Why You’ve Heard of Solyndra, but not Vogtle

January 2, 2013

The Kochtopus media machine has made sure that the misfires of a burgeoning new industry, Solar energy, have become household names. Solyndra is the best example of non-scandals that Fox & Friends have tried hard to pump into something substantial.

Meanwhile, backed by a loan guarantee 15 times as large as the one Solyndra got, the new Vogtle Nuclear project has been quietly plowing ahead in Georgia.  Inevitably, the same types of tiresome and monotonous glitches, snafus and gremlins so familiar to nuclear industry observers have been cropping up and bogging down the ill considered project.

Those still looking for a nuclear revival would do well to consider what those of us paying attention knew a long time ago. This stuff is just too damn complex, ponderous, and expensive to compete. But don’t expect to hear much about it on Fox & Friends.

Wall Street Journal:

The first newly licensed nuclear-power plant to be built in the U.S. in decades, the Vogtle project in Georgia, has run into construction problems and may be falling years behind schedule, according to an engineering expert advising the state.

The $14 billion plant is being closely watched by energy experts as a bellwether for the rebirth of the U.S. nuclear industry, because it involves a new type of nuclear reactor and a modular construction method that are supposed to reduce construction time and cost.

But a construction monitor warned in a report to the Georgia Public Service Commission this month that the plant, which will be operated by Southern Co. SO -1.21% on behalf of several utilities, was falling behind schedule because of what he called an unsatisfactory performance by its construction team.

The expert hired to monitor the project, Bill Jacobs of engineering consultancy GDS Associates Inc., advised the regulators to brace for a potentially costly delay of two to four years. The two-reactor plant was initially scheduled to put its first reactor into service in 2016 but now expects that to happen in 2017.

Joseph “Buzz” Miller, executive vice president for Southern Nuclear, said Southern knew there were risks going into the project. “We haven’t built [reactors] in 30 years,” he noted.

Southern already was facing criticism from consumer groups that Georgia customers’ power needs could be met more cheaply by natural-gas-fired power plants and through conservation efforts.

Georgia Public Service Commissioner Tim Echols said he wants to see the plant finished but said consumers shouldn’t have to pay for the builders’ “learning curve.”

Nuclear Power Daily:

Private lenders have declined to finance new reactors because of the enormously high cost of new nuclear power and the substantial risk that any such investment will fail. In 2003, the Congressional Budget Office (CBO) estimated that the chance of a loan for new nuclear reactor construction resulting in default would be “very high – well over 50 percent.”

The Obama administration’s proposed loan guarantee for Vogtle transfers the risk onto American taxpayers, who would pay up to $8.33 billion if Southern Company and its partners run into the same kind of trouble that is routine in the nuclear power industry-cost overruns, delays and project cancellations.

And Vogtle does have a history that should trouble taxpayers worried about assuming responsibility for the massive loan guarantee: the original two reactors at the Georgia site took almost 15 years to build, came in 1,200 percent over budget and resulted in the largest rate hike at the time in Georgia.

On The Lake Front:

Why should we expect Southern Company to be any better at controlling costs now than back in the 1970s and 1980s when its original nukes on the Savannah River went massively over budget? Massively as in 26 times as much per unit as originally projected.

Kristi Swartz wrote for the AJC 30 Jan 2012, A financial look at Plant Vogtle nuclear projects,

“When the two original nuclear units at Plant Vogtle were planned, the total cost estimate was $660 million..”

Yet, as Jon Gertner reported for NYTimes 16 July 2006,

The plant took almost 15 years to move from blueprints to being operational. And by the time it began producing electricity in the late 1980’s, its total cost, $8.87 billion, was so far overbudget that Vogtle became yet another notorious example of the evils of nuclear energy….

The grand plan was to have four reactors. Instead, it was scaled back to two, Vogtle Unit 1 (finished in 1987) and Vogtle Unit 2 (1989).

That’s right, 4 nuclear units were planned for $660,000,000 fifteen (15) years later only 2 units were built, for $8,870,000,000. That’s more than $8 billion in cost overruns, or more than 13 times the original cost estimate. So per unit, that’s more than 26 times the original estimate, or more than $4 billion per unit.

And of course that $8,870,000,000 is in 1987 dollars. In 2012 dollars that would be about $17,976,000,000. Or about $9 billion a unit.

