I think the fallout of this is will be to reset the politics of Georgia. Do you close down construction now and take a big quick hit? Or drag it out till the plant are connected to the grid and the public sees and feels the cost of high electricity and poor plant reliability.
We are all getting ready to see the rats jumping ship.
Costly Delays Upset Reactor
Renaissance, Keep Nuclear at Bay
February 3,
2017, 10:13 amFebruary 2, 2017, 4:00 pm
Bloomberg) -- Costly delays, growing
complexity and new safety requirements in the wake of the triple meltdown at
Fukushima are conspiring to thwart a new age of nuclear reactor construction.
So-called generation III+ reactors were supposed to have simpler designs
and safety features to avoid the kind of disaster seen in Japan almost six
years ago. With their development, the industry heralded the dawn of a new era
of cheaper, easier-to-build atomic plants.
Instead, the new reactors are running afoul
of tighter regulations and unfamiliar designs, delaying completions and
raising questions on whether the breakthroughs are too complex and expensive to
be realized without state aid. The developments have left the industry’s
pioneers, including Areva SA and Westinghouse Electric Co., struggling to
complete long-delayed projects while construction elsewhere gains pace.
“The cost overrun situation is driven by a
near-perfect storm of societal risk aversion to nuclear causing
ultra-restrictive regulatory requirements, construction complexity, and lack of
nuclear construction experience by the industry,” said Lake Barrett, a former
official at the U.S. Nuclear Regulatory Commission.
Toshiba Corp., Japan’s biggest maker of
nuclear power plants, is the latest to join a list of companies facing
impairments in the pursuit of cutting-edge reactors.
Tokyo-based Toshiba said in December it may have to write down billions on an
acquisition by its Westinghouse unit due in part to cost overruns at two
nuclear plants it’s building in the U.S. The company aims to announce the
details of the impairments on Feb. 14, which Bank of America Merrill Lynch
expects to be 551 billion yen ($4.9 billion), while SMBC Nikko Securities Inc.
forecasts 500 billion yen.
“We are reviewing the future of our nuclear
power business outside Japan, but nothing has been decided at this time,
including future development,” spokeswoman Yuu Takase said by e-mail in
response to questions about the size of the writedown.
The March 2011 Fukushima meltdown that shuttered
Japan’s industry sent ripples around the world, forcing companies and
regulators to seek safer designs. The U.S. shale boom, meanwhile, slashed
prices for gas, coal and oil and undercut rising costs to develop nuclear
energy.
Ballooning Costs
In 2015, the investment cost to develop a
new nuclear plant was $5,828 per kilowatt, up from $2,065 in 1998,
according to a World Nuclear Association report. In Europe, construction of a new nuclear facility in
France seen costing $7,202 per kilowatt, compared with $2,280.
Toshiba isn’t alone. France’s Areva SA is
seeking a 4.5 billion-euro bailout from the French government
after running into delays and escalating costs at its next-generation EPR
reactor at Olkiluoto in Finland, which is almost a decade late. It’s also
selling its nuclear reactor construction business to Electricite de France. An
Areva spokeswoman declined to comment Wednesday.
Two EPRs at Hinkley Point in southwest England
to be built by EDF are expected to run 18 billion pounds ($22.5 billion). The
cost of an EPR being built by the company at Flamanville in France has tripled
since construction started in 2007. The project is six years behind schedule. A
spokesman Wednesday said the issues can be attributed to an industry, which has
lost skills due to a building lull, struggling with a cutting-edge design.
Toshiba, one of Japan’s three biggest
reactor suppliers, first made a bet on the future of atomic power in 2006, when
it purchased a controlling stake in Westinghouse for $5.4 billion.
As recently as March, nuclear power
business was seen as a growth driver, accounting for almost a fifth of net
sales by fiscal year 2018, according to a company presentation at the time. The business comprised 13
percent of net sales in the latest fiscal year.
Westinghouse boasted that its generation
III+ AP1000 reactor was the safest on the market, employing a simpler, modular
design that could be rolled out in record time. In 2015, Westinghouse took
over construction of two nuclear projects in Georgia and South Carolina when it
bought contractor CB&I Inc.’s nuclear business for $229
million. The purchase also resulted in a settlement between Westinghouse,
CB&I and the utilities that owned the plants over delays and cost overruns.
U.S. Overruns
Following the purchase, Westinghouse was
sued by CB&I over a $2 billion accounting dispute related to cost overruns
at four reactors in the U.S. While the case was dismissed, CB&I is
appealing the decision and moved forward on a process with an independent
auditor to decide who bears the charge.
The projects, split over two sites and
overseen by utilities Southern Co. and Scana Corp., incorporate the AP1000.
Cost overruns have ballooned, with Southern’s share at about $1.3 billion and
Scana’s at least $831 million.
“I don’t know of any recent examples of
new, large, complex technological construction projects that have come in on
time and on budget,” Allison Macfarlane, a former chairman of the U.S. Nuclear
Regulatory Commission, said by e-mail.
The industry has no agreed-upon definition
for generation III+. Broadly, the reactors are expected to withstand an
airplane strike and the cooling systems should operate for at least three days
without electricity.
‘Get Up To Speed’
While the industry works through the
challenges of the technology in Europe and the U.S., competitors in Asia are
moving forward. South Korea started its first APR-1400 last year, and the
U.A.E. picked the design for its first batch of reactors. China says its homegrown
Hualong One, which it’s building at home and aims to sell overseas, uses
third-generation nuclear technology.
Hualong One is part of China’s state-backed
nuclear program that plans to boost capacity more than 70 percent by 2020. The
world’s second-biggest economy will almost triple capacity to nearly 100
gigawatts by 2026, making it the biggest market globally, according to BMI Research.
And in Hungary, Russia has agreed to
finance 80 percent of an estimated $12 billion to build two Rosatom VVER-1200
reactors. Russia is ready to raise that to 100 percent by “tweaking” the deal,
President Vladimir Putin said at a joint briefing with Hungarian Prime Minister
Viktor Orban on Thursday.
One fundamental problem facing developers
is the slowed pace of construction since a nuclear building boom in the 1970s
and 1980s, according to Mark Hibbs, a senior fellow at the Carnegie Endowment
for International Peace’s Nuclear Policy Program.
“You get better at building reactors when
you can keep at it,” Hibbs said by e-mail. “At some point Areva and
Westinghouse may get to the point of doing that with generation three, but they
would have to get up to speed first.”
