By Kennedy Maize — February 20, 2023
“The failure of the uncompleted V.C. Summer Units #2 and #3 ($10 billion), and the continuing woes at Vogtle, have marked the complete failure of Congress to create a ‘nuclear renaissance’ through the 2005 Energy Policy Act. The act provided for up to $8 billion each in ‘loan guarantees’ for new nuclear plants.”
“Nuclear ‘loan guarantees,’ it turns out, is a politically constructed term to cover the fact that the ‘guarantees’ are actually Treasury funds, and loan payments are made to the Treasury.”
The sun rises in the East and sets in the West. And Southern Company announces further delays in the startup of Georgia Power’s Vogtle Units 3 and 4, the only nuclear power plant under construction in the U.S.
In its annual financial report issued Feb. 16, Southern said it will push back the startup date for Unit 3 of the two-unit, Westinghouse AP-1000 reactor project to May or June of this year. Earlier, the company projected a startup of the unit in the first quarter of the year. Unit 4 startup is also likely to be delayed, according to the Atlanta-based company, until at least the 2023 4th Quarter, or perhaps (some might consider it likely) into 2024.
Southern said the latest delays would add $200 million to its share of the two-unit project, bringing its 47.5% share to $10.953 billion (or about $23 billion for the full project). Other owners include Oglethorpe Power Corp (30%), Municipal Electric Authority of Georgia (22.7%) and Dalton Utilities (1.6%). POWER magazine reported that “costs reported by MEAG in May last year suggested total spending for the expansion was close to $34 billion at the time.” Oglethorp, a large generation and transmission rural cooperative agency, has also said Southern has understated the Vogtle costs.
In 2009, Georgia Power announced the launch of the existing two-unit nuclear site with the two 1,117-MW Westinghouse reactors at an estimated cost of about $14 billion (with $6.5 billion from the U.S. Department of Energy), entering service in 2016 and 2017. The current tab has more than doubled well past $30 billion, with U.S. DOE in for $12 billion. More cost is accruing–and for no power to date.
According to Reuters, outgoing CEO Tom Fanning said on a call with investors, “After careful consideration and given our experience on Unit 3 and the degree of critical work ahead of us, we are further risk adjusting our Unit 4 schedule.” He said the needed work on Unit 3 includes pipe repairs, a valve fix, and improving flow through the reactor’s cooling pumps. He said tests at Unit 4 likely will reveal more problems. “We’re just trying to get anything we can see right now,” he said.
In its financial report, Vogtle reported a fourth-quarter 2022 loss of $87 million (8 cents per share), compared with a loss of $215 million (20 cents per share) in the 2021 fourth quarter. Southern Company reported full-year 2022 earnings of $3.5 billion, ($3.28 per share), compared with $2.4 billion ($2.26 per share) in 2021.
Summer: $10 Billion Failure
In 2017, a similar two-unit AP1000 new reactor project at SCANA Corp.’s V.C. Summer single-unit site in South Carolina, partnered with state-owned public power system Santee Cooper, went Vogtle-like and was finally cancelled at a sunk cost of $10 billion. Its aftermath, Nukegate, included criminal charges and convictions with SCANA sold at a bargain basement price to Virginia-based Dominion.
The failure of the SCANA project and the continuing woes at Vogtle have marked the complete failure of Congress to create a “nuclear renaissance” through the 2005 Energy Policy Act. The act provided for up to $8 billion each in “loan guarantees” for new nuclear plants. The idea was to make it easier for nuclear projects to finance new projects, as many previous lenders, burned by nuclear project failures, avoided lending money to nuclear projects or exorbitant interest rates. Nuclear “loan guarantee,” it turns out, is a politically constructed term to cover the fact that the “guarantees” are actually Treasury funds, and loan payments are made to the Treasury.
Conclusion
Chris Womack, CEO of Southern subsidiary Georgia Power, will become CEO of the parent company later this year. His Vogtle problems will come with him.
Congress should also pass legislation giving Nuclear power “base load” preference over all other generation, to avoid more hesitance to build Nuclear plants only to have them waiting in line behind worse-than-useless wind and solar to sell what they can produce 24/7.
