With quite some joy, I just penned the following wikipedia update under Westinghouse Electric Company LLC:
On March 24, 2017, parent company Toshiba announced Westinghouse Electric Company was filing for bankruptcy because of US$6 billion in losses from nuclear reactor construction projects. The nuclear projects responsible for this loss are mostly the Vogtle reactors in Georgia and the Summer reactors in South Carolina. 
This bankruptcy might halt the construction of every reactor being built in the US at the moment, at least for some period of time. Without a bailout from a likely reluctant Trump administration, these reactors might never be completed though over $10 billion has been spent on them. Before you doubt these projects might be abandoned, remember that half of the reactor projects started in the US were abandoned, many because of cost overruns.
Despite having followed this story intensely for some weeks now, I am still surprised at this result. I thought the Koreans would want to buy this reactor company for both its contracts and its technologies. Westinghouse has active construction projects and solid leads in many countries including the 4 nearly complete reactors in China. Russia and China were never serious suitors because they are unlikely to be approved by the US federal government for the sale of this sensitive technology.
My first anti-nuclear protest was at the Westinghouse reactors at Diablo Canyon in 1981. I fought Westinghouse at the Temelin reactors in the Czech Republic through the 1990s. Westinghouse developed the first 3rd generation reactors including the AP 1000 which is currently under construction in more locations than any other Gen 3 western design.
What went wrong? There is a pretty standard formula for building nuclear power plants in the US. The reactor vendor comes in and underbids the contract, while still seeking a huge amount of money. The regulators accept this low bid on behalf of the state. Not long into construction inevitable delays and cost overruns begin. The nuclear construction company turns to the utility and says, “Please pass these extra costs on to your rate payers (or in some states the tax payers.)” Historically, the regulator has obliged. This way the frequently exploding costs of nuclear construction, typically over 200% the initial contracted price in the US, do not bankrupt the construction company. But even this formula was not good enough to restart nuclear construction in the US.
Beyond this the AP 1000 was Westinghouse’s new design. It was simpler, more safe, better simulated and tested than any other reactor Westinghouse had ever built. And it was testing the future of reactor construction: Modularity. Historically, reactors are built on site. There are too many custom pieces, many of which are huge, to be built in a factory. But Westinghouse was a forward thinking company. They knew they need to change the ways reactors were built to keep costs down. They presumed, as did many in the industry, that standardizing designs and building components in factories like giant legos, which were then fastened together onsite would make it easier and less expensive. Turn out reactors are not like legos, and this modular strategy was central to Westinhouse failure at Summer and Vogtle.
The Bush/Cheney administration attempted to boot strap the “nuclear Renaissance” with a generous aid package, which included:
- Government-preferred equity investment facilities
- $18 billion of subsidized federal loans
- Tax-exempt financing
- Federal power purchase agreements at above-market rates
- Taxpayer-backed insurance
Despite this generous program, only 4 reactors began construction, two in Georgia at Vogtle and two is South Carolina at Summer. A disappointing yield for an industry that at its high point (2009) had 30 applications in for new reactors.
To land these 4 contracts, Westinghouse (which was acting as the general contractor) had to require that the construction subcontractors bid fixed price contracts. Chicago Bridge and Iron (CBI) was working on the Vogtle reactors and ran into serious difficulties working with Westinghouse and sued them. Counter-suits which further delayed construction followed. Ultimately, Westinghouse would purchase CBI for $229 million to avoid going to court for $1.5 billion.
But once Westinghouse owned most of the construction responsibilities for these reactors there became no way to pass on the cost overruns. The nuclear utilities had protected themselves from this old trick by requiring fixed-cost contracts. It is telling that once the cost overruns could not be passed on, this scam no longer worked, and it promptly bankrupted the nation’s largest nuclear construction firm.
I’ve been fighting Westinghouse my entire adult life, and I did not expect to outlive it. There will be some hard won celebrations by clean energy advocates across the land this week.
