Reports related to this article:
Project(s): View 2 related projects in PECWeb
Plant(s): View 5 related plants in PECWeb
Released July 09, 2013 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The U.S. nuclear power industry faces "massive challenges over the next three to four years," Brock Ramey, Industrial Info's Manager for North American Power, said in an interview. "There will not be another new unit built for at least three years, possibly longer. Natural gas would have to sell for $8 to $9 per million British thermal units (MMBtu) for new-build nuclear to be economically viable."
After years of planning and hard work, the rebirth of the U.S. commercial nuclear power industry started off on a positive note in early 2010, when Georgia Power Company (Atlanta, Georgia,) a subsidiary of Southern Company (NYSE:SO) (Atlanta, Georgia), was awarded federal construction loan guarantees to install two new Westinghouse AP1000 pressurized water reactors at its Alvin W. Vogtle Nuclear Power Station in Waynesboro, Georgia. For more on that issue, see February 17, 2010, article - Obama Administration Commits $8 Billion in Loan Guarantees to Georgia Power's Vogtle Units 3 and 4, and February 14, 2012, article - Vogtle Plant Could Herald New Life for Nuclear in U.S.
But that project has suffered from contractor problems, construction delays and litigation--all of which have pushed up the project's cost. "The costs to build Vogtle units 3 and 4 just keep rising--first, it was supposed to cost $9 billion, then $12 billion, and now it's more than $14 billion," Ramey remarked. "If Southern suffers a loss in litigation, the cost could exceed $16 billion. This is a little disheartening, to say the least. The fact that Southern and the federal government still have not agreed to terms of the federal loan guarantee has everyone's eyebrows raised." Unit 3 is scheduled to begin generating electricity in 2018 and Unit 4 will be operating in 2018, Georgia Power said.
So far, South Carolina Electric & Gas Company (SCE&G) (Cayce, South Carolina), a unit of SCANA Corporation (NYSE:SCG) (Cayce, South Carolina), has managed to avoid significant delays and cost overruns at its two-unit expansion of the Virgil C. Summer Nuclear Power Station, located in Jenkinsville, South Carolina. Cost overruns have been "minimal" on the $15 billion project, Ramey noted: "Some groups have failed to meet their milestones, but overall that project is proceeding more smoothly." Those units are scheduled to go into service in May 2017 and late 2018.
Click on the icon at right to view construction image from the Summer units 2 and 3 work site.
Ramey noted a slowdown in project activity for extended power uprates (EPUs) compared to a few years back. One of the reasons is low natural gas prices, which call into question the viability of some planned EPU projects. Industrial Info is tracking several EPU projects that have been placed on hold, delayed or cancelled altogether. He said he expects some EPU projects to continue moving forward, but the issue of spent fuel disposal still hangs over the nuclear industry and the federal government.
Earlier this year, inability to compete with inexpensive, natural gas-generated electricity convinced Dominion Resources Incorporated (NYSE:D) (Richmond, Virginia) to close the Kewaunee Nuclear Power Station in Wisconsin. Since buying that plant in 2005, Dominion had operated it as a merchant generator, selling electricity into the market without the benefit of a customer base that would take its power and pay its costs. Power prices in the Midwest have been low largely because of low natural gas prices and slack demand.
Click on the image at right for a graph detailing the volatile cost of natural gas for electric generation over the last decade.
Kewaunee's closure highlighted the dilemma of spent nuclear fuel: After more than three decades of work, the U.S. still has no geologic repository for spent nuclear fuel. Nevada's Yucca Mountain was slated to be the spent fuel site, but federal funding for that site ran out several years ago, and Senate Majority Leader Harry Reid (D-Nev.) is strongly opposed to siting the facility in his state. For more on this issue, see October 3, 2012, article - Spent Fuel and Cheap Gas Shape Future of Nuclear Power in U.S..
It's possible more operating nuclear reactors will be closed, the victim of either inexpensive natural gas or new regulations. The U.S. Environmental Protection Agency (EPA) (Washington, D.C.) is required to update the Clean Water Act, one section of which concerns power generators' cooling water intake systems. The draft cooling-water rule, issued in early 2011, was criticized by the nuclear power industry as threatening operating generators as well as planned EPU projects. For more on that draft rule, see March 30, 2011, article - What Price Fish? New EPA Draft Rule Draws Fire from Industry and Green Groups.
