The End of Nuclear? Why Two Utilities Are Abandoning a Multibillion-Dollar Project
Nine years ago, nuclear industry executives and regulators alike believed we were entering a “nuclear renaissance” – despite the fact that no utility company had started a new reactor project since the 1970s.
Fast-forward to just a few days ago: SCANA Corporation (NYSE: SCG) and Santee Cooper, South Carolina’s state-owned electric and water utility company, announced they were abandoning their joint effort to expand a nuclear power plant from one generator to three.
The Virgil C. Summer Nuclear Generating Station was supposed to have two new reactors completed by sometime next year. The reactors were under construction next to an existing one.
The reactors are each about 40% complete and have cost about $9 billion total.
The original estimate for the project was $11.5 billion, and it has ballooned to $25 billion…
But the project will go no further.
If this sounds familiar, it’s because it is…
The abandonment of the V.C. Summer project means there are now only two nuclear reactors – Plant Vogtle’s third and fourth units – under construction in the U.S. And as I wrote back in May, even their futures are in jeopardy.
But the bad news for nuclear doesn’t stop there: There are more than a dozen older plants going through decommissioning.
So much for a nuclear renaissance…
Nuclear Power in America: Not Even Washington Can (or Wants to) Save It
In an effort to save the V.C. Summer project, SCANA and Santee Cooper appealed to “high White House officials,” according to SCANA Chairman and CEO Kevin Marsh. U.S. Secretary of Energy Rick Perry was among those contacted.
But no one responded…
It appears even Washington isn’t interested in reviving this power source…
One of the problems with America’s nuclear industry is that the engineering expertise and the robust supply chains needed to build these plants have been atrophying for the last 30 years.
Another is that the reactor supplier, Westinghouse Electric Company, filed for bankruptcy protection back in March. The company has been building nuclear reactors for decades.
A division of Toshiba Corp. (OTC: TOSYY), Westinghouse had been slated to provide its advanced reactor design, the AP1000, for the V.C. Summer project. But that was before Westinghouse went bankrupt.
The final nail in the coffin was the most recent estimated dates of completion: 2022 for one reactor and 2025 for the other. In order for the project to have been eligible for the federal nuclear production tax credit, both reactors would have needed to be in operation by the end of 2020.
The Lasting Impact of Yet Another Failed Nuclear Project
SCANA and Santee Cooper’s decision to ditch the V.C. Summer project will certainly have a broad impact…
For one, I expect Southern Company (NYSE: SO) to announce that it will be abandoning the Vogtle project before the end of 2017.
That will be the final blow for new nuclear construction in the U.S.
However, that won’t be the end of nuclear power altogether in the U.S. just yet… There are 61 existing nuclear power plants in the country that are still in operation.
But as they come up for cost reviews, it will become clear to utilities that natural gas and/or renewables are more cost-effective.
Let’s face it: The cost for wind and solar continues to decline. And utilities can get approval and build natural gas plants in just two years – not two decades.
There’s no question that nuclear power served America well for more than half a century. But the 21st century is going to be one of energy disruption.
There’s a “nuclear sunset” taking place in lockstep with “the rise of renewables.”
At least now you can’t say no one warned you.
P.S. Speaking of energy disruption, there’s a metal out there driving a revolution in renewables… Investors who know how and when to get in on the action have the chance to make a fortune.
I’ve found a company that seems to have perfected the process for producing this “new precious metal of the 21st century.” I wouldn’t be surprised if its stock goes up ninefold in the near future.
But again, timing is everything…