The same combination of forces that brought down Constellation Energy’s Calvert Cliffs-3 nuclear reactor may undermine two major remaining federal-loan-guarantee applicants: the South Texas Project and the V.C. Summer reactor project in South Carolina, according to experts who spoke at a recent news conference.
The conference was sponsored by the nonprofit and independent Nuclear Information and Resource Service (NIRS), which forecast on August 5, 2010 that the troubled Calvert Cliffs-3 reactor project was “in complete shambles” and “on the verge of collapsing under (its) own weight”. (See http://www.nirs.org/home/080510nirsconstellationnewsrelease.pdf.)
“Calvert Cliffs’ demise was a result of several factors,” says Nuclear Information and Resource Service Executive Director Michael Mariotte. “The most important of which were
- Soaring construction-cost estimates, increased and aggressive competition from other generation sources,
- Falling electrical demand coupled with increased energy efficiency programs,
- Reactor design deficiencies, and
- Overreliance on government handouts.”
The organization says the Office of Management and Budget and DOE are not responsible for any of these factors. In fact, their loan offer for Calvert Cliffs-3 was generous considering the overwhelming array of market forces and roadblocks facing the project. The reality is, says Mariotte, that there will be no nuclear renaissance in the United States as long as new reactors are far too expensive, reactor construction costs remain out of control, natural gas remains cheap, renewable energy costs continue to drop, and consumer demand continues to trend downward. Calvert Cliffs was not unique, says NIRS. The same market-wide forces that brought it down make the South Texas Project and VC Summer equally untenable.”
Commenting on last week’s setback to yet another new reactor project, former Nuclear Regulatory Commission (NRC) Commissioner and former Chair of the New York Public Service Commission Peter Bradford said: “The four pillars of the nuclear revival – underestimated costs, ignored risks, political ballyhoo and prodigious but inadequate subsidies – now make clear that we are dealing not with a renaissance but with a bubble. The main remaining question is just how much taxpayer money will go into keeping it inflated”.
“The VC Summer project is afflicted by all of the problems that other nuclear projects suffer and then some. SCANA’s low-ball cost projections for the two new reactors are a complete fiction: Cost projections of the AP1000 reactor design in other proposed US projects have tripled,” says Susan Corbett, chair, Executive Committee, South Carolina Chapter of Sierra Club. “The current high-cost estimates do not include the cost overruns that inevitably occur during the construction phase of nuclear projects. Even in this state, with the most favorable politically and regulatory climate in the country, the main utility, SCANA, is struggling to find investors for these two new units. The fact that Santee Cooper, the state owned utility, is now getting cold feet regarding their 45% share of the two units is an indication of how shaky the whole project has become.”
“In Texas, the nuclear bubble is bursting in the same way that it is elsewhere,” says Director for Public Citizen’s Texas office Tom Smith. “Proposed reactor costs have trebled in a year, the price of gas-powered energy is down two thirds since 2005 and likely will fall even farther, and the South Texas Project would produce power that is far too expensive to sell in the marketplace. When the first two units of this project were built, they came in eight times over budget and six years late. The new reactor project is already way over budget, beleaguered with accusations of fraud and misrepresentation of the facts, and increasingly unlikely to ever be completed. This is a bankruptcy in the making and no one should have any illusions about that. The only good news here is that NRG is now looking seriously at renewables, plug-in hybrids, and other real solutions.”
As evidence that both the VC Summer and South Texas Project are on ground that is every bit as shaky as that which toppled Calvert Cliffs-3, the speakers noted that executives overseeing both projects are publicly acknowledging that they, too, have cold feet. In an October 13, 2010 Associated Press report (see http://www.google.com/hostednews/ap/article/ALeqM5j5GXYdWUchI3DjYtdYS0QE4a77JAD9IQV65G0?docId=D9IQV65G0), the Associated Press reported: “Even companies that are finalists for federal loan guarantees, NRG Energy and Constellation Energy, announced recently that they have nearly stopped spending on their projects … Analysts say low natural gas prices are making the project uneconomic. NRG chief executive David Crane said he will not pursue the company’s two-reactor project in South Texas if gas prices stay low, even if his project is offered a loan guarantee.”
Similarly, the Charlotte Business Journal reported on October 8, 2010 (http://charlotte.bizjournals.com/charlotte/stories/2010/10/11/story8.html?b=1286769600%5E4063181): “… Santee Cooper, South Carolina’s state-owned power producer, is looking to reduce its 45% share in the 2,234-MW V.C. Summer Nuclear Station expansion near Jenkinsville, S.C. Fitch Ratings has reported that “in light of lower forecasted growth projections …, Santee Cooper is now reviewing its level of participation in the two future nuclear units.” Santee Cooper spokeswoman Mollie Gore says no decision has been made, but she confirms the utility is reviewing its options. The goal, she says, is to control costs as much as possible for Santee Cooper’s customers. Another speaker cited Santee Cooper’s V.C. Summer partner, Scana Corp., as an example. Scana’s market capitalization is about $5.5 billion, he notes. Its 55% share of Summer, estimated at costing nearly $10 billion, pretty well eats up all that value.”
A streaming audio replay of the news event will be available on the Web at http://www.nirs.org
The Nuclear Information and Resource Service
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