What Killed America’s Climate-Saving Nuclear Renaissance?

No nukes is bad nukes.

Courtesy Georgia Power Company

The road to the Alvin W. Vogtle Electric Generating Plant winds through Georgia pines, past the massive International Paper mill where many trees meet their end, and on toward the Savannah River, which forms the border with South Carolina. A couple of miles out, the 55-story steel-and-cement cooling towers loom over the tree line. Cottony white vapor rises from the towers in what one hopes is a friendly, nonradioactive greeting from the nuclear facility.

Less friendly is the white security pickup with a yellow roof flasher that materializes when I pull my rental car to the side of River Road to take in the view. Provisionally satisfied I’m not a terrorist, the guard lets me head to the military-style entry station, where another security man with a Glock on his hip points to a glassed-in rendezvous point. Credentials are checked, and introductions are made to plant staff. They’re proud of the work they do, but on high alert against sabotage and bad publicity.

Plant Vogtle, as the locals call it, is named for a former chief executive officer of Southern Co., the Atlanta-based utility that jointly owns it with several smaller Georgia power companies. As utility officials go, Alvin Vogtle cut a dashing figure. A World War II hero, he inspired the character played by Steve McQueen in the 1963 film classic The Great Escape. (Unlike McQueen’s Captain Hilts, aka “the Cooler King,” Vogtle did not vault barbed wire on a motorcycle.)

In rural Burke County, his namesake plant is regarded with awe, not least because it has employed so many residents over the years. Beginning in the early 1970s, 14,000 construction workers put up the first two reactors on a 3,100-acre site. Today 800 employees—including engineers, control-room operators, lab technicians, and security officers—oversee the plant’s operations 24/7. A pair of hump-topped containment buildings with 4-foot-thick concrete walls house two 355-ton underground reactor vessels: Vogtle Units 1 and 2. On-site inspectors from the Nuclear Regulatory Commission (NRC) conduct spot patrols and check monitoring instruments.

Apart from a nuclear plant’s characteristic power hum, Vogtle is surprisingly quiet. Next door it’s a different story. Concrete-mixer trucks rumble across 800 acres of unpaved red Georgia clay as workers weld enormous components shipped from distant factories. A 60-story derrick, one of the tallest in the world, lifts the modules into place as they’re completed. The two additional reactors under construction are supposed to combine with the operating units to make Southern’s Plant Vogtle the most productive nuclear facility in the nation, ultimately generating electricity for 1 million customers.

“It’s going to be one of the most successful megaprojects in modern American industrial history,” says Thomas Fanning, Southern’s always-on CEO. With 4.4 million customers in Alabama, Georgia, Mississippi, and northwest Florida, Southern, he says, “is leading the nation’s nuclear renaissance.”

Fanning
Fanning
Photographer: John Bazemore/AP Photo

One doesn’t hear much about the nuclear renaissance these days. A decade ago, when Southern started on Vogtle Units 3 and 4, nuclear was poised for a revival. It had backing not only from utility executives but also from climate activists feeling new affection for its low-carbon emission profile. With President Obama’s Clean Power Plan—aiming for 32 percent carbon reduction by 2030 and officially enacted on Oct. 23—nuclear ought to be booming right about now.

But it’s not. Vogtle Units 3 and 4 are outliers, two of only five reactors being built in the U.S. Two others are under way in South Carolina; Tennessee Valley Authority’s much delayed, 40-years-in-the-making Watts Bar Unit 2 plant finally received its operating license in October, making it the first reactor to come online in the U.S. this century. Even as sympathetic an observer as John Rowe warns that the new units at Vogtle will be uneconomical when—or if—they’re completed. “They did it as a long-term investment in Georgia’s economy,” says Rowe, former chairman of Chicago-based Exelon, the country’s largest nuclear operator. “That was a wrong decision.”

Stunting the renaissance before it got going were the 2008-09 recession, the 2011 Fukushima Daiichi disaster, and especially the proliferation of cheap natural gas. Nuclear, which provides 19 percent of U.S. electricity and two-thirds of the country’s emission-free power, has arrived at a perilous crossroads. Four nuclear plants have shut down over the past several years because of recession-stifled demand and inexpensive gas. Eight or nine more are in danger of premature retirement for similar economic reasons.

The tortuous history of Plant Vogtle—of public safety concerns, budget overruns, lawsuits, and seemingly self-defeating politics—explains why it’s so hard to get nuclear done and illuminates the strange paradox of nuclear power today. “The only way we significantly reduce carbon in the short run is if projects like Vogtle come online,” says Josh Freed, vice president for clean energy at Third Way, a centrist Democratic think tank in Washington. Yet, he adds, “just when we need to preserve and expand nuclear in order to meet the president’s ambitious climate goals, we’re actually in danger of losing a substantial percentage of carbon-free generation.”

