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TVA makes $4.5 billion bet on nuclear resurgence

Duane W. Gang
dgang@tennessean.com
  • TVA says it is on pace to start operating the new Watts Bar reactor in December 2015
  • Reactor won%27t contribute to Tennessee%27s carbon footprint
  • Long-dormant battle over wisdom of pursuing nuclear at all has intensified once again
  • TVA expects to spend between %244 billion and %244.5 billion on reactor%2C nearly double earlier estimates

SPRING CITY, Tenn. – One of the keys to the Tennessee Valley Authority's efforts to meet strict new rules for reducing greenhouse gas emissions lies behind walls more than a foot thick and beneath more than a half-million pounds of metal.

The walls form a massive concrete containment building at the Watts Bar nuclear power plant, where workers this summer have been putting the finishing touches on the utility's latest reactor — a signal that a federal agency that once bet heavily on atomic energy is coming back to the nuclear table.

That signal is reinforced by new EPA rules for reducing emissions and by the utility's continued efforts to have a broad mix of energy sources. Ironically, though, some of the biggest objections are coming from environmentalists, who think nuclear is a bad idea to begin with.

TVA in recent years has been moving away from coal, which produces harmful pollutants when burned and is one of the nation's leading sources of greenhouse gas emissions. Nuclear — and cleaner-burning natural gas — could help fill that void.

TVA officials say they are on pace to start operating the new Watts Bar reactor — the second at the power plant — in December 2015. That could make Watts Bar the nation's first new civilian nuclear power unit to come online in the 21st century.

When the new reactor starts up, it will produce 1,150 megawatts of electricity per year, enough to power the equivalent of 650,000 homes. And all without contributing to Tennessee's carbon footprint, the climate-altering emissions that attract the EPA's attention.

But the Watts Bar project also illustrates the challenges facing the U.S. nuclear industry. Nuclear plants are expensive, complicated and time consuming to build. They require huge sums of upfront capital — the new Watts Bar reactor could cost as much as $4.5 billion.

A visit to Watts Bar shows why. The sheer scale of what TVA is building there exceeds the scope of any normal utility project.

There are 3,100 workers on the project. The core barrel is 33 feet in height and weighs 282,000 pounds. The reactor head, which covers the reactor at the top, weighs 298,700 pounds.

TVA officials say the Watts Bar project is 90 percent complete, but acknowledge that the work could stretch into 2016, particularly if TVA runs into any regulatory hurdles.

"Most of the major construction work is concluding," said Mike Skaggs, TVA's senior vice president for nuclear construction and operations. "We are making systems, structures and components like new and are making sure they operate according to TVA, industry and technical standards."

An old battle makes a comeback

Underneath all of the Watts Bar work lies a philosophical debate about nuclear energy, a reprise of a bitter fight that began in the 1970s.

There are only three utilities — including TVA — that have reactors under construction in the United States. The others are in South Carolina and Georgia.

By contrast, there are eight reactors with decommissioning in progress, according to the Nuclear Regulatory Commission, as companies find it too expensive to repair aging units or can't compete economically with cheap natural gas.

But with concerns about global warming prompting nuclear to get another look, the long-dormant battle over the wisdom of pursuing it at all has intensified once again.

The EPA has proposed new rules to cut carbon emissions 30 percent at existing power plants by 2030. The federal agency estimates that Tennessee can get a 20 percent to 22 percent reduction just from turning to nuclear.

EPA administrator Gina McCarthy has said nuclear will be part of the mix in the future, and the new rules could boost nuclear plants fighting for profitability. Four previous Republican EPA administrators also are pushing hard for nuclear energy.

The economics of climate change and EPA regulation could help drive the resurgence of nuclear, said Dan Lipman of the Nuclear Energy Institute, an industry group. He said electricity demand hasn't fully come back to pre-recession levels, reducing the need for new power plants of any kind.

But if pressure remains high to cut emissions and combat climate change, and if gas prices spike upward again at some point, then nuclear energy once again becomes attractive.

"The point is, the country is moving toward non-emitting sources of electricity," said Lipman, the NEI's executive director for policy development and supplier programs. "We believe over time that new nuclear plants are going to be built."

Along with the environmental benefits, Lipman said the economy gets a boost from the massive building projects necessary to bring nuclear back. Tennessee is a perfect example, he said.

According to the NEI, the nuclear industry employs more than 2,200 people in the state, and there are 500 companies here that supply $162.5 million a year in services, material and nuclear fuel.

Alternative choices

Watts Bar’s second nuclear reactor, scheduled to be operational in December 2015, will produce electricity without contributing to Tennessee’s carbon footprint.
Mike Skaggs, TVA’s senior vice president for nuclear construction and operations, gives a tour of the Watts Bar reactor in Spring City, Tenn.

Environmental groups and nuclear critics say TVA and other utilities should spend their money on energy efficiency programs and renewable resources such as solar.

Although nuclear plants don't produce greenhouse gas emissions, storing nuclear waste remains a challenge because it takes millions of years to stop being radioactive. And should something catastrophic happen, generations could be affected.

"It is too slow, too expensive and too dangerous," said John Coequyt, who directs the Sierra Club's international climate program.

