Southern Company, parent of mega-utility Georgia Power, has distributed a press release this morning that they have decided to continue with the construction of Plant Vogtle units 3 & 4 – currently the only nuclear power plants under construction in the country. South Carolina utilities chose to scrap construction of their units in the past few months, and Duke Energy more recently halted units that were still in the planning stage.
Georgia Power Chairman and President Paul Bowers said via the release, “Completing the Vogtle 3 & 4 expansion will enable us to continue delivering clean, safe, affordable and reliable energy to millions of Georgians, both today and in the future. The two new units at Plant Vogtle will be in service for 60 to 80 years and will add another low-cost, carbon-free energy source to our already diverse fuel mix.”
The key phrase to garner support with the PSC is “diverse fuel mix”. Despite the current messaging coming from the White House, regulators believe the era of coal powered electric generation is dead. Despite some overly rosy scenarios painted by some academics, there’s also the understanding that renewable energy – specifically wind and solar – are still not sufficiently developed to meet base load generation needs.
That leaves the remaining feed stock of natural gas, the currently favored fuel for new electric generation. The shale oil boom in the U.S. has had a beneficial by-product of lowering natural gas prices to historical lows. At this time, the supply is plentiful. This is why another phrase in Bowers’ statement is important. Those making planning decisions for the future of this plant have a 60-80 year time horizon. Fossil fuel prices have a volatile history over the past half century. The two oil price spikes were followed by a glut in the early 80’s, when natural gas was often burned off during oil production because it cost more to ship to market than it was worth. And yet, years later, fossil fuels were in short supply with dramatic spikes again.
In addition to a vote by the Georgia Public Service Commission, a vote by the United States Senate is needed to increase the economic feasibility of completing the plant. Vogtle 3 and 4 is backed by federal tax credits, which have a deadline for the plant being in-service by 2020. Originally scheduled for delivery in 2016 or 2017, Vogtle’s construction delays by prime contractor Westinghouse and their subsequent bankruptcy have virtually stalled progress. An extension of this tax credit passed the House in June via H.R. 1551. Senate action and a Presidential signature are still required to complete the construction financing package.
The decisions ahead for the PSC and any potential legislative action will not be easy nor pretty. The mood of the electorate currently ranges from skeptical to hostile. The key in looking forward is a relatively simple question with no easy (or cheap) answer: How does Georgia meet the demand for growth in electricity we expect over the next half century.
This growth will come in two forms. Georgia was the 4th fastest growing state over the past decade, and at a rate that has been consistent four of the past five decades. In 25 years, present growth rates will have Georgia moving from the 8th largest state to the 5th largest, passing Illinois sometime near the end of that window.
There’s also the projected increase in demand of electricity per person. Much of what we do now is powered by electronic devices, but there’s a major revolution coming that will propel the need for power generation. Every major automaker is shifting significant R&D funds to develop electric automobiles. In one product cycle, these will move from niche vehicles to mainstream automotive products. Because of the long lead time required to build a new power plant, decisions on how this new wave of electric demand will be met must be made now.
The decisions ahead are not easy. The choices for Georgia are essentially this: Bite the bullet and pay a larger upfront charge than expected for 60-80 years of relatively cheap nuclear power; Go the path of least resistance and continue to expand the reliance on natural gas, knowing price spikes are historically part of this package; or, do nothing, and hope technology eventually saves us from our inability to make decisions for the future.
That last option, paralysis by analysis, doesn’t usually end well, but almost always ends with an even angrier electorate paying more while screaming “someone should have done something.”