Vogtle 5? Big Nuclear Looks to Big Government – Watts Up With That?

From MasterResource

By Robert Bradley Jr.

“Absolutely I think they should build another [nuclear plant], because I think they’ll get better at it, It’s the cleanest energy you can possibly have out there, and we’re gonna need a tremendous increase in energy production.” [Rep. Rich McCormick (R-Ga.), quoted in Politico. June 27, 2024]

Nuclear power is a government-created and government-enabled industry. It was born of government largesse and regulatory favor, led by these five policies:

• Federal research & development by the Atomic Energy Commission (AEC, founded 1946)
• The Price-Anderson Act of 1957 limit on accident liability
• Five years of ‘free’ enriched uranium from AEC
• Federal jawboning to parties to construct plants
• State utility commissioners granting rate-base status for new plants

Nuclear’s history of cost overruns, construction delays, and in-progress cancellations speaks for itself. Suffice it to say that the free market would have never allowed this industry to jump from military applications to civilian ones. The “peaceful atoms” as a palliative for military-side destruction was a mistake.

More than a half-century later, the debacles of V.C. Sumner (cancelled in 2017) and Plant Vogtle #3 and #4 (completed) has the apologists and rent-seekers out in force. The $35 billion Plant Vogtle project created 2,200 megawatts of nuclear generation was more than double the original estimate ($14 billion) and seven years late. In terms of opportunity cost, the same capacity from natural gas combined cycle would have cost around $2 billion and been in operation for a decade.

Here are some quotations from Politico’s article, “Plant Vogtle fuels Capital Hill Nuclear Buzz” (June 27, 2024)

“Lawmakers from Georgia are still all in on nuclear energy, even after the state weathered one of the most costly and delayed nuclear projects in American history.”

“… Georgia’s Capitol Hill lawmakers … are already wondering when Southern Co., the utility that owns Georgia Power, might start plans to build a fifth reactor.”

“… Rep. Rich McCormick (R-Ga.) … enthusiasm speaks to the win streak nuclear energy is having on Capitol Hill. Last week, the Senate passed a compromise nuclear energy bill that eases Nuclear Regulatory Commission restrictions on smaller next-generation reactors. … On top of that, the administration recently announced it was injecting $900 million to boost the small reactor industry. The NRC expects two dozen applications for new and advanced nuclear over the next five years.”

“Republicans from the Conservative Climate Caucus took a tour of Plant Vogtle near Waynesboro, south of Augusta, in May and held a panel discussion on the ‘importance of nuclear power’.”

“Energy Secretary Jennifer Granholm and several Biden administration officials also visited the plant earlier this month. Granholm even said that other states should follow Georgia’s example in building nuclear mega-projects like the AP1000 units at Vogtle. ‘Southern Company and Waynesboro, they have led the way here. But it is now time for others to follow their lead,’ Granholm said. ‘To reach our goal of net zero by 2050, we have to at least triple our current nuclear capacity in this country.’”

“Gov. Brian Kemp agreed with Granholm in a visit a few days prior: ‘Now, let’s start planning for Vogtle Five,’ the Georgia Republican said.”

“‘There were a lot of incidents that occurred that interrupted and delayed the final coming online, but we got through all of that,” said Rep. Sanford Bishop (D-Ga.), a senior appropriator who was one of the original champions of the project in 2008. “I think it’s turned out to be a success, and hopefully it will ring true for years to come’.”

“’We learned some important lessons, and hopefully we won’t repeat those,’ said Rep. Buddy Carter (R-Ga.). ‘I don’t think that’s the reason why we shouldn’t at least try and go in that direction.’”

The overwhelming bipartisan love for Vogtle is drawing shock from environmental advocates and some lawmakers, especially due to the massive costs the project incurred on Georgia ratepayers. Out of the Georgia lawmakers interviewed by POLITICO’s E&E News, progressive Rep. Hank Johnson, was the only member to express real concerns with nuclear. “Ratepayers having to pay the price, and at the same time record profits for the owner of the reactors, something is not right with that,” Johnson said. “We need to invest in new ways of energy production that are clean and renewable and also cost-effective.”

Georgia Power plans to collect from ratepayers $7.56 billion in capital and construction costs incurred to build the two reactors.

The company’s shareholders, meanwhile, would take on the remaining $2.63 billion in construction spending, as per an agreement reached in 2023 with Georgia’s Public Service Commission.