The problem with nuclear power is that it just doesn’t k*ll anyone. Quite the contrary, its 24/7 product is beneficial.
Weapons of war seem to be more in line with WEF goals, requiring no loan guarantees.
There is something very rotten at the heart of western civilisation. But then we’re all very well aware of that. I can’t really speak to the US situation as I know very little about it, but here in the Disunited Kingdom the greens are all fully opposed to any nuclear expansion – and we are not talking 1950s technologies.
“The Green Party of England and Wales and the Green Party of Ireland are strongly opposing a UK government plan to build a nuclear power plant at Hinkley Point, an area in South West England that overlooks the Irish Sea. They are working hard to expose the economic and environmental risks of the plan, and hope that an EU scrutiny may still derail this socially and environmentally damaging project.”
https://europeangreens.eu/news/uk-and-irish-greens-team-against-state-funded-nuclear-power-plant
What counts for the greens is ensuring the problem is never solved. After all, what would they do then?
And the politicians? They’re the new Cnidarians.
And NOW YOU KNOW why all the left and all RINOs went after TRUMP!. He did what he promised. How can politicians keep getting elected if they actually SOLVE problems? What can they run on then?
Really? Perhaps you can point me to the wall on the border with Mexico that Mexico paid for? Or how he repealed Obamacare and replaced it with something better? Was Hillary Clinton actually locked up?
They didn’t even accept that Trump was elected. The same CLOWNS that never recognized an election as legit now claim that others are “election deniers”. You couldn’t make that up.
I’ve just been surprised at all he did accomplish considering he spent most of the 4 years defending himself against spurious and often ridiculous accusations brought by lying Democrats and RINOs. I’m sure you applauded their efforts.
Based on the Southern Company stock price, investors have no obvious concern about the delay.
SO last traded at $65.18 per share, which is still close to the 52-week and also all time high of $80.57 before the 2022 market decline. The SO stock price has had a fairly steady rise since January 1985.
I doubt if any company will build more reactors after seeing the costs for Southern and the prior $10 billion sunk cost for SCANA.
It’s amazing what you can accomplish when fixed costs are offloaded onto the hapless customer base. That’s when the lobbyists tell everyone how low cost the plants are by ignoring more than half the cost equation.
Most utilities sell their electricity at fully accounted cost and make profits on a regulated rate of return on their investments. I don’t know what happens to their Return on Equity if the investments are halted and they have sunk costs which will never have any revenues. In the past I believe the FERC has assigned at least some of the sunk costs to stockholders. Regulators must decide whether incurred costs should be disallowed (charged to stockholders) or recovered by increasing rates to remaining ratepayers.
How do utilities make a profit?
This century-year-old utility business model: utilities make profit by investing in the infrastructure, like pipes and wires, that provide energy services to customers.
I earned my Finance MBA so long ago, I don’t remember the accounting rules for utilities, but they were strange. And there were some for profit utilities with different rules.
which costs are usually NOT passed on to the consumer?
In this case there are no regulatory tactics or trail of political manipulation brakes to explain all the cost over runs and delays like pipelines. At the rate this is going, the completed nuclear units will be needed to power all the multibillion-dollar solar mfg plants, EV plants, and EV battery plants in the state. Except this will not be cheap baseload power. Better move the mfg plants to TVA territory next time.
First Solar (FSLR) to Build Its Fourth U.S. Factory in Alabama (yahoo.com)
“Better move the mfg plants to ” China?
Nope.
Gee, how much of the silicon in those First Solar panels is produced in the US?
Answer: NONE
Those Uighur slaves gotta work, you know…
https://cen.acs.org/energy/solar-power/US-solar-polysilicon-supply-problem/100/i33#:~:text=A%20report%20by%20the%20International,wafers%20used%20for%20solar%20panels.
FS uses CdTe CVD process from an American genius inventor (Harold McMaster) not silicon and the other panel producers in GA are not using Uighur silicon in those new and expanding plants.
Our Technology | First Solar
Why can South Korea build four nuclear plants in the United Arab Emirates on time (roughly 6 years) and within budget. China has build two similar size units in Pakistan at a slightly lower cost.
“Why can South Korea build four nuclear plants in the United Arab Emirates on time (roughly 6 years) and within budget. China has build two similar size units in Pakistan at a slightly lower cost.”
