nuclear-news

Escalating costs, expanding timelines, cast doubt on the future of modular nuclear construction

Fitch: ‘Failure’ of new nuke construction means fewer plants  https://www.snl.com/InteractiveX/Article.aspx?cdid=A-33617164-10551  , Thursday, August 20, 2015  By Matthew Bandyk The troubled construction of new nuclear reactors in Georgia and South Carolina will likely chill the pursuit of more nuclear plants in the U.S., although recent actions by the U.S. EPA and the Department of Energy could improve the outlook over time, according to an analysis by Fitch Ratings.

As a result, there will be less new nuclear to replace the increasing number of retiring plants. Fitch said that the U.S. Energy Information Administration’s forecast of nuclear generation falling by 10,800 MW by 2020 might be too conservative if more plants retire due to local political pressure and the need for costly upgrades.

The nuclear projects at the Vogtle and V.C. Summer plants, the first new nuclear generation built in the U.S. in decades, use the Westinghouse Electric Co. LLC AP1000 reactor design, which promised to be cheaper and more efficient to build than past nuclear plants that saw spiraling cost overruns during construction. In particular, Westinghouse touted the “modern, modular” construction technique in which major plant components would be built off-site as modules, allowing pieces of the project to be completed in parallel and in turn speeding up construction.

But “the recent failure of modular construction to deliver lower prices and shorter timelines will likely keep a cap on U.S. nuclear development into the midterm,” Fitch analysts said in a statement Aug. 20. The Vogtle and Summer projects are each running about three years behind schedule and are now expected to cost a few billion dollars more than originally estimated.

The blame for much of the delays has been centered on subpar work on the modules at facilities like Chicago Bridge & Iron Co. N.V.‘s Lake Charles fabrication facility in Louisiana. CB&I has since shifted work to other facilities, and monitors of the Vogtle project recently reported that the module work has “improved significantly.” But the contractors continue to miss their own deadlines and there is still risk of more delays, the same monitors said.

In addition, four AP1000 reactors under construction in China are also seeing rising costs and delays, Fitch noted.

One of the best hopes for the U.S. nuclear industry comes from the EPA’s recently finalized Clean Power Plan, according to Fitch. The rule allows new nuclear plants and capacity uprates at existing plants to generate credits that states can use to reduce their CO2 emissions levels and comply with the rule. In addition, the DOE continues to try to lower the financing costs for the nuclear industry through loan guarantees. Last year the DOE said it is accepting applications from nuclear developers for $12.5 billion in loan guarantees.

Both the EPA and DOE efforts could “yield growth factors longer term,” Fitch said.

August 24, 2015 - Posted by Christina Macpherson | business and costs, technology, USA