On Monday, the two utilities building nuclear reactors at the Virgil C Summer nuclear site decided to pull the plug on the project, scuttling two of the four nuclear reactors currently under construction in the United States. The remaining two nuclear reactors are on the other side of the Savannah River, in Burke County Georgia. We know them as Plant Vogtle units 3 & 4. The bankruptcy of prime contractor Westinghouse has utility companies scrambling and policy makers concerned. There are implications for rate payers, the utilities involved, and the nuclear power industry as a whole.
Given the complexity of the issue, I turned to a local expert to provide some background and implications of recent events. David Gattie is an Associate Professor of Engineering at the University of Georgia. He’s written a guest op-ed for us before, and the views here are his own and do not represent the University of Georgia’s.
Nuclear Power in America: All Eyes Are on Georgia and Plant Vogtle
On July 30, 2017 the United States had four nuclear reactors under construction along with the hope of a comeback for nuclear power. As of July 31, 2017, the United States is down to two reactors as South Carolina Electric & Gas Company (SCE&G), principal subsidiary of SCANA, made the decision to halt construction on its two reactors at the V.C. Summer Nuclear Station.
It appears the hope for a nuclear comeback in the U.S., at least for the immediate future, rests with two reactors at Plant Vogtle in Burke County, Georgia. The implications, however, aren’t limited to Georgia and South Carolina, and they aren’t trivial.
Implications for South Carolina: Immediate and Acute
SCE&G has made what they believe to be the best decision for their customers, and they shouldn’t be faulted for that decision. It’s worth bearing in mind, though, that SCE&G ended up in this situation, “not because the project failed due to construction efforts; it failed due to Westinghouse not living up to its commitments under its fixed-price contract.”
Nonetheless, this doesn’t expunge the impacts of the decision, which has left 5,600 people immediately unemployed, local merchants without a customer base they had been banking on to support their businesses, and two generations of South Carolinians without 17,700,000 megawatt-hours per year of reliable, baseload electricity. The impact on people’s livelihoods is bad enough, but South Carolina will now be pressed to take action on how to minimize the financial impacts of abandoning the project as well as how to replace the loss of this much generation.
Implications for Carbon Reduction: Long-term and Chronic
Quite a few individuals concerned about climate change recognize the need for nuclear power to reduce long-term carbon emissions and as a hedge against what is likely to be a carbon-constrained future for U.S. energy policy. Many, however, don’t recognize this, preferring instead to trust in renewables. The loss of 17,700,000 megawatt-hours of zero-carbon power generation will almost certainly be made up with new natural gas plants resulting in a net increase in carbon. For those with strong beliefs in renewables, SCE&G won’t turn to intermittent solar and wind to fill this gap because solar and wind aren’t substitutes for nuclear. Rather, they’re alternatives and they have alternative characteristics; e.g., intermittency, low capacity factors, and an inherent need for reliable energy resources to prop them up when they’re unavailable—which is an everyday occurrence.
Implications for America: Latent
Nuclear power in the U.S. is struggling. Existing plants are closing, new construction has been trying to restart following a 30-year dormancy, U.S. laws won’t allow nuclear fuel reprocessing, budgets are being proposed for shutting down a plutonium conversion facility (MOX Project), and spent fuel has been stored at plant sites for 30 years while a major repository in Nevada sits in political limbo. This constitutes a dangerous regression by the U.S. in the full cycle of the nuclear resource and an unprecedented national security threat. The national security concern is a latent concern that is often, and regrettably, overlooked.
Implications for Georgia: Unknown
The projects at V.C. Summer and Vogtle are similar in that both represent two Westinghouse AP 1000 reactors and both have been impacted by the Westinghouse bankruptcy. However, the disposition of the major partners, the financial status of those partners, the parental guarantees negotiated with Toshiba (parent company of Westinghouse) and the customer base of the utilities are quite different, as noted in Georgia PSC Commissioner Stan Wise’s statement:
“First, the rate impact is spread across over three times as many customers at Georgia Power Company versus South Carolina Electric & Gas (GPC has 2.4 million customers to 700k at SCE&G). Second, the overall rate impact of the Plant Vogtle expansion in Georgia of less than 5% thus far has been significantly lower than the current 18% residential customer impact reported by SCE&G. Third, the Toshiba parental guarantee, which reduces the total customer impact, is $3.7 billion for the Vogtle project versus $2.2 billion for the Summer project. Last, there are four co-owners underwriting the Georgia effort, whereas Santee Cooper is the only co-owner in South Carolina. These factors suggest the Plant Vogtle project may be in a better position to move forward than the project in South Carolina.”
In addition, the financial heft of the major companies involved in the respective projects is quite different as the market cap for SCANA is $9.60 billion whereas Southern Company (parent to Georgia Power) stands at $48.17 billion.
For Vogtle to move forward, the economics of the project will need to merge into the same lane with the pragmatics of long-term strategic energy policy for Georgia—strategy that has afforded the state some of the lowest electricity rates and highest reliability in the country. However, Georgia Power and the Georgia Public Service Commission must, and will, make a final decision based on what is economically tenable; and that may very well be to abandon the project. However, if abandonment is chosen, the implications mentioned above will only magnify and America’s position in the global nuclear space will diminish.
China: Irony and Opportunity
On July 31, 2017, the United States saw its hopes for immediate progress in nuclear power cut in half—from four reactors to two. While some comprehend the magnitude of this decision as having grave consequences, others have embraced it as a signal for the U.S. to abandon nuclear power altogether (see Senator Bernie Sanders). However, among those that also likely welcomed this decision was China; which, on the very same day, announced it had connected its most recent nuclear reactor to the grid.
One step forward for China…two steps back for America.
If the abandonment of nuclear power projects and the closing of existing nuclear plants continues in the U.S., we may very well be looking at an America without nuclear power and a China assuming the role of global leader. What would that world be like and what would be the national and international security implications?
All eyes are on Georgia and Plant Vogtle, but Georgia can do only so much. Besides, this issue is bigger than Vogtle. The bigger issue is whether or not the U.S. has the political resolve to address nuclear power in America.
David Gattie is an Associate Professor of Environmental Engineering at the University of Georgia. The views reflected here are his own and do not necessarily reflect the views of the University of Georgia. He can be contacted at his blog: https://davidgattieblog.wordpress.com/