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Baseefa Ltd

South Carolina utilities suspend construction of two reactors in blow to US nuclear revival

07 August 2017

On July 31, the utilities involved in the construction of two new nuclear reactors at the V.C. Summer Nuclear Station in Jenkinsville, South Carolina, said all construction work would halt on the site because of delays and cost overruns. South Carolina Electric and Gas Co. (SCG&E) and partner Santee Cooper commissioned Westinghouse Electric Co. to build two AP1000 reactors at the site nine years ago.

Construction work at the V.C. Summer Nuclear Station - Image: Westinghouse Electric Co.
Construction work at the V.C. Summer Nuclear Station - Image: Westinghouse Electric Co.

SCANA group subsidiary SCG&E has a 55% stake in the project, and Santee Cooper a 45% stake. Construction is around a third complete. SCG&E considered completing Unit 2 and abandoning Unit 3, but that option was killed when partner Santee Cooper's board voted to cease all construction and no other partner could be found to take its place.

Santee Cooper said the decision to suspend construction was based in large part on analysis of schedule and cost data from Westinghouse and subcontractor Fluor Corporation after Westinghouse filed for Chapter 11 bankruptcy protection in March. That data showed unit 2 would not be completed until December 2022 and unit 3 not before March 2024 - four years after the most recent completion date provided by Westinghouse.

"After Westinghouse's bankruptcy…, the best case scenario shows this project would be several years late and [cost] 75% more than originally planned," Lonnie Carter, Santee Cooper president and CEO, said. "We simply cannot ask our customers to pay for a project that has become uneconomical."

Westinghouse’s president and CEO José Emeterio Gutierrez said the company is “extremely disappointed” in the decision.

“The South Carolina economy is sure to feel the negative impact of losing over 5,000 high-paying, long-term jobs, as well as not having available the reliable, clean, safe and affordable energy these units would provide,” he said. "Also, at a time when other nuclear plants are being retired, the US energy sector is sure to feel the stunting impact of walking away from these two nuclear units."

For Santee Cooper alone, the project was originally costed at $5.1 billion, but the latest projections put the total at $11.4 billion. Earlier in July, Westinghouse’s parent company Toshiba Corp. had agreed to a $2.2 billion guarantee for the power plants in a bid to ensure construction went ahead, but the utilities said despite this costs would still have been too high and that they will save about $7 billion in charges they would have had to pass on to customers by suspending the project.

The two utilities plan to maintain and protect the site in the event that a party wishes to purchase some of the unused equipment or if a decision is made to revive the project.

This leaves only one new nuclear project under construction in Georgia, where Westinghouse has also gone over budget and missed deadlines. Plant Vogtle Unit 3 is now tentatively scheduled for completion in 2019 and Unit 4 in 2020. Georgia Power has taken over construction of the two new reactors from Southern Nuclear and has said it will review the project’s viability later this year.

In Virginia, Dominion Energy has proposed a new reactor, North Anna 3, but with the cost estimated by a state regulator to be about $25 billion, there is considerable opposition to the utility’s proposals.

It would seem that the main obstacles to new nuclear power projects are primarily economic and technical. At a time of cheap gas and falling renewable costs, a hollowed-out nuclear supply chain (which last built a new reactor in the 1980s) is facing serious difficulties in bringing viable new plants on stream.

And despite insistence from Energy Secretary Rick Perry that he is fully supportive of the nuclear sector, Trump administration budget proposals will slash nuclear research and development, and federal production tax credits and loan guarantees originally designed to promote new projects by the Obama administration are unlikely to be extended.

Some industry observers think the Trump administration’s lukewarm support for nuclear is partially due to its primary focus on the coal sector, which would face serious competition from new nuclear plants.

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