U.S. Nuclear Renaissance: Will Nuclear 2.0 Be Better, Faster, and Cheaper than Nuclear 1.0?

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--It has been said that one of the most dangerous phrases in the English language is, "This time it's different." The phrase makes investors, divorcees, and policy-makers nervous, and for good reason: Often, it isn't true. Version 2.0 of anything--investments, marriages, public policies--rarely turns out better than the first iteration.

What about nuclear power? The so-called "nuclear renaissance" has been discussed and debated at conferences and in industry publications for several years. A lot of important changes have been made in the nuclear project design, procurement, and licensing processes in recent years, speakers told a breakout session at the 12th Annual Electric Power Conference & Exhibition in Baltimore. Speakers agreed that these changes would lead to better results as the United States prepares to build its first new nuclear generators in more than 30 years.

"The one-stop licensing process at the U.S. Nuclear Regulatory Commission (NRC) is a big improvement" over the way that nuclear generators were licensed in the 1960s and 1970s, when utilities had to obtain separate construction and operating licenses, according to Joe Williams, construction manager for new plant construction at the Tennessee Valley Authority (NYSE:TVE) (Knoxville, Tennessee). That two-stop licensing process gave people who opposed nuclear power multiple opportunities to delay or stop construction or operation of the multibillion-dollar facilities, he said.

"Organized opposition to nuclear power was a significant hurdle" that nuclear power had to overcome during the 1970s, Williams said, but "the one-stop licensing process will be a big step in getting issues heard and resolved early."

Other improvements to the engineering and construction process include advanced certification of standardized reactor designs, innovative approaches to construction and supply-chain management, and a requirement that nuclear generators have at least 90% of their design completed prior to any concrete being poured for the project, added Dennis Demoss, P.E., a senior vice president and project director with Sargent & Lundy LLC (Overland Park, Kansas). "We're trying to learn from the past," he told about 50 attendees at a breakout session. When nuclear plants were being built in the U.S. during the 1960s and 1970s, reactor-design changes or safety modifications often were made during the construction process, which meant delays and cost overruns as the changes were incorporated into the construction process.

In addition, nuclear utilities, national craft labor organizations, and engineering, procurement, and construction (EPC) firms have been working for several years to ensure there is an adequate supply of skilled craft labor to build the next generation of nuclear power plants.

So far, two reactor designs--the Westinghouse AP 1000 and the GE-Hitachi-Toshiba Advanced Boiling Water Reactor (ABWR)--have been certified by the NRC, Demoss told the audience. The NRC is reviewing other nuclear reactor designs from Areva, Mitsubishi, and the GE-Hitachi-Toshiba consortium, he added.

The Southern Company (NYSE:SO) (Atlanta, Georgia) is building a two-unit expansion of the Vogtle Plant using the NRC-certified Westinghouse AP-1000 reactor. In February, Southern was awarded $8.3 billion in federal loan guarantees to build Vogtle units 3 and 4, but the utility company and the federal government continue to negotiate the details of the loan-guarantee package. For more on the federal government's loan guarantee commitment to The Southern Company, see February 17, 2010, article - Obama Administration Commits $8 Billion in Loan Guarantees to Georgia Power's Vogtle Units 3 and 4.

At the Electric Power conference, Michael Smith, a Southern Company technical support director, said he didn't know if or when the utility company and the government would reach an agreement on the details of the loan guarantees. But he did say that Southern was committed to building Vogtle units 3 and 4 with or without the federal loan guarantees. Southern has estimated that the two-unit Vogtle expansion will cost about $14 billion to build. Preliminary site work for the units began last year, but actual construction cannot begin until Southern receives a combined construction and operating license from the NRC. The Vogtle Units 3 and 4 are owned by Southern Company, Oglethorpe Power, MEAG and Dalton Utilities.

"Right now, Vogtle 3 and 4 is just a big hole in the ground, but it's pretty darn sexy if you've been waiting for it for a long time," Smith said as he showed photos of site preparation work under way at the Vogtle site. If Southern receives its combined construction and operating license for Vogtle 3 and 4 next summer as expected, Unit 3 is scheduled to begin operating in April 2016, and Unit 4 is scheduled to begin operating a year after Unit 3 begins commercial operations.

Before the industry can pronounce the nuclear renaissance a reality, "we've got to build at least one of each of the new, standardized design reactors on time and on budget," said Chris Colbert, senior vice president for UniStar Nuclear Energy, a 50:50 joint venture between Constellation Energy Group (NYSE:CEG) (Baltimore, Maryland) and EDF (EPA:EDF) (Paris, France), the French nuclear utility.

UniStar wants to build a third unit at the existing two-unit Calvert Cliffs nuclear power station on the Chesapeake Bay in Maryland. The plant is planned to be a merchant power plant: It will sell electricity on the open market and will not be part of the regulated ratebase of Constellation's Baltimore Gas and Electric utility subsidiary. Calvert Cliffs 3 will use a new 1,600-megawatt reactor design from Areva. Bechtel (San Francisco, California) is the EPC firm for the project. If UniStar receives a combined construction and operating license from the NRC in mid-2012, as it hopes, the unit should be ready to produce electricity by the end of 2017, Colbert said.

"In our analysis, whether carbon is $10 per ton or $30 a ton, Calvert Cliffs 3 is viable," Colbert told the conferences. "But because these projects are all larger than the companies that will own them, deciding who bears the risks is our biggest challenge."

"You don't want to be either late or over-budget when you build these new reactors, but it is worse to be late than it is to be over-budget," continued Colbert. UniStar is one of several other nuclear operators that are on the Department of Energy's shortlist for billions of dollars in nuclear loan guarantees. He told Industrial Info Resources that he had no idea when the DoE would announce its decision on the loan guarantees, or whether the DoE's decision was dependent on the outcome of the agency's negotiations with The Southern Company.

Although not discussed during the conference session, nuclear utilities, EPC firms, and regulators have reason to be nervous about the "nuclear renaissance," given what has transpired at the South Texas Project units 3 and 4, which is scheduled to use the GE-Hitachi-Toshiba ABWR design. That proposed expansion project was rocked last year when the owners had a very acrimonious and litigious falling out over--what else?-- dramatic increases in project costs. For more details, see February 24, 2010, article - Nuclear Developer Seeks New Partners for South Texas Project as Split with CPS Energy Nears Finalization.

The Electric Power show has drawn about 500 exhibitors and 5,000 attendees, slightly less than last year's event, which was held in Chicago .

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