Wind Energy Still More Expensive Than Nuclear Reactors Halted for Cost Overruns
By Mark Nelson and Michael Shellenberger
The nuclear reactors whose construction was halted in South Carolina last Monday would likely produce electricity for the same or less than wind and solar, a new Environmental Progress analysis finds.
The halting of the reactors came as a shock to workers and pro-nuclear environmentalists.
On average, the 60-year life-cycle cost would be $74 per MWh — about what wind power in South Carolina would cost, according to the Energy Information Agency — and that’s without counting the high cost of wind’s integration onto a grid, whether through storage or back-up power. And though this cost is similar to projections for the cost of solar PV in South Carolina, if scaled to the output of the Summer reactors, solar would rapidly lose its carbon reduction capabilities due to the high amount of existing clean energy production in the state.
The analysis comes on the heels of widespread speculation that the reactors will be carefully mothballed by their builder and could eventually be revived by Southern Company or Duke, two neighboring electric utilities, when natural gas prices rise in the future.
Either company could potentially get the one-third-finished reactors for pennies on the dollar, insiders told Environmental Progress
Wind energy development collapses when Congress fails to provide it with a production tax credit. Nuclear plants also had a tax credit, but Congress has not extended it.
The building of a radically new, untested design — the AP1000 — led to lengthy construction delays and cost overruns that bankrupted Westinghouse, once the jewel of the American nuclear industry, and which has been majority-owned by Japanese conglomerate Toshiba since 2006.
Bottom line though? Finishing the reactors would be more expensive than building new gas-fired power plants, but averaged over the 60-year service life, the costs will be right in line with renewables, about $60 to $80 per MWh — except nuclear produces reliably, where wind energy is fundamentally unreliable and chaotic. And gas-fired plants can never replace nuclear energy if deep-decarbonization is the goal.
From the standpoint of cost-effective climate policy, then, completing the reactors at V.C. Summer still makes great sense.
A Closer Look at the Calculations
Santee Cooper says the total cost of the plant will be $25 billion, with $10.4 billion already spent, leaving $14.6 billion of the cost to complete.
In that case, the levelized cost of electricity (LCOE) of the cost to complete, not counting sunk costs, would be $78 per MWh — higher than the cost of power from natural gas, but similar to what wind power in places like South Carolina is expected to cost in the future. South Carolina and its neighboring states have the worst onshore wind resource availability in the continental United States, and offshore wind would not be competitive in cost to finishing the reactors.
Assuming Santee Cooper’s $25 billion total cost number, 20-year payback, 7 percent WACC and $30 per MWh operation and maintenance costs, the plant’s levelized cost of electricity in the first 20 years would be $163 per MWh.
That’s high, but in the final 40 years of the plant’s service life, after construction expenses are paid off, the cost would fall to about $30 per MWh.
And nuclear engineers widely believe that nuclear plants can last for longer than 60 years — to 80 years or beyond.
At SCANA’s $16 billion total cost, the LCOE in the first 20 years would be $126 per MWh and the 60-year average cost would be just $62 per MWh. For comparison, the reported lifetime revenue requirement for the similar Vogtle reactors is $62 per MWh according to filings from Southern Company to the Georgia Public Services Commission.