“Georgia Power is one of the richest utilities in the nation,” Patty Durand, a Democrat running for the Public Service Commission, testified on behalf of the group Concerned Ratepayers of Georgia at the time of the agreement.

“Georgia Power should be required to use their huge profits to pay for the cost overruns rather than allowing Georgia Power to pass these billions of dollars onto its captive customers,” Durand added.

The situation is due to the “vertically integrated” model of Georgia Power, a structure where the utility handles the build-out of new power generation but is also guaranteed a return on those investments. Consumers are on the hook for covering the costs of those projects through electricity rates determined by the utility.

Edwin Lyman, a senior scientist at the Union of Concerned Scientists, said upcoming hikes in electricity rates for Georgia consumers due to the Vogtle project are why no utilities are moving forward with plans to build a new large reactor.

“Given the experience at Vogtle, it’s going to take a lot more than happy talk to convince more utilities to take on that kind of a gamble,” Lyman said. “Putting one’s faith in such unrealistic scenarios is not going to help the U.S. achieve its carbon reduction goals and could well undermine them.”

Georgia Power estimated that the settlement would work out to an additional $8.95 per month for a typical residential customer this year, added to the average $153 monthly bill.

Resistance to federal backstop

Despite the growing bipartisan support for nuclear energy in Georgia and elsewhere, some are arguing that Congress will have to deliver even more money to the industry if new mega-reactors are to be built anytime soon.

Tim Echols, a member of Georgia’s Public Service Commission, suggested that a federal backstop would be necessary for utilities to make plans for new large reactor projects to limit ratepayers’ liability for ballooning costs.

“What makes sense is to build another AP1000 somewhere while the workforce is fresh,” Echols said on social media platform X. “And to do it, a federal backstop is essential.”

Such a proposal would entail Congress doling out more money, likely in the billions, to provide utilities leeway in covering over-budget costs on new large reactor projects.

Even smaller reactor projects could benefit from such a policy. In November, NuScale — the only U.S. developer with a small modular reactor design approved by the Nuclear Regulatory Commission — announced it was scrapping its Carbon Free Power Project because not enough utilities were subscribed to the program.

But the Hill’s most vocal nuclear boosters aren’t behind such a broad federal funding mechanism for either small or large reactors, especially considering the nuclear industry has received so much federal money in recent years.

“I’m not necessarily for that,” said Rep. Jeff Duncan (R-S.C.), chair of the Energy and Commerce Subcommittee on Energy, Climate and Grid Security. “But I think the financing side of it is a concern for most because costs keep skyrocketing.”

Neither is Granholm, who shot down Southern CEO Chris Womack’s suggestion at a recent American Nuclear Society conference that any future projects still depend on the federal government providing more money and financial backing.

“What I hear you saying, Chris, is there needs to be more than what we’re putting on the table, and that’s hard to hear because we’ve just put billions and billions and billions on the table,” Granholm said in a panel discussion. “I don’t know what the delta is between what you think is necessary and what it would actually take to build up.”

That’s why Duncan and other lawmakers pushed the “ADVANCE Act,” the nuclear energy bill that would ease restrictions on smaller next-generation reactors.

They believe that small, factory-built reactors could avoid the cost overruns and long timelines of “one-of-a-kind” large reactors — if they can cut down NRC regulations. Sen. Shelley Moore Capito (R-W.Va.) agreed, telling POLITICO last week that the new law’s speed-up of permitting will cut costs.

“Every year you add, it just adds more and more cost,” Capito said. “The point of [the ‘ADVANCE Act’] is to rein that in and have the expertise ready and available. And once the NRC does one or two of these [projects], it will become much easier.”

Nuclear backers are hopeful that Vogtle, despite the drawbacks, will portend a wave of new construction.

“Most of the focus has been on the small modular reactors,” said Carter, the Georgia Republican. “But if the Vogtle reactors function well over the next few years, then I think it’s an indication that we’ve got the technology and the ability to build those.”

But the Hail Mary of nuclear power is very irresistible to some “Net Zero” advocates who do not care about cost (economics). In fact, higher rates might be seen as good, even great, for forced energy conservation. (Ouch!)