Ironically, it was impending new environmental regulations on power-plant emissions of sulfur dioxide (SO2), oxides of nitrogen (NOx), mercury (Hg) and carbon dioxide (CO2) that gave rise to the "nuclear renaissance" in the first place. And that hoped-for future could still come if President Obama's climate action plan, announced late last month, is enacted. That plan includes a directive for the U.S. Environmental Protection Agency (EPA) to enact CO2 emissions regulation for existing fossil-fuel power plants. For more on that issue, see June 27, 2013, article - President Obama Unveils Ambitious Climate Action Plan. The rule is certain to face sustained industry opposition, Capitol Hill hearings and deep-pocketed litigation.
Ramey sees continued spending on plant upgrades driven by regulations from the U.S. Nuclear Regulatory Commission (NRC) (Bethesda, Maryland) enacted in the wake of the meltdown of the Fukushima Daiichi Nuclear Power Plant in March 2011. "Looking forward, we see increased spending by the industry for instrumentation & control (I&C) upgrades and dry-cask storage of spent nuclear fuel, among other things," he said. "We expect to see more new standards come out over time."
Last month's decision by Southern California Edison (Rosemead, California), a unit of Edison International NYSE:EIX) (Rosemead, California) to permanently retire the two-unit San Onofre Nuclear Generating Station (SONGS) is the biggest black eye for U.S. nuclear power since the meltdown of the Three Mile Island Nuclear Power Station Unit 2 in 1979. SONGS' closure is unlikely to lead to a spike in prices for electricity in the West, Ramey predicted. Nor it is likely to lead to brownouts or rolling blackouts, partly because a lot of new gas-fired generation has been constructed in the West in recent years, and more is in the final stage of construction.
The industry suffered another setback a few months ago when Duke Energy Corporation (NYSE:DUK) (Charlotte, North Carolina) decided to close the troubled Crystal River Nuclear Power Station in Florida. That plant had been shut since 2009, following a botched attempt to repair cracks to its concrete containment building.
"Strategic issues in the power industry have a way of turning full circle," Ramey points out. "A few years ago, natural gas cost exceeded $10 per thousand cubic feet. It's hard to see those high prices coming back any time soon, given the dramatic expansion of production with horizontal drilling and hydraulic fracturing. But in the power industry, you never say 'never'."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
After years of planning and hard work, the rebirth of the U.S. commercial nuclear power industry started off on a positive note in early 2010, when Georgia Power Company (Atlanta, Georgia,) a subsidiary of Southern Company (NYSE:SO) (Atlanta, Georgia), was awarded federal construction loan guarantees to install two new Westinghouse AP1000 pressurized water reactors at its Alvin W. Vogtle Nuclear Power Station in Waynesboro, Georgia. For more on that issue, see February 17, 2010, article - Obama Administration Commits $8 Billion in Loan Guarantees to Georgia Power's Vogtle Units 3 and 4, and February 14, 2012, article - Vogtle Plant Could Herald New Life for Nuclear in U.S.
But that project has suffered from contractor problems, construction delays and litigation--all of which have pushed up the project's cost. "The costs to build Vogtle units 3 and 4 just keep rising--first, it was supposed to cost $9 billion, then $12 billion, and now it's more than $14 billion," Ramey remarked. "If Southern suffers a loss in litigation, the cost could exceed $16 billion. This is a little disheartening, to say the least. The fact that Southern and the federal government still have not agreed to terms of the federal loan guarantee has everyone's eyebrows raised." Unit 3 is scheduled to begin generating electricity in 2018 and Unit 4 will be operating in 2018, Georgia Power said.
So far, South Carolina Electric & Gas Company (SCE&G) (Cayce, South Carolina), a unit of SCANA Corporation (NYSE:SCG) (Cayce, South Carolina), has managed to avoid significant delays and cost overruns at its two-unit expansion of the Virgil C. Summer Nuclear Power Station, located in Jenkinsville, South Carolina. Cost overruns have been "minimal" on the $15 billion project, Ramey noted: "Some groups have failed to meet their milestones, but overall that project is proceeding more smoothly." Those units are scheduled to go into service in May 2017 and late 2018.