 

At Southern they refer to Fanning, 58, as Rocket Man, a nickname earned “while blazing a trail through 15 jobs in eight business units” during a 35-year career, according to Big Bets, an in-house corporate history. Leaning forward and gesticulating vigorously, he describes his utility as “arguably the most important energy company in the United States.” Fanning fancies himself a straight shooter and realizes that much of the public is wary of nuclear power. Asked when he first thought about the pros and cons of nukes, he recalls his senior year at Georgia Tech—the spring of 1979. “Three Mile Island,” he says, his enthusiasm waning, if just for a moment. At the time of that terrifying accident—a partial meltdown at the Three Mile Island Nuclear Generating Station in Dauphin County, Pa.—Southern was building two of its own first-generation nuclear plants, one near Baxley, Ga., the other near Dothan, Ala. Thankfully no one died at Three Mile Island, but afterward, “the complexity and variability kind of allowed design chaos to occur,” Fanning says. “Costs just went off the charts.”

Vogtle Units 1 and 2, begun in 1971, weren’t completed until 1989, more than a decade late. The original price tag was $900 million; the final bill came to $9 billion. After only seven years of operation, safety fears again stalled the industry following the full meltdown at Chernobyl. An explosion at the Ukrainian reactor led to the worst civilian atomic accident ever. Clouds of radioactive particles caused thousands of deaths among cleanup workers and left 1,000 square miles uninhabitable. While American plants such as Vogtle were better built and more safely operated than their Soviet counterparts, few Americans advocated for new nuclear facilities.

Then, at the turn of the millennium, something unexpected happened: Environmentalists who’d manned antinuke campaigns began to shift their attention to climate change. Some green heroes such as James Hansen, the former NASA climatologist who sounded alarms about global warming, endorsed nuclear power as a necessary element of any workable carbon reduction strategy. “In the space of a few years the atmosphere changed dramatically, and we started to hear about this ‘renaissance,’ ” says Joseph “Buzz” Miller, a chemical engineer who joined Southern’s nuclear division just in time for Chernobyl in 1986.

The erosion of antinuke activism opened the door for pro-nuclear policies. In 2005, Congress gave nuclear developers a package of tax credits, cost-overrun backstops, and federal loan guarantees. Dozens of reactors were commissioned. Miller was assigned to oversee construction of Vogtle 3 and 4. “The economy was zooming,” he says. “Natural gas prices were high, and everyone was talking about nuclear providing clean, 24/7 baseload power—and that’s whether or not the sun shines or the wind’s blowing.”

Southern hired Westinghouse Electric, which had designed a standardized reactor model approved by the NRC. Westinghouse marketed the AP1000 as more likely to stay within schedules and budgets because its main components can be built efficiently at specialized work yards, then shipped to a plant site and snapped together like an enormous steel-and-concrete Lego creation. “It’s a much simpler design based on the decades of experience we didn’t have in the 1970s and 1980s,” says Miller. Deploying its formidable state-level lobbying force, Southern pushed Georgia politicians to enact an arrangement in 2009 called Construction Work in Progress. CWIP required customers to finance Vogtle 3 and 4 on a pay-as-you-go basis, rather than the traditional approach of a utility seeking full reimbursement after a nuke plant is completed—inevitably provoking sticker shock.

In Washington, Obama folded support for Vogtle 3 and 4 into his broader campaign for climate legislation. The bill put a declining cap on carbon emissions while allowing cleaner utilities to trade pollution permits with dirtier rivals. At a news conference in February 2010, the president announced approval of $8.3 billion in loan guarantees for Southern. “Those who have long advocated for nuclear power, including many Republicans,” he said, “have to recognize that we will not achieve a big boost in nuclear capacity unless we also create a system of incentives to make clean energy profitable”—a reference to his “cap and trade” legislation.

Southern accepted the loan guarantees but took an equivocal position on cap and trade. While the utility nominally supported some kind of climate bill, it stood shoulder to shoulder with the U.S. Chamber of Commerce, a corporate group that opposed the Obama plan as harmful to the economy. At the time, Southern still generated 56 percent of its electricity from burning coal, so on balance, cap and trade might have hurt its bottom line. Sometimes the company even seemed to be at cross-purposes. Earlier this year, environmentalists using the Freedom of Information Act disclosed documents showing that for the decade beginning in 2005, Southern had provided almost $470,000 to fund research by Wei-Hock “Willie” Soon, a Smithsonian-affiliated solar physicist who disputes widely accepted evidence of climate change. After the disclosure, Southern said it would stop funding Soon’s work. In the spring of 2010, the Obama climate bill died in the Senate.

