Nuclear Energy Appetite Tempers in South Carolina

The U.S. nuclear energy industry got a cold shower earlier this week when construction halted on two reactors in South Carolina. That gave nuclear opponents something to cheer about, but perhaps not for long. A much-anticipated national grid study from the Department of Energy is expected to make the case for continuing to rely on nuclear as well as coal for large scale, baseload power production.

Although nuclear energy is promoted as a zero-emission fuel, companies seeking to burnish their green brands are looking to sources that are untainted by episodes like the Fukushima disaster. The new grid study won't do them any favors if it promotes a national policy of continued reliance on nuclear.

Nuclear energy in South Carolina

South Carolina is an interesting test case for the future of nuclear energy in the U.S.

The state still relies heavily on nuclear power plants for electricity production, and it needs every watt it can get. As of 2015, South Carolina was the eighth-highest in the country for per capita retail electricity sales.

According to the U.S. Energy Information Agency, the high rate of consumption is partly because in South Carolina electricity is a common heating source in the winter, and usage skyrockets in the summer when demand for air conditioning soars.

The state currently has four nuclear power plants, which provided about 55 percent of its electricity generation in 2015.

Coal and natural gas rounded out most of the remaining generation in 2015. Renewables came in far behind at 5.5 percent, with the majority coming from hydroelectric sources.

So far the state has relied almost exclusively on large, centralized power plants for electricity, but the situation is poised to change rapidly. In 2014 a new state law favoring distributed solar came into effect, and residential solar installations began to bump up.

The state added about 1,000 new solar jobs in 2016, and the solar industry is anticipating steady growth as South Carolina's manufacturing sector -- notably early adopter Boeing -- comes to realize the benefits of installing on site solar.

Two plants down...

The work stoppage at the two South Carolina plants was not entirely unexpected. They were under construction by Westinghouse at the existing Virgil C. Summer nuclear facility near Jenkinsville, and a series of delays and significant cost overruns helped drive the company into bankruptcy earlier this year.

Last week Toshiba, the parent company of Westinghouse, came through with a guarantee of $2.2 billion to keep the work going, but apparently that was not enough to convince the utility Scana Corp., which holds a 55 percent stake in the project.

The turning point was a report by the state-owned water and electricity utility Santee Cooper, which holds the other 45 percent stake. The report estimated that mothballing the plants would save $7 billion for rate payers.

Santee Cooper alone covers a lot of ground. The utility is serves 20 electric cooperatives, covering every county in the state. It also has a roster of 29 major industrial customers under its belt along with Charleston Air Force Base.

While Santee Cooper customers are breathing a sigh of relief, the damage is already done. Here's a rundown from The Boston Globe:

The utility had already spent about $5 billion for its 45 percent share of the project, and completing it would have cost an additional $8 billion, plus $3.4 billion in interest.

...probably for good

Although a permanent halt to construction has not yet been approved by state authorities as of this writing, the decision looks all but certain.

That's partly because it is becoming difficult to make the case that economic growth in South Carolina depends on adding more nuclear capacity.

The first reactor was initially expected to be commissioned by now, but as the delays piled up the earliest estimate for completion was pushed back to 2024.

That provides a long window for the state's solar industry to accelerate, and utilities are responding.

In the latest twist, SCE&G (a subsidiary of Scana) recently announced that it would offer its customers the opportunity to buy subscriptions to solar panels at its solar farms.

The South Carolina wind industry is also poised to fill the gap left by the loss of the nuclear plants.

The state is already a top wind turbine manufacturing and R&D center, aided by its international port facilities. It also has one of the largest offshore wind potentials on the wind-rich Atlantic coast.

What about the grid study?

As of now, the two utilities are planning to keep equipment at the two plants in working order, apparently on the off chance that it could be salvaged for use in another country where the environment is more hospitable to nuclear.

There is also a chance, though a remote one, that the U.S. government could come through with subsidies that would relieve South Carolina electricity customers from the full burden of paying for the two new plants.

Whether or not that happens may depend on the results of the new grid study, ordered by Energy Secretary Rick Perry last April.

During his tenure at the Energy Department, Perry has consistently promoted renewable energy and clean technology, including distributed renewables. However, at least initially the new study seemed intended to promote central power plants -- including nuclear, coal and hydroelectric -- as a matter of national security.

More recently, a leaked draft of the new study suggests that it may not paint such a rosy picture for baseload power after all, though that could easily change in the final version.

As for the national defense angle, that's not as big of a stretch for the Energy Department as it may seem. The agency's main mission is rooted in the national defense as steward of the national's nuclear programs, and the Energy Secretary sits on the National Security Council.

Meanwhile, the Energy Department's existing grid analysis programs have been humming along smoothly -- and they indicate that the U.S. grid can absorb more renewable energy without sacrificing reliability.

In addition, the U.S. Department of Defense has been installing solar and other renewables at its facilities, partly to cut costs and partly to enhance energy security for its operations.

The new grid study was supposed to be released by the end of June and so far the Energy Department has not explained the delay.

Perry could be waiting until one of his agency's legitimate, peer-involved grid programs comes out with another update, rendering the new study moot.

Energy industry observers are already predicting that the South Carolina debacle spells the end of the nuclear industry in the U.S. for the foreseeable future. The new grid study could breathe new life into the beleaguered industry, or pound yet another nail in the coffin.

Image credit: DJSlawSlaw