TVA expects to spend between $4 billion and $4.5 billion on the second Watts Bar reactor — nearly double earlier estimates. A TVA inspector general report in 2012 concluded that the project was first set for completion that year at a cost of about $2.5 billion.

For comparison, TVA this month announced plans to shutter its Allen coal-fired power plant near Memphis and instead build a natural gas facility. That gas plant is expected to cost $975 million and produce 1,000 megawatts of electricity, enough to power 580,000 homes.

TVA officials say both projects are smart investments.

Meanwhile, as part of the Watts Bar project and to meet new Nuclear Regulatory Commission safety rules in the wake of the Fukushima Daiichi nuclear disaster in Japan in 2011, TVA built a separate building to house emergency response equipment.

The building is designed to withstand tornadoes, earthquakes and more. Inside, diesel-powered generators and pumps are ready in the event the site loses power and TVA must keep the reactors cool.

Watts Bar is expected to be one of the first nuclear plants in the nation to complete its Fukushima safety upgrades.

The cost and complexity show why nuclear isn't a good investment for TVA and other utilities, said Stephen Smith, executive director of the Knoxville-based Southern Alliance for Clean Energy.

"TVA is representing that this is going to be the first new nuclear plant in the 21st century. They are counting how it is on budget and on schedule," he said. "But you have to have amnesia to really buy into that."

TVA's ratepayers have been paying for Watts Bar 2 since the early 1970s and haven't yet received any electricity from it, Smith said.

"It is a magnificent feat of engineering, no doubt about it," Smith said. "Is it a good investment? I question it."

The proverbial eggs

Still, TVA officials remain confident that nuclear energy has a bright future. In addition to the Watts Bar reactor, TVA is actively researching the possibility of deploying what are known as small modular reactors. They are cheaper and produce about 180 megawatts of electricity.

Skaggs, TVA's senior vice president for nuclear operations, said the utility strives for a balanced portfolio of energy sources and that nuclear remains an important part. Nuclear accounts for just over a third of TVA's energy.

"We don't want to put all of the proverbial eggs in one basket," he said in an interview from a construction trailer in the shadows of Watts Bar's two 535-foot-tall cooling towers.

TVA officials said nuclear energy is safe and reliable. The decision to finish Watts Bar is based on the need for "carbon-free, baseload power," spokesman Scott Brooks said. "Unit 2 is an investment in that demand for at least 40 years to come."

But Brooks said TVA isn't investing in nuclear beyond Watts Bar without "more serious consideration of future demand." As for the cost, Brooks said that while the estimate was revised upward in early 2012, the project remains on time and budget.

Skaggs said the second Watts Bar unit will require fewer resources to operate because many workers already on site can easily operate both units. He said building the plant must be done right.

"It is not something we cut corners on," he said.

Reach Duane W. Gang at 615-726-5982 and on Twitter @duanegang.

Around the nation

Only three utilities have new nuclear reactors under construction in the entire nation. All are in the South.

  • Tennessee Valley Authority, Watts Bar 2, Spring City, Tenn.
  • South Carolina Electric & Gas Co., Virgil C. Summer Nuclear Station, Units 2 & 3, Jenkinsville, S.C.
  • Southern Nuclear Operating Co., Vogtle Electric Generating Plant, Unit 3 & 4, Waynesboro, Ga.

Source: Nuclear Regulatory Commission

Watts Bar Nuclear Power Plant

  • 1972 — Work begins on Watts Bar, a planned two-unit nuclear power plant
  • 1985 — TVA halts construction efforts
  • 1992 — Construction resumes on the first unit at Watts Bar
  • 1996 — Watts Bar 1 comes online, the last new nuclear power unit to begin operation in the 20th century
  • 2007 — TVA restarts construction on the second power unit
  • 2015 — Estimated completion date for Watts Bar 2

Source: Tennessee Valley Authority

By the numbers

  • 1,150 megawatts: Amount of electricity the new nuclear power unit is estimated to generate
  • 650,000 homes: The number of homes the new plant can power
  • $4 billion to $4.5 billion: Current estimate on the cost of the second power unit at Watts Bar
  • $2.5 billion: Initial estimates on the construction costs

Source: Tennessee Valley Authority, TVA Inspector General

Tennessee Valley Authority power sources, in millions of kilowatt hours

  • Coal-fired: 62,519 — 43 percent
  • Nuclear: 52,100 — 36 percent
  • Hydroelectric: 18,178 — 12 percent
  • Natural gas and/or oil-fired: 13,102 — 9 percent
  • Renewable resources, non-hydro: 9 — Less than 1 percent

Source: Tennessee Valley Authority

TVA has had an on-again, off-again relationship with nuclear power.

The Tennessee Valley Authority has spent billions to start construction on power plants, only to shutter them before completion. The utility spends tens of millions each year maintaining the sites.

In Alabama, TVA started work on the Bellefonte nuclear plant and has spent $6 billion on it since 1974. It remains unfinished. To complete the plant, TVA estimates it would need between $7.4 billion and $8.7 billion.

Closer to Nashville, TVA started work on a proposed nuclear power plant in Hartsville. A single cooling tower — 200 feet tall by 200 feet wide — was built before work stopped.

TVA now uses the site for storage.

— Duane W. Gang, dgang@tennessean.com

Correction: This story has been updated to correct the number of reactors currently in the process of decommissioning.