Despite bailing on cap and trade, Southern continued to enjoy the Obama administration’s loyalty. Then, in March 2011, an earthquake-generated tsunami swamped the inadequately protected coastal Fukushima nuke facility in Japan, causing diesel generators to fail. That cut power to pumps circulating coolant water, leading to a meltdown. Almost 16,000 people died as a result of the earthquake and tsunami. Radiation isn’t thought to have killed anyone immediately, although some experts predict cancer rates will rise among first responders. In all events, Fukushima raised fresh doubts about Southern’s Vogtle expansion.

Fanning, promoted to CEO only four months earlier, launched an all-out lobbying blitz. “I talked to everybody that would listen” at the White House and in Congress, he says. He argued that Vogtle didn’t face coastal flooding or seismic dangers. Moreover, he said, the Westinghouse AP1000 represented a leap ahead of the technology at Fukushima.

AP stands for “advanced passive,” a reference to an array of automatic safety devices designed to prevent meltdowns without human intervention. The main such mechanisms are enormous water reservoirs placed above and within the reactor vessel. If the cooling system fails, as it did at Fukushima, valves open, and gravity pulls the water down to cool the containment structure. As the water turns to steam, it rises, cools back to a liquid, and pours back down. That process is supposed to last up to three days, after which diesel-powered pumps kick in to add water from an exterior reservoir. Or that’s the plan; one never knows about fail-safes until something serious fails.

The Obama administration bought Fanning’s pitch. In February 2012, the NRC voted 4 to 1 to license Vogtle 3 and 4. Then-Chairman Gregory Jaczko cast the lone dissent, citing Fukushima. A few days later, in a speech in Miami defending his “all of the above” energy policy, Obama referred to Vogtle, saying: “We supported the first new nuclear power plant in three decades.” A grateful Fanning calls the administration’s decision “a big bet by America.”

Source: USGS/Google

 

That bet hasn’t paid off yet. The notion that standardized AP1000s would stay on time and within budget hasn’t worked out. By late 2012, the $14 billion Vogtle project was almost $1 billion over budget and seven months behind the April 2016 target for Unit 3 to begin operation. In November of that year, litigation broke out between Southern and Westinghouse over the overruns. Southern blamed flaws in Westinghouse’s plans; the contractor pointed to changes made in response to NRC revisions of the reactor shield building. The suits are still pending. Westinghouse declined to comment.

By 2013, an engineer working for the Georgia Public Service Commission had identified persistent problems at the Chicago Bridge & Iron factory in Lake Charles, La., where components of the AP1000 were being built. Construction requirements for nuclear plants are more stringent than those of any other industry. Welds are meticulously checked via X-ray analysis and documented. Some of the work done in Lake Charles initially wasn’t up to code and had to be redone.

Miller concedes that many welders in Louisiana were “used to working on oil rigs.” He says these shortcomings have all been remedied, in part by farming out some of the fabrication work to factories as far away as Oregon and Japan.

Skeptics aren’t reassured. “I’m not against nuclear per se,” says Robert Baker, an Atlanta lawyer and former Georgia public-service commissioner who represents the nonprofit Southern Alliance for Clean Energy. “But the difficulties Southern has encountered raise serious questions about whether the Vogtle project can be completed in a safe and economical fashion. Nuclear isn’t the only way to generate electricity. We can build natural gas [plants] for less, and the cost of renewables is coming down fast.”

The Georgia Public Service Commission confirms that Vogtle’s fabrication standards improved, but not before the project fell further behind. Originally, the company expected to load nuclear fuel this summer. Vogtle’s construction bosses now concede they’re at least three years behind schedule, with Unit 3 expected to begin operating in 2019, followed by Unit 4 in 2020. The total cost estimate has risen to $16.2 billion, 16 percent over budget. “This is the first time we’ve built reactors since the 1980s,” says Miller. “There were bound to be some hiccups.”

Perhaps, but the bond evaluation company Fitch Ratings is prepared to make a negative early call on the AP1000 reactors going in at Vogtle and Scana’s Virgil C. Summer plant in South Carolina, which are also behind schedule and over budget. The Westinghouse reactors have “fail[ed] … to deliver lower prices and shorter timelines,” Fitch noted in an Aug. 20 report. “Four AP1000 reactors under construction in China have also experienced cost overruns and delays. In our view, the change in expectations about this technique could join other forces in keeping [nuclear] expansion down.”

Other utilities have abandoned nuclear projects left and right. In the immediate wake of Fukushima, NRG Energy wrote off $500 million related to two reactors it canceled in Texas. The promise of federal loan guarantees wasn’t enough to prevent Constellation Energy Group from dropping plans to expand at its Calvert Cliffs nuke plant in Maryland.