The stock excuse for nuclear contractors way back when was the staggering cost of constantly changing Nuclear building standards and regulations.  Of course, one of the reasons those costs became so staggering is that many of these projects were still under construction when the Three Mile Island accident shone a bright spotlight on glaring design deficiencies that citizens groups and independent scientists had been shouting about for a decade.

38 Responses to “Why You’ve Heard of Solyndra, but not Vogtle”

  1. rayduray Says:

    Speaking of cost overruns, the Shell Oil Co. has found a new way to get egg on its face. They’ve just grounded their Arctic drillship on a reef off of Kodiak Island. These boys seem mighty lost.

    KTUU, the NBC TV affiliate in Anchorage has this story:

    http://tinyurl.com/9wqb37b

  2. omnologos Says:

    Isn’t the WSJ part of News Corp like Fox News?

    • MorinMoss Says:

      Happy 2013, Mauro. I see all the regulars have survived the end of the world.

      Rupert has only had his hands on the WSJ for a few years and he’s been a little preoccupied explaining to the friendly chaps at the Old Bailey how it was the lowly plebes he put his trust in that are wholly responsible for rampant phone hacking.

      The paper does have a hundred years of history and a couple dozen Pulitzers – let’s see how long it’ll be before the next win now that such an esteemed global citizen is at the helm.

      I’m not sure what to make of reports of inflated sales numbers of the WSJ in Europe in 2011. I’m sure it’s all a simple misunderstanding

      • omnologos Says:

        Makes sense MoMo but the whole conspiratorial idea behind Peter’s text still doesn’t.

        • MorinMoss Says:

          Why not?

          • omnologos Says:

            1. FOX isn’t the only news outlet

            2. If the loan conditions are so important some news outlet is bound to report them – in fact the NYT has

            3. The project isn’t exactly secretive. There was an annual media event a month ago.

            Unless of course Peter believes its readers only listen to Fox News 🙂

          • greenman3610 Says:

            My point is that I’ve had discussions with a senior member of congress who seemed to think the Solyndra non-issue was a big deal, but had nothing to say about the much larger, actual boondoggle that is Vogtle.
            Time for a re-orientation away from Fox-fantasy and towards reality.

          • MorinMoss Says:

            I think you missed the point Peter was trying to make. Try re-reading the 1st two paragraphs.

            Generally, Fox, like it or not, has become short-hand to indicate right-wing media, mostly because

            a) they are the biggest and loudest (well, apart from Limbaugh)
            b) they incessantly pretend to be “Fair and Balanced”
            c) make the biggest fuss about the “liberal” media – whoever that is.

          • omnologos Says:

            OK now I got it…a bit of a hyperbole to say the least…

    • MorinMoss Says:

      While I did find a Feb 2012 article at Fox News about Vogtle, the DoE loan guarantee, which as awarded about 2 yrs prior, is not mentioned.

      A minor oversight, I’m sure.

      http://www.foxbusiness.com/industries/2012/02/09/us-approves-southerns-vogtle-nuclear-reactors/

      http://www.world-nuclear-news.org/NN-Georgia_Power_accepts_Vogtle_loan_guarantee-2106107.html


  3. The second paragraph says the nuclear project is in Alabama, but WSJ quote says Georgia – I think the latter is correct.

    The two things about nuclear power plants that make no sense: there is limited supply of uranium mean that we cannot use very long time, and we still have no solution for storing the spent waste.

    I think we simply have to figure out a better way to boil water to make steam for electric turbines!

    Lemme think – oh wait! We can use the heat from the sun concentrated with mirrors! And we can store the excess heat in underground molten salt storage systems! The sun is a preexisting fusion reactor located at a (relatively) safe distance that will last for another 4-5 Billion years. No fuel is burned, no radioactive waste; indeed almost no waste at all – what’s not to like?

    Neil


  4. […] As I’ve noted recently, so-called conservatives have been waging a rabidly aggressive fight against any government subsidies to clean energy, while continuing to pump out far greater taxpayer support for sunsetting technologies and conventional fossil fuels. The one year extension of the wind production tax credit is better than nothing, but continues the long term tradition of hit and miss support for renewables, especially wind power, which has been allowed periodically to fall off its own fiscal cliff. […]

  5. neilrieck Says:

    Speaking of the true cost of nuclear, the Quebec government recently decided to not re-license the Gentilly-2 reactor. The license expired on 2012-12-28 which means the reactor has now been shut down.

    http://en.wikipedia.org/wiki/Gentilly_Nuclear_Generating_Station

    Now I am not sure what is going on at there but they intend to spend one billion dollars over the next 50 years decommissioning the site. For a technology originally billed as too-cheap-to-meter, that is a lot of money. (and I’m pro nuke)

    On the flip side, it would cost almost nothing to decommission a wind or solar site.

