and has to happen," Safran said as part of a panel discussion about energy finance at CERA.

The U.S. nuclear industry has been virtually frozen since the accident at Three Mile Island in 1979, the worst such incident in U.S. history. Since then, no company has followed through with new plans to build a nuclear plant.

But the problem of where to dispose of nuclear waste persists, with some seeing it as an environmental hazard. Still, some groups have softened their opposition to nuclear power, which is virtually emission-free.

The bankers said high oil prices have also generated strong investor interest in alternative energy sources like ethanol and wind power.

Goldman's Montgomery said ethanol has been "a very active sector" for the bank.

Warburg Pincus Managing Director Chansoo Joung, who was also on the panel, said his private equity firm liked "the prospects long-term for cellulosic ethanol."

Cellulosic ethanol is ethanol produced from non-food sources like wood chips and switchgrass.