Sunday, August 6, 2017

The Costly Demise of the Nuclear Renaissance

I feel like I won the lottery because I finally nailed down a bet I made in 2006 that the supposed nuclear renaissance was going to be a huge failure.  I predicted that the 30+ new reactors being proposed would not be built, and the four that had actually gained construction permits would not be built on time, would be way over budget, and that even if they did come on line, their electricity would be so expensive it would have to be subsidized. The nuclear industry, on the other hand, claimed the new unproven Westinghouse AP-100- reactor would be cheaper to build and operate, would be safer, and would be the leading star in the “new” nuclear era here in the US and throughout the world.

The two Summer reactors under actual construction since 2008 in South Carolina were abruptly canceled last week after the utility confessed that the project was now estimated to cost $25 billion+ (up from the original $8 billion), was about 45% complete, and would not open before 2024.  If those plants were up and running by their original date of 2019, they would have been eligible for up to $8 billion in federal subsidies and tax credits.  Not going to happen.  So the big question now is who is going to "foot the bill" for the $9 billion that has already been spent on concrete, steel, labor, and executive's bloated salaries?  In 2007, the state legislature authorized an unheard of rule which allowed the utility (South Carolina Electric & Gas and the state-owned power company Santee Cooper) to immediately start charging the ratepayers for the construction costs, claiming it would be cheaper down the road since that would avoid borrowed money interest charges.  So the big question now is who pays?  The utility? Toshiba/Westinghouse, whose state of the art new generation design (the AP-1000) turned out to be a total disaster?  The state and/or feds, with a huge bailout?  Or do the citizens of South Carolina, who realistically had no choice in this boondoggle other than the empty promises of cheap electricity, construction jobs, increased local tax revenues, and the American dream? 

As one analyst reported, wrong assumptions were made from the start by the CEOs and other top brass who have so far profited immensely, and would have continued to profit from this white elephant if it ever went critical.  As many activists have purported, they knew because history repeats itself (think of the doomed half built Clatsop reactors sitting in Washington state because of the failed WPSS nuclear plan); and the environmental/anti-nuclear community told them, waging a battle offering knowledgeable testimony and discourse.  The big money won in the end.  It is interesting that the blame bantered around by the utility and the nuclear industry today does not focus on those damn environmentalists, as it has in the past.  Many of the reasons for the failure lie with the fact that this is a very complex and complicated technology that is very expensive to construct, and it must conform to stringent safety requirements and regulations.  The other big factor in this demise is the cheap cost of natural gas and the equally cheap and growing abundance of renewables such as solar and wind.  Add to that the third cost driver – efficiency – and no way would the large nuclear base-load dinosaur would ever be cost effective.  The decreasing demand for electricity, driven by such things as efficient LED lighting, better standards for appliances, and the shift to the digital age were not adequately addressed in the assumptions made 10-15 years ago.  The times they are a-changing, and most utilities are still in the dark ages dreaming of centralized control and profit.

The significance of the cancellation of this project now brings to the forefront the question of the two Vogle reactors currently being built in Georgia.  Begun about the same time, these nukes are way behind schedule, hoping to come on line in 2023; and the current cost estimate is $19 billion+, up from the original $8 billion.  A big difference here is that a consortium of investors all have a piece of this pie – Georgia Power, a subsidiary of Southern Co, Duke Energy, and even Toshiba (the parent company of the now bankrupted Westinghouse Electric, whose same AP-1000 reactor is being used, and several other players.  This consortium was awarded an $8.5 billion loan guarantee from the feds in 2007.  Is that going to be paid back to us, the taxpayers?  It's already been spent.  We'll see.

All of this will play out over the coming years.  The nuclear industry continues to be oblivious to the fact that there is no future for nuclear power generation – not in advanced reactors, small modular reactors, or even fusion.  The fiscal competition from natural gas (for the moment) and from the decreasing costs of solar and wind make it a no-brainer. They will soon have to face the facts that as current reactors shut down (10 scheduled this year alone) there is an enormous bill waiting to be paid for decommissioning and waste management.  The big argument will be "who pays?"  A fiscal conservative’s dilemma!

Two of the many articles covering this:

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