Vogtle nuclear expansion price tops $30 billion
An updated financial report from one of the owners of the Plant Vogtle nuclear expansion in Georgia shows that the cost to build two new reactors has now exceeded $30 billion, more than double the original price expected for the project.
The Municipal Electric Authority of Georgia (MEAG), one of four groups with a stake in Vogtle’s expansion, on May 6 raised its total cost estimate for the project to $7.8 billion from $7. $5 billion before. The group’s updated figures, combined with cost estimates from other owners, push the cost of building two new 1,100 MW reactors at the Waynesboro, Georgia site to at least $30.3 billion.
The owners’ updated cost estimate does not include the $3.68 billion that original contractor Westinghouse paid to the owners of the project after Westinghouse declared bankruptcy, bringing the total expenses for the expansion to around $34 billion.
No more cost overruns
MEAG, which supplies electricity to city-owned utilities, owns 22.7% of Vogtle. The group in the report released on Friday said its cost forecast includes capital expenditure and borrowing costs. MEAG’s new cost figure comes after Georgia Power, the project’s main owner, announced an additional $920 million in cost overruns in March, bringing its spending on the project to about $13.8 billion. Georgia Power, part of Southern Co., owns 45.7% of the project.
Oglethorpe Power Corp., which has a 30% stake in the expansion, said in March that its costs for the project had risen by $250 million, to $8.5 billion. The city of Dalton, Georgia holds a 1.6% stake in Vogtle. Last year, officials put Dalton’s costs at $240 million.
The addition of two new AP1000 reactors at Vogtle is the only large-scale nuclear power construction project underway in the United States and, when completed, would represent the first major new nuclear power plant project in the United States to be completed. for over 30 years. The cost of the expansion has skyrocketed due to construction delays and other issues, including staff reductions caused by the coronavirus pandemic.
The project is years behind its original schedule and billions of dollars above its original budget. The two Westinghouse AP1000 reactors were scheduled to enter service as early as 2016, at a cost of around $14 billion, after approval for construction in 2012.
Southern Co. CEO Tom Fanning during the company’s first quarter earnings call in late April said the two new reactors are expected to be online by the end of 2023, fueling for Unit 3 being planned later this year.
Plant Vogtle has two existing reactors, with a combined generating capacity of 2,450 MW. Unit 1 began operating in 1987, with Unit 2 entering service in 1989.
Chuck Goodnight, who leads the U.S. nuclear power team at Arthur D. Little in the company’s global energy and utilities practice, recently said POWER Vogtle’s expansion remains important to the country’s nuclear power sector. He acknowledged the project’s cost overruns and ongoing delays, but said, “The reason I think this should continue is a sunk cost issue. If we look back five years from now and say we haven’t finished this project, and we were so close… that would be a huge waste of money.
Goodnight added: “For Vogtle, I am delighted to see these factories completed and brought online. From South [Co.] has a historical reputation, well deserved, they manage the factories well. They were good at that. I would be confident that when they cross the finish line, we are looking at 80 years of 2,400 MW generation. That’s exciting.”
“Cost sharing is imminent”
Each property group, in a procedural way, voted at the end of February to continue construction. The three minority ownership groups signed an agreement in 2018 with Georgia Power that if costs reach a certain level, other owners can choose to freeze their costs at that figure. Georgia Power would take more ownership of the projects if the utility paid more of the cost of the expansion.
MEAG said on Friday it wanted to freeze its costs, although the group did not specify how much it would like to transfer to Georgia Power. Oglethorpe earlier said it wanted to freeze costs at $8.1 billion, with the group selling a 2% stake to Georgia Power in return for Georgia Power paying an additional $400 million for construction.
Southern Co. earlier said it would pay at least $440 million more to cover other owners’ costs; An additional $460 million in costs are disputed. Georgia Power questioned the cost threshold for its liability and said it should not have to pay the other owners’ share of costs related to pandemic-related issues.
Discussions continue between the parties regarding these costs. Oglethorpe CEO Mike Smith said in March: “Cost sharing is imminent, however, until the parties reach an agreement, Oglethorpe will continue to pay its full share of construction costs charged by Georgia. Power, but will do so subject to contract.”
—Darrell Supervisor is associate editor of POWER (@POWERmagazine).