South Carolina’s state-owned utility is reluctant to continue its pursuit to build two nuclear reactors in the state, saying that the expected cost increases would be too much for customers to bear. As such, it just said it won’t ask its board for more rate hikes that would help pay for the reactors — all on top of the fact that South Carolina’s governor is searching for a new buyer that could complete the project.
This episode represents the latest upheaval in the nuclear industry, which has had more than nine lives dating back to the partial meltdown of the core at Three Mile Island in 1979 and running through the complete meltdown of the core at the Japanese Fukushima plant in 2011. But safety issues are not at the root of this saga; rather, it is financial — that the plant was originally cast to be about $11 billion but is now expected to be double that, and at least 3 years late to start operations, all of which is compounded by the bankruptcy of its technology supplier, Westinghouse Electric Co.
The bigger question is how this development will effect the beleaguered nuclear industry, which has seen five such plants close since 2013 and which may see another six reactors go in the coming years. To that end, debate is swirling in a number of state capitols as to whether customers should subsidize nuclear energy and carbon-free power as a way to battle climate change — policies opposed not just by coal and natural gas groups but also by some environmental organizations that think the emphasis ought to be on renewable energy.
In this country, nuclear power now provides 19 percent of the nation’s electricity and 63 percent of the carbon-free energy. However, as much as 6% percent of the existing nuclear power could be shuttered.
For most utilities and their state regulators, building and approving combined-cycle natural gas plants mean much less financial uncertainty than going the nuclear route. But there’s no doubt that choosing such a path presents a two-fold peril: betting too heavily on cheap natural gas, and doing the same with the environment and the potential climate risk.
As for nuclear energy in South Carolina, Santee Cooper, which now owns 45% of the project, said it is dropping out and that it has been trying to convince other utilities to take over its share. South Carolina Gas & Electric (SCG&E) owns the other 55%. Meantime, Governor Henry McMaster says that he is in contact with neighboring utilities that are in the nuclear business to assume command of the so-called V.C. Summer Nuclear Station: Dominion Energy, Duke Energy and Southern Co.
"I've got to be convinced that building the one-plant option — even with a new partner — would be in the best interest of our customers," Scana Corp. Chief Executive Kevin Marsh told South Carolina legislators. “(I) don't know that it makes economic sense.” Scana is the parent company of SCG&E.
In 2008, Santee Cooper and SCG&E sought to expand their nuclear presence — one that now supplies 55 percent of the state’s electricity. Along with Southern Co., which is building two nuclear reactors in Georgia, they chose the Toshiba Corp. subsidiary Westinghouse to design an advanced reactor.
But in March 2017, Westinghouse declared bankruptcy, which then triggered the latest tailspin in the nuclear sector. Even though Toshiba agreed to pay $2.2 billion to the South Carolina utilities, that was not nearly enough to complete the deal. (Toshiba also agreed to pay Southern Co. a similar amount but in that case, Southern Co. has said it will complete its so-called Vogtle plants, albeit on a delayed and more expensive schedule.)
What is more important: The cost to ratepayers for finishing V.C. Summer Nuclear Station or the price paid to the environment from not completing it?
“If policymakers and the plant’s investors restart construction, the plant would likely reduce the share of electricity the state receives from coal from 21% in 2016 to 3%, allowing the retirement of most or all of the remaining coal capacity,” Mark Nelson and Michael Light wrote for Environmental Progress. “The two nuclear reactors would generate 18 terawatt hours (TWh) of electricity annually, replacing 86% of South Carolina’s electricity from coal.”
To further illustrate the point, PIRA Energy Group says that the retirement of Pacific Gas & Electric Co.’s Diablo Canyon reactor in 2025 — that provides 8.3% of California’s electricity — will kill the state’s carbon-reduction goals: natural gas usage would increase by 34% to 2026. More natural gas means more CO2 emissions. Such was the case when Edison International’s Southern California Edison closed its San Onofre facility in 2013: CO2 emissions are up by 35%.
The idea that wind and solar could ramp up that quickly to replace those retiring nuclear units is nonsense, say nuclear advocates. Collectively, renewables now make up about 11% of the electricity generation. Moreover, the sun doesn’t always shine and the wind doesn’t always blow and that power must therefore be firmed up with fossil-fueled energy, which is often natural gas.
This dilemma pits free marketers against all subsidized energy forms, which includes wind and solar power and potentially nuclear energy if states would opt to subsidize the cost to produce carbon-free electricity. New York and Illinois have already done so — to the benefit of Entergy Corp. and Exelon Corp., all to fulfill their clean energy goals.
Now, Connecticut, Ohio, New Jersey and Pennsylvania are thinking about doing the same. Exelon’s Three Mile Island near Harrisburg, Penn. is one of those plants that may be closed in 2019 — in a state where nuclear energy makes up a third of the electricity mix.
“Ultimately, it means penalizing companies that emit too much pollution or putting a price on carbon,” Christine Todd Whitman, former EPA chief and New Jersey Governor told this writer. “The regulatory structure does not now give an added value to clean power,” also a co-chair of the pro-nuclear CASEnergy Coalition.
Nuclear energy once again finds itself at a cross-road: whether to go quietly into the night or to push through the hard times and potentially into a brighter future. The same is now true for South Carolina’s SCANA Corp., which is searching not just for a business partner but also for an answer to that vexing question.