For their large 1,100 MWe class reactors, the South Koreans and the Chinese have:
— Mature reactor designs whose supporting subsystems don’t generally require much in the way of post-installation technical revision in order to reach a reliable and safe operating condition.
— An experienced managerial workforce, engineering workforce, technical workforce, and in-field craft skill workforce which can be drawn upon for new reactor construction projects. In other words, their nuclear workforce has already passed through the difficult learning curve of doing new-build nuclear construction in a disciplined QA-conscious way.
— Access to cheap and plentiful labor for lower-skill on-site construction activities, combined with on-site industrial health & safety standards which are much less rigorous than what is seen here in the US.
— Ready access to cheap and plentiful land for their proposed plant sites, access which does not compete with other land use priorities.
— Better access to a larger industrial base and a component supply chain which can be relied upon to deliver the various construction materials and the various equipment subsystems on time and at lower comparative cost.
Here in the US, the real cost of any large new-build industrial facility is approximately double what it was thirty years ago, for a number of reasons. The real cost of new-build nuclear is now roughly quadruple what it was thirty years ago, also for a number of reasons.
The most important of the various reasons is the withered state of the nuclear construction industrial base in the US; but more importantly, the offshoring of much of America’s larger industrial base to Asia.
That larger industrial base is no longer available as a source of talent and experience for creating a source of nuclear-specific construction expertise, or as an industrial resource for manufacturing and fabricating nuclear-grade systems and components.
The South Koreans are bidding on plants in Poland, Czech Republic, and Saudi Arabia. Why can’t we seek a quote from them. South Korea has stated that it wants to be the largest nuclear plant supplier in the world.
Further, South Korea does not have The US Nuclear Regulatory Commission Anti-Nuc Regulators and Inspectors. For example, before I retired from the Nuclear Power industry the plant, I was working at had to spend over $10 million on a study on the necessary changes to mitigate the impact of a dam failure, two dams upstream and the implementation of these necessary changes. Similar amount was spent by a NPP to mitigate the effects of a seiche on lake Michigan.
Most all of you have already seen my detailed analysis of what went wrong at VC Summer and at Vogtle 3 & 4:
Root Causes of the Massive Cost Overruns at VC Summer and at Vogtle 3 & 4
That essay covers the issues these projects were experiencing between the years 2011 and 2015 under the original project management teams. Those management teams were subsequently replaced. Vogtle 3 & 4 survived and has made steady but expensive progress over the last six years.
What is happening now at Vogtle 3 & 4 in the year 2023 is a different kettle of fish.
For those who have been through the process of starting up a large new-build industrial facility, the most recent problems seen at Vogtle 3 & 4 are not at all unexpected for a first of a kind nuclear power plant as it gets closer to final completion and enters start up testing.
That said, we have to ask the question, what is the larger picture for new-build nuclear power here in the US?
Advocates of the large AP1000 size reactors make the claim that now that Vogtle 3 & 4 is nearing completion, serious consideration should be given to initiating another AP1000 size reactor construction project here in the US.
Given the realities of the current situation, with high inflation and with nuclear power’s capital costs under intense scrutiny, starting construction of another of these large unitary reactors like the AP1000, or any other 1,100 MWe size reactor project, will be a very hard sell.
The fact is that here in the US, we are not and will not be constructing enough of the large 1,100 MWe reactors which would be needed to realize the theoretical economies of scale which supposedly go with building the large reactors.
As it applies to current market conditions in the United States, and the current state of our nuclear construction industrial base, these large reactors require that too many financial, material, and industrial resources must be concentrated over too short a period of time, with the effect that project risk and financial risk rise to unacceptable levels.
Demonstrating that a nuclear construction project done in the US can be brought in on budget and on schedule is now in the hands of the oncoming SMR vendors to prove it can be done. If they fail to do that, new-build nuclear power in the US fails.
I worked as an engineer on the VC Summer Project and your analysis is spot on!
To add insult to injury, the Chinese have already built several of these units as well as their own supply chain. They’ve purchased the design rights from Westinghouse and have an uprated version that they will be building.
