The Final Nail?

When first introduced, electricity from nuclear power was to be too cheap to meter.

Then, while the first nuclear power plants were being built, extensive delays and modifications resulted in large cost overruns. The utilities incurred these cost overruns, as the contracts were mostly cost-plus, where the construction companies were reimbursed for their costs.

By the end of the last century, 100 nuclear power plants providing 20% of America’s electricity had been built, but the sentiment in the industry was that nuclear power was too costly.

The constant changes and delays while building the first 100 nuclear power plants were attributed to construction being done on site where it was difficult to control events and costs.

It was thought that costs could be controlled by building major components in a factory and then shipping them to the site for installation.

It was believed that a factory environment would allow for the use of manufacturing disciplines and quality control that would keep costs under control.

At the start of this century, there was support for a nuclear renaissance, where new nuclear power plants of a new and safer design could be built at a reasonable cost, with major components being built in a factory.

Vogtle nuclear power plant. Photo courtesy of Southern Company Inc.
Vogtle nuclear power plant. Photo courtesy of Southern Company Inc.

The Fukushima disaster raised the specter of radiation danger once again, but the new generation of nuclear power plants would shut down safely and automatically if there was a problem.

As construction was started at the four new nuclear power plants, two in Georgia and two in South Carolina, there was great confidence that this time it would be different: Costs would be controlled and the plants would be built on schedule.

With last week’s announcement that Toshiba would take a multi-billion dollar charge against operations due to cost overruns, quality control problems and delays at the four nuclear power plants being built in the United States, it is now clear that nuclear power may be dead … at least for the foreseeable future.

Westinghouse, the Toshiba subsidiary building these new nuclear power plants, has experienced many of the same problems that occurred in the last century.

Toshiba’s stock fell 30% with the announcement confirming the problems at Westinghouse, and of problems with the construction of other nuclear power plants being built in other countries.

Whereas the utilities incurred the overrun costs in the last century, this time the contracts were written so that the construction companies and supplier of reactors incurred most of these extra costs.

Nuclear power was already dying a slow death in the United States as there was considerable doubt whether existing nuclear power plants would receive a second extension to their operating licenses. See Nothing to Fear for a description of why nuclear power is dying in the United States.

The problems at Westinghouse probably preclude any construction company or supplier of reactors from entering into contracts where they would be liable for cost overruns, and it’s doubtful that any utility regulator would allow any utility to assume such liabilities in the future.

This may have been the final nail in the coffin for nuclear power in the United States.

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Nothing to Fear, Appendix, explains why nuclear power is dying in the United States.

Nothing to Fear is available from Amazon and some independent book sellers.

Link to Amazon: http://amzn.to/1miBhXy

Book Cover, Nothing to Fear
Book Cover, Nothing to Fear

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0 Replies to “The Final Nail?”

  1. Pingback: Westinghouse problems – the final nail in USA’s nuclear industry coffin? « nuclear-news

  2. Pingback: The Final Nail? | Power For USA | AGR Daily News Service

  3. Nearly every significant cost overrun of any project is due to bad management. People with the political skills to attain positions without the technical skills for competent execution of their responsibilities. Why wasn’t the unexpected cost in the original project plan? Because the planners were incompetent. Apply quality system principles to management staffing choices, eliminate the politics and focus on skills.

    • There is no question that bad management played a part in the latest cost overruns.
      There were, however other factors that have caused the cost overruns, especially during the first wave of construction in the 1900s.
      A very important problem was the intervention by radical environmental groups that stoked fear of radiation among the public.
      Extreme environmental groups are still stoking fear of radiation, especially after the Fukushima disaster.
      Fear has caused the public to resist the construction of nuclear power plants, which has resulted in law suits that imposed further problems during construction.
      The Shoreham plant was closed after it was completed, but before it could go into operation because of fear.
      The Indian Point power plant may not get a second renewal to its operating license because of fear created by environmental groups.
      It should be noted that it was a construction company that had responsibility for producing major components in a factory setting, not a manufacturing company. They didn’t have the skills you are mentioning, where a manufacturing company would have been able to impose disciplined procedures and quality control methods that would have constrained costs.
      Yes, bad management was part of the most recent problems, but obstruction by environmental groups was a very important factor during the last century.

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