Editor Update: Since this article was prepared, Southern Company (the parent of Georgia Power) announced another cost increase and delay.
“Since September 2018, the project budget has increased five times, and is now expected to total more than $30 billion [from $14 billion in 2009].”
The bad news continues at Georgia Power’s Plant Vogtle #3 and #4, the first nuclear units to be constructed in six years. The most complicated, expensive, and hazardous way to boil water, (government-enabled) nuclear remains a mirage of cost-effective engineering.
A project that broke ground in 2013, expected to cost $14 billion with start-up in 2016 (Unit 3) and 2017 (Unit 4), is now past $30 billion with estimated start dates in 2023/24. The U.S. Department of Energy has contributed loan guarantees of $12 billion to the project.
MasterResource has tracked the Vogtle #3 and #4 saga since 2010 (here). The latest is provided by Kevin Clark in Power Engineering (June 20, 2022), Oglethorpe Power to freeze capital spending in Plant Vogtle construction:
Oglethorpe Power said it would use a one-time option to freeze its capital costs for the construction of Plant Vogtle Units 3 and 4 in Waynesboro, Georgia.
In exchange, Oglethorpe will hand over around 42 MW of its ownership share in the nuclear project to Georgia Power, which will pay Oglethorpe’s remaining portion of the construction costs. Oglethorpe’s original share was 660 MW, meaning that it will now have a 28% share of the project, down from 30%.
Cost overruns and construction problems have delayed the project, the first nuclear units to come online in the United States since 2016. Vogtle Unit 3 is currently expected to come online by 1Q 2023 , and Unit 4 is expected at the end of 2023. Each unit is rated at 1,114 MW.
Vogtle is jointly owned by Georgia Power, Oglethorpe Power, Municipal Electric Authority of Georgia and Dalton Utilities (1.6%).
In 2018, coinciding with a vote to proceed with construction of the project, the four co-owners jointly agreed to a cost-sharing agreement designed to mitigate financial risk from future potential cost increases.
Under that agreement, if total sharable project costs increase by $2.1 billion from the time the agreement was executed, each co-owner, other than Georgia Power, has a one-time option to freeze their capital investment in the project.
Since September 2018, the project budget has increased five times, and is now expected to total more than $30 billion.
Oglethorpe Power’s decision to exercise its freeze option means its share of the project would be estimated at $8.1 billion. If the total project budget remains the same, Oglethorpe estimates its new ownership will be around 28%. It said that if the total project budget exceeds the current budget, its ownership share and megawatts could be further reduced.
The company said while it remains deeply invested in the success of Vogtle, it felt a need to protect its member cooperatives and their customers from more potential cost increases.
“By exercising the freeze option, we are ensuring that the 4.4 million Georgians served by our member cooperatives will not absorb future capital cost increases, if they occur,” said Oglethorpe Power President and Chief Executive Officer Michael L. Smith.
According to Oglethorpe Power’s latest quarterly SEC filings, the company said if it didn’t exercise the freeze option, any schedule extension for Units 3 and 4 could increase Oglethorpe’s cost by approximately $75 million per month for both units and approximately $30 million per month for Unit 4 only, including financing costs.
Since Oglethorpe Power plans to exercise the option, the company said it expects each additional month of delay to increase financing costs by around $30 million per month for both units and around $12 million per month for Unit 4.
A month later, Dalton Utilities exercised a similar option.
Georgia Power’s website has numerous engineering updates on the two units with this tag line:
Units 3 and 4 are the first new generation of nuclear energy facilities under construction in the U.S. The rising demands for electricity combined with concerns about clean air are two of the leading issues generating interest in new nuclear facilities.
But economics not …. The news is all upbeat with engineering-type news. No string of releases (at least easily accessible) about the cost overruns, one after the other.