At a cost of more than $6.2 billion when it was completed in 1996, TVA’s Watts Bar Nuclear Plant is both the newest and most expensive nuclear reactor ever built in the United States.
But rising costs for everything from cement to steel are threatening to shatter that cost record for the next generation of nuclear power plants.
Despite streamlined licensing requirements and more advanced engineering and design, the latest projected costs for some of the next generation of nuclear reactors are double some initial estimates made five years ago.
TVA President Tom Kilgore said the rising costs of materials for nuclear reactors is causing the agency to re-examine its pursuit of new reactors. But the Tennessee Valley Authority, at this point, appears to still be committed to building more nuclear units.
“The cost of new plants are higher because concrete has gone up, steel has gone up, and other commodity prices have gone up,” Mr. Kilgore said. “That causes us to pause and rethink, but frankly it’s still the best option.”
Critics of nuclear power wonder if the industry is still beset with the cost overruns that stalled any new U.S. nuclear reactors from being started in the past three decades.
“Once again, we’re seeing the sticker shock from nuclear power,” said Stephen Smith, executive director for the Southern Alliance for Clean Energy, a Knoxville group opposed to nuclear power. “What we continue to see from this industry are overly rosy estimates about construction costs to lure utilities into building nuclear. By the time they recognize what it is actually going to cost, they already have so much money sunk in a plant that they want to finish it.”
TVA’s costly past
The TVA, the nation’s biggest government utility, in the 1970s and ’80s sunk nearly $10 billion into nuclear plants that it ultimately decided to scrap when plant costs escalated and the growth in power demand slowed. But TVA officials insist they are using a different, more cost-competitive approach today toward building more nuclear units.
Unlike the 17 different reactors TVA began designing in the 1960s, the authority now is taking its power additions one reactor at a time to better align new power generation and power demand and to focus management attention on each reactor.
The next generation of reactors also will be built in cooperation with other utilities and with standardized designs to help speed construction and allow workers to successfully move from one plant to another, TVA Vice President Jack Bailey said.
“TVA is already leading the industry in additional nuclear generation,” Mr. Bailey said.
After restarting TVA’s oldest reactor last year through a five-year, $1.8 billion upgrade at the Browns Ferry plant near Athens, Ala., TVA is spending $2.5 billion to finish a second reactor at its Watts Bar plant by 2012.
Even more ambitious are TVA’s preliminary plans for two of the next-generation nuclear reactors at its Bellefonte nuclear site in Hollywood, Ala. The reactors, to be built by Westinghouse, are expected to cost about $3 billion to $5 billion each, Mr. Bailey said.
A study three years ago jointly conducted by Toshiba Power Systems, Bechtel Corp. and TVA initially estimated the cost of each of the new AP-1000 reactors at Bellefonte at around $1,600 a kilowatt, or about $2 billion for each of the planned units.
“That is now probably bouncing around $3,500 a kilowatt, and even higher in some circumstances,” said Adrian Heymer, senior director for new plant deployment at the Nuclear Energy Institute, an industry-backed trade group in Washington D.C.
Other utilities are projecting even higher costs to develop and finance similar reactors. Moody’s Investors Service estimated last year that the cost of a new 1,000-megawatt reactor even smaller than what TVA wants to build at Bellefonte will cost between $5 billion and $6 billion.
Progress Energy Florida estimated that building reactors at a new 3,000-acre site in Levy County near Tampa, Fla., would cost about $7 billion per unit. Farther south near Miami, Florida Power & Light estimates the cost of adding new units at Turkey Point nuclear plant could range from $6.5 billion up to $12 billion per reactor, according to a March filing with Florida regulators.
David A. Kraft, director of the Nuclear Energy Information Service, an anti-nuclear group in Chicago, said cost estimates for new nuclear reactors continue to rise and the new designs of reactors add extra uncertainty to utility estimates.
“The upward trend in costs is unmistakable and also exists internationally,” he said.
Mr. Kraft and Mr. Smith urged TVA and other utilities to take the billions of dollars they are planning to invest in new nuclear units and put it instead into aggressive efficiency measures and renewable energy generation from solar, wind and biomass.
“Nuclear plants take decades to pay off and, by that time, we can develop other sources of power like wind and solar that don’t have any fuel costs and don’t produce radioactive wastes,” Mr. Smith said.
Mr. Bailey said higher cost estimates from other utilities reflect, in part, their desire to gain approval from state regulators to cover any unanticipated costs for the new reactors. The TVA executive noted that the Bellefonte site where TVA is proposing to build its new reactors already is developed with site security, transmission and cooling towers built for earlier reactors TVA scrapped in the 1990s.
Buying equipment in advance also could lock in costs to prevent costly increases later, he said.
Mr. Heymer said the costs of all types of generation will be higher in the future and nuclear power isn’t as subject to rising fuel costs as is power generation from either coal or natural gas.
“No matter what you use to generate power, the consumer is going to see an increase in the cost of electricity,” Mr. Heymer said. “Nuclear power is still competitive with other forms of generation and, if you put in the environmental concerns and new limits on carbon emissions, nuclear turns out to be the best buy.”