It looks like nuclear power is gaining traction. Two utilities recently announced new nuclear power plants. NextEra Energy (NEE - Get Report) announced plans to expand its Turkey Point facility in Florida by adding two new AP1000 reactors. Southern Company (SO - Get Report) management put out a tease suggesting they would have an announcement about one or more new AP1000 nuclear plants. These announcements are not commitments. It is unlikely any U.S. nuclear renaissance will gain traction. Large-scale reactors such as Westinghouse Electric's AP1000 only fit in limited cases.
Currently, the U.S. has five nuclear power plants under construction. They are being built for Tennessee Valley Authority (TVA), Southern and Scana (SCG - Get Report). Only Southern and Scana are building next generation reactors.
TVA restarted its old construction project at Watts Bar. Management's idea was to throw a few dollars at a partially completed nuclear project and get a cheap nuclear unit added into the fleet. At first, it sounded like a good idea. Now, with blown schedules and exploding budgets, it seems that restarting old nuclear projects may not have been the best idea. Consequently, TVA's Watts bar project will limp across the finish line, but other unfinished projects will remain unfinished.
Southern and Scana took a different path. They decided to start new with the best available technology. They are building AP1000s that will produce more than 1,100 megawatts of electric power per reactor.Currently, Southern is constructing two AP1000s in Georgia. They are adjacent to existing nuclear units at Plant Vogtle in Waynesboro, Ga. Southern is a minority owner and holds a 45.7 equity interest. Majority owners are Georgia's non-profit utilities (municipals and cooperatives). Because Georgia remains a regulated state and because the state authorized the construction, Southern has almost no risk. Most of the financial risk has been hedged against the state's consumers. Scana is constructing two AP1000s in South Carolina that are adjacent to their existing nuclear unit at V.C. Summer in Jenkinsville. Scana is the majority owner. Similar to Georgia, South Carolina's utilities are fully regulated. Since the state authorized the construction, Scana has almost no financial risk. The state is requiring consumers to bear most risk. NextEra owns a two-unit nuclear plant at Turkey Point (south of Miami). Adding two more nuclear units at that site makes sense. Using certified AP1000 reactors speeds up federal approvals. However, unlike the sites at Vogtle and Summer, the facility at Turkey Point will face more regulatory oversight. It appears there will be more challenges with state overseers than Nuclear Regulatory Commission regulators. There are costs and uncertainties associated with all government regulators. Consequently, this project is on hold until federal and state officials have completed their work. The same is likely true for Southern's other nuclear project. While the utility declines to describe its proposed units, it does say they will be one or more AP 1000s. If approved, it will be a carbon copy of its new Vogtle units. Southern's biggest challenge is to convince the state that their consumers should bear most of the construction risk. Their second challenge will be to find utilities willing to partner by taking equity stakes in the unit. In all likelihood, it will require NRC approval for the site. Like NextEra, this project is on hold until federal and state officials have completed their work. Southern Company's new nuclear unit(s) might be built in Alabama or Mississippi. Both states have good experiences with nuclear power. In addition, Southern already owns and operates two units at their Joseph M. Farley Nuclear Plant in Alabama. The biggest challenge for commercial nuclear power is money. Nuclear plants, like the massively large AP1000, cost more to build than most utilities are worth. Utility executives and their bankers are not willing to risk such large portions of their businesses. This is why Southern, Scana and NextEra are offloading most of their financial risks on state governments. Even most states are unwilling to take the risk. Most deregulated states lack legislative authority to help any utility build any power plant, let alone a $7 billion nuclear plant. Other states have moratoriums against new nuclear power. Still others lack the demand to justify a new nuclear plant. Taken together, nuclear construction announcements may be a mirage. For the U.S., there is no traction. There will be no traction until new technologies are developed or politicians change our national energy policies.
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