    • MorinMoss Says:

      Wikipedia says $1.8B over 50yrs for decomm costs but $1.9B to make it run to 2040.

      If both those numbers are reasonably accurate, I say keep it running.

      But Quebec has always been bullish on hydro power, not nukes.

      I assume they’ll keep the 400MW gas plant?

      • neilrieck Says:

        I would have kept it going just to keep the related jobs while sending power south to New York state (where it was going until the shut down). But Hydro Quebec is a crown corporation and the new Quebec government is anti-nuke.

  6. David Tyler Says:

    It is interesting to note that Germany, which is heavily invested in Nuclear power and “clean” coal, is moving aggressively into wind and solar.


  7. There is a fundamental difference between the loan guarantees awarded to Solyndra and to Vogtle.

    The fee.

    Georgia Power have to pay a fee on their loan guarantee, to cover the Credit Subsidy Cost as assessed by government.

    Solyndra got their guarantee without paying any fee.

    The difference is the DoE program. The Section 1703 Loan Program
    requires payment of a fee; Section 1705 does not. Nuclear power projects are excluded from 1705.

    Also, as far as I know, Georgia Power are presently building without the loan guarantee. It’s possible I missed the actual award (as opposed to the much-trumpeted conditional agreement), but the project still shows on the DOE loan program website as “conditional”. https://lpo.energy.gov/?page_id=45

    =====

    Vogtle on-site progress report: https://www.youtube.com/watch?v=5WCDkIm6dgU
    – relentlessly upbeat, of course, but real progress to see nevertheless.

    =====

    On the flip side, I’ll say this – if a government stimulus program doesn’t inadvertently back a few turkeys (like Solyndra), they’re not really doing enough. Hopefully it’s the projects that are marginal that are chosen for help anyway. Selective focus on a few flops is just politics/media as usual.


  8. Of course the fee covers the $8 billion. That’s how the loan guarantee works – like insurance. That’s the whole point of it.

    The fee is not refundable. It’s a straight-up payment from the constructors to the government.

    [WordPress won’t let me log on with Twitter for a reply, so I had to reply down here… fortunately this article is relatively quiet so it’s not too confusing]

    • greenman3610 Says:

      if they can cover the 8 billion, why do they need the loan guarantee?
      No matter how you slice it, the project would not be done without government backing, which is the whole point. No nuclear project is going forward in the US without public funding, because even at this stage of industry maturity, 50 years along, no smart money manager will take the risk.

      • rayduray Says:

        And don’t forget to mention the Price-Anderson Act which is a perfect example of private profits and socialized losses, should they occur in the nuclear industry.

        Essentially this Act says that if anything goes terribly wrong at a nuke plant, the public is on the hook and the utility is exonerated.

        A classic case of “heads I win, tails You lose” capitalism.

        http://en.wikipedia.org/wiki/Price%E2%80%93Anderson_Nuclear_Industries_Indemnity_Act

      • joffan7 Says:

        You seem to be using “cover” in a different way to me. Of course the fee is not $8 billion. The fee is the net loss as calculated by government (OMB), based on different possible loss/no-loss scenarios given various levels of debt, asset value and repayment, weighted by some estimate of likelihood.

        As I said, it’s like insurance. Your insurance charge is not the same as the value of whatever you’re insuring. Nevertheless the charge you pay covers that value for adverse circumstances (with some profit for the insurance company, too).

        Nuclear power plants are long-lead infrastructure projects which have a lot of government hurdles to clear to get to completion, and the track record of government changing the nuclear regulatory environment is certainly a risk to any private investor. Government backing under those circumstances is very desirable, if not essential. However no real public funds are required – only that back-up guarantee to put government skin in the game in case of capricious changes.

  9. joffan7 Says:

    @Rayduray: we can talk about Price-Anderson, but it certainly doesn’t say what you claim and the insurance aspect is not the whole Act.

    Price-Anderson requires every reactor to carry maximum commenercial insurance and enter into a cross-covering pool for liabilities beyond that so that the industry can cover high-liability events. Extreme events like Fukushima – which might go beyond that limit, although that isn’t certain – then require Congress to decide how to fund liability above this. The Act doesn’t promise that the liaibility stops for the operator at that level.

    The other side of the deal is that – unlike normal liability – people affected by such an accident do not have to show any negligence or other fault on the part of the reactor operator in order to get compensation.