It’s interesting that they are trying to get more flow through the Reactor Cooling Pumps. I pointed out that the simulator model had too low a reactor coolant flow rate causing a larger temperature drop reducing thermal margin over what the design inputs that the Reactor Protection System setpoints were based on. Westinghouse told me I was wrong.
I had a hell of a time getting reactor physics data from Westinghouse to verify the simulator model for NRC inspection. Westinghouse pretty much left us to our own fate. To be fair, the working level and first-line supervisors were good people. But I’m glad at least one Westinghouse official was convicted in Nukegate.
People who decide what earth does in 2020 became adults in the 1970s. Wait a few decades and everything will go differently. If you did not become an adult in the 1990s then they might not do what you’d like…. but that’ll be your problem not theirs
Our collective lack of manufacturing skill and large project capability is disheartening. What investor is going to put their money up against repeated failures or near catastrophic cost/schedule overruns like these?
The regulatory greenies keep stifling nuc plants from completing and operating. They are entrenched everywhere.
The Votgle Nuclear Power Plant has cost more than $30 billion. Hmmm. An Ohio Class submarine S8G reactor costs less than $200 million in 2022 dollars. 52, S8G reactors provide more shaft power than the 2.3 GW Votgle Nuclear Power Plant. If the DOE commandeered four BIG mothballed U.S. Navy warships and installed 13, S8G reactors per ship; then the DOE could park said warships in various locations in Georgia to feed the grid … and all for about a third of what the Votgle Nuclear Power Plant cost. Also, the Navy would have a LOT of jobs for people ready to retire from stoking the reactors on submarines and aircraft carriers.
Hmmmmm! So tell me about the containment building on subs. Maybe you might need a few generators to convert shaft power to electricity too.
Just saying there design differences between stationary power plants operating at 100% power and warships that mostly operate at low power most of the time.
I’m hoping someone can help me.
“In 2009, Georgia Power announced the launch of the existing two-unit nuclear site with the two 1,117-MW Westinghouse reactors at an estimated cost of about $14 billion (with $6.5 billion from the U.S. Department of Energy), entering service in 2016 and 2017. The current tab has more than doubled well past $30 billion, with U.S. DOE in for $12 billion. More cost is accruing–and for no power to date.”
I think the language may be a little ambiguous but let’s start.
It sounds like Georgia Power announced in 2009 it was starting from scratch and building two new Westinghouse reactors. I assume announcing the launch means the site was approved and the reactor design was approved otherwise how could they offer a start up date. If the site was approved and the reactor was approved then how could it not be operating 14 years later, 6 years after the projected start date? That tells me they hired real shitty builders or someone is moving the goal posts. I don’t believe the former and would almost guarantee it is the latter. If shitty builders were hired the solution would be simple fire them and hire competent builders. If it were the latter we need to create a way to fire those mongrels as well. This is total BS.
Go read about it. The first set of problems came from their sales pitch at “saving money” on the project by shipping prefab construction components from a distant, out of state location.
Nope, that’s not the cause. Windmill parts are shipped across country (from out of state) and they are going up with no problems. It’s got to be something else.
Yep, there are many cost overrun factors. Here is discussion of some of those earlier ones, including the pre-fab work at Lake Charles, La.
Cost Overruns at Vogtle Expected to Soar (powermag.com)
How the Vogtle Nuclear Expansion’s Costs Escalated (powermag.com)
these are few of the factors along the way…..
December 2012: The independent monitor reports that The Shaw Group “clearly lacked experience in the nuclear power industry and was not prepared for the rigor and attention to detail required to successfully manufacture nuclear components.” Between July 2012 and December 2012, the project contractors were forced to repair “welds on [reactor components] that were found to be the wrong type of weld.” The project is now a full year behind schedule.
August 2013: The independent monitor reports that the construction contractor has “not demonstrated the ability to fabricate high-quality CA20 submodules at its Lake Charles, La., facility that meet the design requirements at a rate necessary to support the project schedule.”
24.5% of my retirement account is in Southern Company. Why did I buy stock when they were building two nuke reactors?
What did the Georgia PUC know in 2009? No gas, no oil, no coal, no choice.
For 60 years those nuke plants will provide high paying jobs in the state of Georgia.