Turns out nuclear has been eclipsed by another scourge of environmentalists: the fracking revolution. Technological advances in freeing natural gas from subterranean rock formations—and the relatively modest price of building gas-fired power plants—make it difficult to justify the higher costs of building nuclear, especially in regions such as the Midwest and Northeast, where energy markets deregulated beginning in the 1990s. Nimble energy producers can sell gas-fired electricity into deregulated areas at prices much lower than that of nuclear or coal. Southern has the advantage of operating in a still-regulated market, where state public-service commissions effectively limit competition from cheap gas.

In just the past several years, economic pressures in deregulated markets have caused the closure of Dominion Resources’ Kewaunee nuke plant in Wisconsin, Entergy’s Vermont Yankee plant, and three other nuclear facilities. An additional eight or nine of the nation’s 99 nuclear units, several of them in Illinois and Ohio, are threatened with similar premature closures, according to Fitch, an estimate similar to one made recently by Moody’s Investors Service. In mid-October, Entergy added the Pilgrim Nuclear Power Station in Plymouth, Mass., to the shutdown list, saying it would close no later than in mid-2019.

The Obama administration adjusted the president’s Clean Power Plan specifically to reward construction of nuclear capacity. Under a draft version circulated last year, yet-to-be-completed reactors wouldn’t have been credited for carbon reductions after they started operating. Nuclear industry players, including Southern, complained that this would make it more difficult for states to meet federally mandated carbon reduction targets. In the final plan released this August, the Environmental Protection Agency said Georgia, South Carolina, and Tennessee may take credit for carbon-free electricity from their nascent nukes. (Lower carbon levels attributable to existing reactors won’t count under the Obama plan, leaving those units vulnerable to premature retirement.)

“We tend to view the new rules as potentially the first bit of good news for the struggling nuclear industry,” Julien Dumoulin-Smith, an analyst for UBS, wrote in a research note after Obama announced the Clean Power Plan in August. But two weeks later, the pro-nuclear Third Way think tank produced a white paper warning that plant closures in Illinois, New Jersey, and Ohio could eclipse the new output in the South. “If America’s nuclear plants begin retiring in droves, achieving the Clean Power Plan emissions reductions could be impossible,” Third Way said in the paper, titled When Nuclear Ends.

Even with all the pessimism surrounding nuclear, one would assume that Southern is happy about the revised plan making it easier for Georgia to meet its emissions requirements. The carbon reduction goals, while facing Republican opposition and court challenges, make Southern look prescient in pressing ahead with the Vogtle expansion.

Repeatedly, I ask Fanning, the CEO, whether he’ll support Obama’s plan, which would require Southern to close most of its remaining coal-powered generating plants. Once, twice, three times he deflects the question. Finally he says: “We’ll work to do the right thing.”

Well, yes, that’s called following federal law. What about publicly campaigning for the Clean Power Plan as a goad to new nuclear construction?

No, Fanning says, Southern won’t support the plan. He calls it federal “overreach.” Setting carbon reduction goals, he adds, should be left to the states rather than Washington bureaucrats. On Oct. 23, Southern’s Georgia Power unit formally objected to the Obama plan in a federal court filing in Washington, saying the mandate would force it to retire 4,800 megawatts of fossil fuel-fired electricity.

So even though Southern has been shifting away from coal for years—its current mix is 48 percent natural gas, 32 percent coal, 16 percent nuclear, and 4 percent hydro, solar, and wind combined—it doesn’t want the EPA to dictate the pace of change. The echo of 2010, when the utility took federal loan guarantees from Obama but wouldn’t get behind the president’s cap-and-trade legislation, is unmistakable.

“It’s strange,” says Third Way’s Freed. “When we need all interested parties pulling together behind both emission reductions and nuclear expansion, we’re likely to get tepid utility support for the Clean Power Plan and net nuclear capacity reduction. It doesn’t add up.”

Fanning says he doesn’t feel obliged to reconcile his enthusiasm for nuclear and reluctance about Obama’s carbon mandate. Southern, he says, is an “all of the above” utility that pursues all viable sources of energy—always with the goal of providing more electricity at lower prices. Addressing the topic of efficiency steps that could reduce overall energy use and shield the environment, he says: “I think that’s garbage.” Consumers want more powerful air conditioners, faster computers, and better high-tech medical care, he says. “Energy efficiencies really don’t mean ‘Sell less.’ ”

Update: On October 27, Westinghouse, a unit of Toshiba, resolved its dispute with Southern in a settlement that included Westinghouse acquiring Chicago Bridge & Iron's nuclear business and taking over management of the Vogtle expansion. 

 

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