The U.S. Department of Energy said Thursday that it has approved a $2 billion loan guarantee for French nuclear power developer Areva S.A. to build a uranium enrichment plant in Idaho that would serve the U.S. nuclear power industry.

Energy Secretary Steven Chu said in a statement that Areva's technology is sound and the company's plant will provide enriched uranium to existing and new U.S. nuclear reactors.

Areva...