Nuclear disaster of a different kind

JAPANESE corporate giant Toshiba has announced that its Westinghouse nuclear power unit has filed for Chapter 11 bankruptcy in the US, largely due to massive cost overruns for four reactor projects the company is building in South Carolina and Georgia. The financial loss to Toshiba is estimated to be about 1 trillion yen (about $9 billion) for the fiscal year that ended yesterday (March 31), which would be one of, if not the biggest, annual loss in Japanese corporate history.

Officials at both W estinghouse and parent company Toshiba are optimistic that the collapse is not total; the financial problems are rooted in Westinghouse’s construction division, while its nuclear fuel and plant operations/maintenance segments remain relatively profitable. On the other hand, the bankruptcy filing is glaring evidence that these same people have been very wrong before; every other objective indicator suggests that Westinghouse’s fall may be a fatal blow to what nuclear advocates were hoping would be a bit of a renaissance for nuclear power worldwide.

The Westinghouse Electric Company LLC is a remnant of the fabled US corporate giant Westinghouse, which was founded in 1886. Through the mid-1990s the original company was gradually broken up and sold off; the brand is still well known worldwide – mainly in household appliances and certain kinds of industrial equipment – but is owned and produced by a variety of unrelated parent companies. The nuclear power business has historically been one of Westinghouse’s strengths, and reached its zenith during the 1970s; a majority of the several dozen operating nuclear reactors in the US were built by Westinghouse, and it built reactors in several other countries. The mothballed Bataan Nuclear Power Plant (BNPP) here in the Philippines is a Westinghouse product.

The company has over the years become embroiled in controversy at times – the BNPP being one example – but on the whole remained fairly sound, and was considered a good investment when it was purchased in 1999 by British Nuclear Fuels Limited (BNFL). BNFL in turn sold Westinghouse to Toshiba in 2006 for $5.4 billion, just at a time when the prevailing view was that nuclear power was about to undergo a resurgence; China, the US and the UK were all then planning to invest heavily in new nuclear power facilities.

Toshiba thought they had a gold mine on their hands. Westinghouse had a new, marketable reactor design – the AP1000 – which had become the first Generation III+ design to receive final design approval from the US Nuclear Regulatory Commission (NRC) in 2004. The Japanese parent company sold 10 percent of its stake to the Kazakh national uranium company (Kazatomprom) in 2007 to secure a fuel source and strengthen its supply line, and in the same year won a bid from the China National Nuclear Corporation for construction of four AP1000 reactors and transfer of the AP1000 technology. In 2008, Westinghouse won a contract from Georgia Power Company to build two AP1000 reactors in that state and a second contract to build two more in South Carolina; two years later, the US government announced it would provide $8.3 billion in loan guarantees to complete the Georgia plant.

The Fukushima nuclear disaster in March 2011 and the boom in natural gas production in the US had a chilling effect on the plans for new nuclear plants in the US. Even without Fukushima raising safety concerns, nuclear plants suddenly became unreasonably expensive compared with gas-fired plants, which put a bit of pressure on Westinghouse. What really sank the company, however, was the enormous cost and schedule overruns at its Georgia and South Carolina projects. Both were expected to cost about $14 billion each, and be operational by the end of last year; so far, they have cost $19 billion and $22 billion, respectively, and are two years or more behind schedule.

To make matters worse, the financial trouble at Westinghouse has raised old, but still not completely answered, questions from regulators – in the US, the UK, and China – about the safety of the AP1000 reactors. Up to now, most of those concerns have been deflected, but what is likely to happen now, even if Westinghouse can continue to satisfactorily convince governments and potential operators of the system’s safety, is that uncertainty over whether the company – or more likely, whoever buys the ailing unit from Toshiba – can be relied on to keep up standards is going to make big customers look elsewhere. And once they do, they are likely to prefer the more economical and less contentious path countries like the US are taking, turning to gas generation or expanding renewables.

http://www.manilatimes.net/nuclear-disaster-different-kind/320327/

April 3, 2017 - Posted by dunrenard | Japan | Toshiba, Westinghouse