Angelica Oung, self-described energy advocate at Clean Energy Transition Alliance,” recently posted:

I can’t believe it! It doesn’t feel real! Mark W. Nelson is posting from Vogtle, Georgia that the US Secretary of Energy Jennifer Granholm just called for “hundreds” of large nuclear reactors to be built:

“We need two hundred of these by 2050. Two down, one hundred and ninety-eight to go.”

I believe it was 2022 when I first made myself an absolute pest on US DOE folk’s mentions and inboxes. But why? But why? But why aren’t we building more AP1000’s? Why is it all “SMR and advanced” when we’ve got a proven design and large reactors are the most cost-effective way to build nuclear? But Vogtle wasn’t done yet and we weren’t ready for that conversation. This is a reminder to self that sometimes change does happen and the political gridlock that seems so intractable can turn around with startling speed. Back when I first got the AP1000 bug in 2022 it just wasn’t the time! (I even have a hilarious memory of hounding Westinghouse executives about why they’re they’re pushing out the senseless AP300 just to jump on the SMR trend when they should obviously be pushing the more cost-effective AP1000).

With Vogtle 3&4 all done, the first pair of nuclear power reactors the USA has built for decades from scratch, it is the time to have this convo. They took too long and cost too much, but they were the First-of-a-kind. According to Jigar Shah Vogtle Unit 4 came in 30% cheaper than Unit 3 and Unit 5&6 would come in below $95/MWh.

Closer to home, Korea just called for a further 4.9GW of nuclear capacity by 2038, in addition to 5.6GW currently under construction. Nuclear will be the largest source of power in the land of K-pop and kimchi. This is according to Bloomberg. I bet a healthy chunk of that is going to be large reactors too because I was just in Korea and it’s very clear: SMRs are awesome, but niche. You build SMRs when you have a reason. Is it a small grid? A remote location? Do you need industrial heat? Are you leveraging existing infrastructure like a coal drop-in? Otherwise it’s like almost anything else: scale matters. The cup for a large milkshake is only a little larger than a medium milkshake. But you get a lot more milkshake!

THE ERA OF BIG NUCLEAR IS BACK!

More than 150 comments followed, some critical.

Thomas Eiden: “I’ve been in this industry long enough and have lived through enough “nuclear renaissances” to have learned to believe it when I see it. If you believe anything a politician or government agency spokesperson says, you *will* be disappointed.”

David Gaier: “Vogtle’s obscene cost overruns (screwing ratepayers of course) and years behind schedule to make COD was inexcusable. SMRs have fallen flat on their faces and AP1000s may indeed be the best way to go. But such incompetence and most likely, corruption that we saw in Georgia was Monty Python-esque absurdity.”

Eric Lemmons: “This woman is not exactly all that sharp. She has bought into the EV nonsense from day one! She literally had staffers blocking an EV charging station so she could virtue signal.

It’s been the exorbitant costs associated with building the large plants that have caused a lot of issues., look at VC Summer. They were in the process of building 2 AP1000’s and stopped dead due to gross construction mismanagement.

Vogtle was 7 years late and $17 Billion over budget! That literally sounds like it was built for the government! That is not a sustainable model!”

Johann Lindner: “The simple universal Law of Scale for Nuclear Powerplants of all sizes including factory produced Submarine reactors (=SMRs) – for total overnight Construction Cost – has been the same since 1960’s and worldwide for aml types and designs: (MW large NPP / MW small NPP)**0.6 is the ratio how much more an SMR costs (Overnight Construction Cost). That is why civil NPPs increased from SMR size (1960’s) to large 1300 MW size just 10 years later. Means there are still plenty of special markets, countries, different industries, isolated grids, district heating, etc – were SMRs are ideal.

Making basic large scale national electricity will still be best done by large NPPs. Finally – an important safety observation:
– a few large NPP sites can be safely protected (incl by military)
– 1000’s of SMRs especially in 3rd world countries will be a nightmare for protection and a paradies for terrorists.”

John Hockert: “We are not going to build 200 large nuclear plants by 2050. The technical infrastructure is not in place. We do not have enough nuclear plant constructors familiar with NQA-1 to build at that rate. We do not enough NRC construction inspectors to oversee that level of construction. We have many politicians who seem to believe that calling for the impossible and throwing money at it will succeed. We do need nuclear plants but sensible planning is required instead of calls for pie in the sky schedules that are doomed to failure.”

Adam Link: “I think Big Nuke is worse than Big Oil.”

To her critics, Oung replied: “Big or small, we will build them all.”