    • rayduray Says:

      Hi joffan7,

      You sound like you are quite familiar with the minutiae of the Price-Anderson Act which is admirable.

      You make valid points.

      But I was only pointing out that in the specific case of a “China Syndrome”-style failure, that Price-Anderson would guarantee a result quite similar to what has happened in Japan to TEPCO post-Fukushima.

      In that incident, TEPCO, a private corporation, would have been wiped out had the Japanese government not stepped in and limited TEPCO’s liability and substituted the public treasury for the costs of cleanup. So now we have the Japanese taxpayer paying for the cleanup with TEPCO acting as a contractor.

      This is the scenario I was thinking about. I was not at all concerned with the trivial (by comparison) issues of plant construction cost overrun, picaresque regulatory environments, etc.

      Yes, in the normal course of business everything works as you say it does. But you did not address the issue of catastrophic failure and the implications for the public’s exoneration of utility entities in your comments.

      • joffan7 Says:

        I think the operator being “exonerated” is an implausible scenario. They would still have heavy burdens of both non-liability costs and public disapproval, as well as direct liability costs which Congress would likely assign to them, if indeed they were still operating.

        For major societal disruptions, the government is always the backstop in any case.

        Although you are referring to the potential of catastrophic failure, it is worth considering that the this is a very rare situation that is getting rarer as (in the typical manner of engineering) past problems are translated into improved future designs and facilities.

        The NRC recently completed a study of the likely consequences of a severe accident, called SOARCA – without regard to the likelihood of the accident. The result – which was published shortly after Fukushima, so that was addressed in an appendix – was that very few people would see any heath effects – exactly zero immediately and probably zero long-term – from radiation.

        I think the focus that the nuclear industry and regulator have on mitigation gives people the false impression that they are expecting these accidents as a matter of course, which perhaps explains a lot of the nervousness around nuclear power. Certainly I have seen it argued on the internet that preparedness implies likelihood.

        • rayduray Says:

          Re: “I think the operator being “exonerated” is an implausible scenario.”

          One only need read the headlines of today in order to understand that “exoneration” of powerful people is the new norm in our society.

          Here’s a recent example:

          http://tinyurl.com/awsctx4

          The LIBOR scandal is another example of powerful men being absolved of criminal liability.

          In the case of TEPCO, one could say that TEPCO’s executives had been warned about potential deficiencies at the Fukushima-Daiichi plant regarding back-up power but for the sake of economy decided against relocating the cooling water pumps and associated generators to a safer elevation. Some could consider this negligence. Yet there is no prosecution of the executives for their catastrophic decision making.

          Similarly, in the case of BP’s Deepwater Horizon disaster a clear case of negligence can be argued. The failed cement job. The neglected warning signs about “kicks”. The rush to shut-in the well failing to follow standard operating procedures. A clear case of criminal liability should have been pursued by the DoJ but it hasn’t happened yet. To date no one has been held accountable for America’s greatest environmental disaster. There is no criminal liability for powerful corporate types in this world.

          • joffan7 Says:

            This is a shift of ground. Criminal prosecutions are a different topic to compensation mechanisms.

            Without exonerating them, I think Tepco executives would have reason to complain if _only_ they are punished for the consequences of the massive tsunami. The plant did after all have tsunami defense; the sea wall was 6-odd meters but the plant would (almost certainly) have been good to a 10-meter tsunami, as that is the grade level of the reactor buildings.

            Basement generators are a good idea if your main concern is earthquakes; bad if you are concerned about flooding. The problem in my view was that there was no diversity of defense – putting some generators high and some low, some close and some distant, would have been better.

            As for LIBOR – I know my limits, and high finance is beyond them 🙂

            I would argue that America’s greatest environmental disaster is (continued) coal-mining. No-one’s being held accountable for that.

          • MorinMoss Says:

            The recent news about the contribution of black carbon (soot) to global warming means that significant pressure could be brought to bear on coal plants.

        • greenman3610 Says:

          so why is everyone upset that North Korea, Iran, Syria, Saudi Arabia, or Jordan might want one of these safe, clean, cheap reactors?

          • rayduray Says:

            Xenophobia. It’s one of America’s most reliable features. Along with paranoia, of course. 🙂


  10. […] Georgia – where, with the familiar pattern of cost overruns, and construction snafus, it seems possible that taxpayers will be taking yet another bath, courtesy of the nuclear industry. And there’s this from […]


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