[Update Nov 2016 – I was completely wrong. Despite the strong case for the cancellation of this terrible project. Elizabeth May decided to go forward with it. Threats of Chinese trade retaliation and the British need for new civil nuclear technology to maintain nuclear sub capacity are two often cited reasons for why the UK government made this expensive, stupid and dangerous choice.]
What does it mean when the largest nuclear construction company, backed by the most pro-nuclear state, funded by the world’s largest economy, can’t build a reactor in one of the most pro-nuclear countries in the west? It means the end of the nuclear age is in sight.
I make predictions. I get that on some level this is quite arrogant. But i really want this to be true, and it has an unusually good chance. So I am going to call September 2016, “Hinkley dies”. I’ve made the case why this ill conceived reactor complex in the UK should be scrapped. So I won’t go over it all again.
The important thing here is that the new British Prime Minister Theresa May has said she will review the project this month, and almost everyone who has done a review thinks the project should be killed. But with nuclear power, this is frequently not enough. I have watched thousands to top flight reports pointing out the flaws of nuclear power, in specific and general cases, and typically these reactors get built.
And while Hinkley has its own special problems (including that none of the four attempts to build this design reactor has been successfully completed and some are nearly a decade late now and billions over budget), all of new nuclear power construction is looking down the barrel of low cost solutions using renewables .
This is crazy important. Even if you don’t care about climate disruption, even if radioactive waste does not bother you, even if you are just a black-hearted capitalist trying to make a buck, unless the market is fixed as it is in Virginia, you would have to be a bit crazy not to shift to renewables over nuclear, because they are just cheaper. Even when you consider the cost of storage of renewable power.
Let’s hope the new British PM takes seriously her own call for reviewing Hinkley Point C. If she does, she will likely stop this project and, if she does that, the entire future of new reactors in the west is thrown into question. And this is a question I have wanted to hear for half my life.
This letter to the editor was not printed by the Richmond Times Dispatch
Sadly, I will not be able to attend this year’s shareholders meeting for Dominion Resources on May 11th in Columbia SC. Were I there, I would be asking out-going CEO Tom Farrell some difficult questions about the proposed North Anna 3 reactor.
“The estimated cost of building the new reactor at North Anna is $19 billion. Dominion paid $192 million for the Kewaunee reactor in Wisconsin. You ran this reactor for 5 years and were not able to make it be profitable. Dominion closed Kewaunee in 2013. How can Dominion expect to run the North Anna plant profitably, if it is 100 times more expensive than one it has already closed for economic reasons?”
“Dominion has already put over $1 billion into the rate base for this project it claims to have not yet decided on, making this one of the most expensive non-decisions in history. Now Dominion wants to spend in 2016 over half a billion dollars (the cost of a very large solar array) to wait another year to decide on North Anna, while the clean energy regulations are being litigated. Why not invest this money is solar PV which could be generating cheaper electricity, without toxic radwaste, at a lower price, even factoring in the cost of batteries?”
The global investment for renewables new capacity exceeded investment in fossil fuels (including fracking) and nuclear combined in 2015. Is Dominion just unable to find capable people to tap into this clear emerging market? Dominion has a fairly small fraction of its capacity in high profile renewables.
Dominion is fundamentally failing to become a forward thinking utility and instead depends on its comfortable relationship with the state government to push off the costs of its mistakes (like North Anna 3) onto ratepayers and taxpayers. Wise investors would recognize that this is not a sustainable investment strategy.
Three different but related news events have happened in the last month and each in a different way bodes ill for the future of nuclear power.
In Japan, the district court has ordered the closure of two reactors at the Takahama complex. Reactor block 3 had recently restarted and block 4 was scheduled to be the fourth running reactor in a country which had over 50 reactors running before the March 11, 2011 earthquake and tsunami.
The surprise ruling cited the failure of the evacuation plan and lack of tsunami protection as the reasons the court agreed with the local plaintiffs. This is the first time a Japanese court has ever ruled against a reactor. And one of the very few times in any country that a court has stopped an operating reactor. It seriously endangers the Abe administration’s plan to return shuttered Japanese reactors to service, all of which were closed within a year of the Fukushima triple meltdown. Both people protesting nuclear power in Japan and the court ruling in their favor were nearly unthinkable before Fukushima.