Click on the icon at right to view construction image from the Summer units 2 and 3 work site.Ramey noted a slowdown in project activity for extended power uprates (EPUs) compared to a few years back. One of the reasons is low natural gas prices, which call into question the viability of some planned EPU projects. Industrial Info is tracking several EPU projects that have been placed on hold, delayed or cancelled altogether. He said he expects some EPU projects to continue moving forward, but the issue of spent fuel disposal still hangs over the nuclear industry and the federal government.
Earlier this year, inability to compete with inexpensive, natural gas-generated electricity convinced Dominion Resources Incorporated (NYSE:D) (Richmond, Virginia) to close the Kewaunee Nuclear Power Station in Wisconsin. Since buying that plant in 2005, Dominion had operated it as a merchant generator, selling electricity into the market without the benefit of a customer base that would take its power and pay its costs. Power prices in the Midwest have been low largely because of low natural gas prices and slack demand.
Click on the image at right for a graph detailing the volatile cost of natural gas for electric generation over the last decade.Kewaunee's closure highlighted the dilemma of spent nuclear fuel: After more than three decades of work, the U.S. still has no geologic repository for spent nuclear fuel. Nevada's Yucca Mountain was slated to be the spent fuel site, but federal funding for that site ran out several years ago, and Senate Majority Leader Harry Reid (D-Nev.) is strongly opposed to siting the facility in his state. For more on this issue, see October 3, 2012, article - Spent Fuel and Cheap Gas Shape Future of Nuclear Power in U.S..
It's possible more operating nuclear reactors will be closed, the victim of either inexpensive natural gas or new regulations. The U.S. Environmental Protection Agency (EPA) (Washington, D.C.) is required to update the Clean Water Act, one section of which concerns power generators' cooling water intake systems. The draft cooling-water rule, issued in early 2011, was criticized by the nuclear power industry as threatening operating generators as well as planned EPU projects. For more on that draft rule, see March 30, 2011, article - What Price Fish? New EPA Draft Rule Draws Fire from Industry and Green Groups.
Ironically, it was impending new environmental regulations on power-plant emissions of sulfur dioxide (SO2), oxides of nitrogen (NOx), mercury (Hg) and carbon dioxide (CO2) that gave rise to the "nuclear renaissance" in the first place. And that hoped-for future could still come if President Obama's climate action plan, announced late last month, is enacted. That plan includes a directive for the U.S. Environmental Protection Agency (EPA) to enact CO2 emissions regulation for existing fossil-fuel power plants. For more on that issue, see June 27, 2013, article - President Obama Unveils Ambitious Climate Action Plan. The rule is certain to face sustained industry opposition, Capitol Hill hearings and deep-pocketed litigation.
Ramey sees continued spending on plant upgrades driven by regulations from the U.S. Nuclear Regulatory Commission (NRC) (Bethesda, Maryland) enacted in the wake of the meltdown of the Fukushima Daiichi Nuclear Power Plant in March 2011. "Looking forward, we see increased spending by the industry for instrumentation & control (I&C) upgrades and dry-cask storage of spent nuclear fuel, among other things," he said. "We expect to see more new standards come out over time."
Last month's decision by Southern California Edison (Rosemead, California), a unit of Edison International NYSE:EIX) (Rosemead, California) to permanently retire the two-unit San Onofre Nuclear Generating Station (SONGS) is the biggest black eye for U.S. nuclear power since the meltdown of the Three Mile Island Nuclear Power Station Unit 2 in 1979. SONGS' closure is unlikely to lead to a spike in prices for electricity in the West, Ramey predicted. Nor it is likely to lead to brownouts or rolling blackouts, partly because a lot of new gas-fired generation has been constructed in the West in recent years, and more is in the final stage of construction.
The industry suffered another setback a few months ago when Duke Energy Corporation (NYSE:DUK) (Charlotte, North Carolina) decided to close the troubled Crystal River Nuclear Power Station in Florida. That plant had been shut since 2009, following a botched attempt to repair cracks to its concrete containment building.
"Strategic issues in the power industry have a way of turning full circle," Ramey points out. "A few years ago, natural gas cost exceeded $10 per thousand cubic feet. It's hard to see those high prices coming back any time soon, given the dramatic expansion of production with horizontal drilling and hydraulic fracturing. But in the power industry, you never say 'never'."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
