Let it be written that environmentalists didn’t kill the nuclear power industry, economics did.
South Carolina Electric and Gas Co. and partner Santee Cooper abandoned work on two new nuclear reactors this week, not because of public protests, but because the only way to pay for them was to overcharge customers or bankrupt both companies.
The decision comes after the main contractor, Westinghouse, has completed a third of the work at the V.C. Sumner Nuclear Station. Of course, the project has already bankrupted Westinghouse due to missed deadlines and costs spiraling out of control. Westinghouse parent Toshiba Corp. had to pay $2.7 billion to get out of its contract.
That leaves only one new nuclear project under construction in Georgia, where Westinghouse has also gone over budget and missed deadlines. Georgia Power says it has taken over construction of the two new reactors at the Vogtle plant through Southern Nuclear.
Georgia power officials are reviewing the timeline and estimating the cost for completing the two new reactors, which if finished would be the first in the U.S. in 30 years. Costs, though, are not as important to Georgia Power because it sells power in a regulated market. Georgia Power started charging customers for the reactors as soon as construction began.
By comparison, Texas has a competitive market, where power plants only make money when they produce electricity. Customers here don’t finance new plants for mega-corporations the way they do in Georgia, and that saves Texans money.
Once Georgia Power completes its review of the Vogtle reactors, company leaders will likely have a hard time justifying the increased cost to regulators. Because even if the reactors were not over-budget already, the all-in cost of the power generated by that plant is far higher than alternative sources.
Natural gas and wind from Texas are far cheaper, and new natural gas pipelines and two proposed direct current transmission projects will easily deliver cheap power to South Carolina and Georgia well below the cost of the new reactors.
Even existing nuclear power plants have a hard time competing with cheap natural gas and renewable energy, which is why all of them are begging for subsidies or a carbon tax that will reward the plants for not producing carbon dioxide.
President Donald Trump has promised to boost nuclear power, but he has yet to roll out a plan. So far he has talked about doing away with the Clean Power Plan and has rejected a carbon tax, both of which are vital for nuclear power’s future.
What the nuclear industry really needs is new technology. Scientists are working on smaller reactors that are less dangerous, but none of them is ready for commercial deployment.
There could be a future for nuclear power in the United States, but only if the technology can compete on cost with renewable sources and natural gas. That is the real challenge for the nuclear power industry.