In Europe, 30 northern European cities from Germany, Luxembourg and the Netherlands are petitioning for the closure of two Belgium reactors which have had a long series of technical problems. The petition includes two lawsuits, one against the plant operator and the other directing the European Commission to block the continued operation of the Tihange 2 and Doel 3 plants in Belgium. There has never been such an international effort to block nuclear inside the EU before. These plants have seen a disturbing recent increase in cracking and unsolved sabotage strikes.
In the United States, for the first time since Gallop started asking in 1994, a majority of US American’s oppose the use of nuclear power.
The work is not done. The US Congress and Japanese parliament are both in the pocket of their respective nuclear industries and continue, against the will of their populations, to support these failed technologies. But even more writing is on the wall. Nuclear power is dying and almost everyone knows it and wants it to die.
I hate anniversaries. They are another thing I need to remember and in some cases respond to and I would prefer a blissful, timeless ignorance of history. But as the saying goes, “Those who fail to learn the lessons of history …”
The triple meltdown following the March 11, 2011 earthquake and tsunami in Japan has left us a huge mess.
- Most of the 160K people displaced still can’t return home
- The half billion dollar ice wall to protect the reactors has failed
- Fukushima owner TEPCO continues to hide radiation leaks
- Over 150 million gallons of radioactive water has been captured but has no permanent home
- Over 2000 people have died prematurely because of the evacuation.
- Children from Fukushima have 20 to 50 times the thyroid cancer rate
- It will be decades before they get to the worst contamination, because so far all the robots which have tried to look at the cores have fried.
- Fukushima is the biggest civil liability case in world history.
But there are some good things which have come from the Fukushima accident as well.
- Mexico, Italy, Germany, Venezuela, Switzerland, Belgium, and the Netherlands have all decided against building any more reactors.
- The Nuclear Renaissance is basically dead
- Radiation around Fukushima has dropped by about half.
- TEPCO senior executives face criminal charges, though they likely won’t go to jail.
- The normally passive Japanese grew a popular resistance movement.
- Almost all the reactors in Japan are shut down and the courts just closed two more.
- The Japanese breeder reactor program is dead.
- The biggest nuclear deal ever may get stopped because of financial risk.
- Germany and Japan are proving nukes can be phased out by renewables
- Far more investment is going into new renewables than new nuclear
- Consciousness shift: Fukushima was a tragedy, but not an accident.
There are still many lessons to be learned from Fukushima, but perhaps the biggest is that despite the tremendous damage of this technology and the totally failed economics, we need to keep fighting it.
The second largest coal company in the US has just filed for bankruptcy. Environmentalists are celebrating the potential closing of some of the ugliest proposed coal projects in the country. But as Greenpeace points out, often chapter 11 bankruptcy gives bonuses to CEOs while cutting worker pensions.
The largest earthquake in Canada‘s history was likely induced by fracking. The Alberta government responded by immediately closing down the fracking operation. The company can not resume operations until they can demonstrate the technology is safe, that could be a long time coming.
The Tennessee Valley Authority (the only utility in the country which could “go it alone” with the construction of nuclear power plants in recent decades) has decided to cancel two reactor projects in Alabama. These are some of the last new commercial reactor projects in the US, bringing to a sputtering halt the much touted Nuclear Renaissance.
The biggest news however is about investment trends in 2015. Petroleum prices are the lowest in a decade (except for a brief period immediately after the 2008 crash). There has been a “dash for gas”, fracking gas in particular. Because renewables investments are structurally linked to fossil fuel prices, we would expect the investment market for new renewables capacity to have stalled in 2015. But if had we assumed this, we would be wrong.
Despite a big drop in European renewables investment, globally new clean energy investment exceeded all fossils fuels new capacity combined. Over 121 GW of renewables capacity came on line in 2015 at a price tag of $329 billion. Also interesting is that emerging economies accounted for more than half of the worlds renewables investments for the first time ever.
And what does the future hold? Business as usual (as forecasted by Bloomberg) looks like this:
For an excellent short video on the diversified energy future of 2016