The economics of nuclear energy have shifted

In September 2024, during the first meeting of the South Carolina Senate’s ad hoc committee on our energy future, I requested an evaluation of the infrastructure at the abandoned VC Summer site. A few days later, I repeated that request to Rick Lee, Chairman of the Governor’s Nuclear Advisory Council.

On September 12, 2024, Mr. Lee followed through on my request.

Here is the first paragraph of report: 

“During the August 15, 2024, University of South Carolina-sponsored conference on nuclear reactors and the future of the industry, Rick Lee, Chairman of the Governor’s Nuclear Advisory Council (GNAC), had occasion to hear Senator Tom Davis, who was serving on a panel discussion, ask questions regarding the possibility of restarting the V.C. Summer Nuclear Power Station project. After the program, Mr. Lee talked to Senator Davis who asked Mr. Lee if he had time to visit the site and report his findings. Mr. Lee agreed to do so.”

And the results of that inspection are succinctly stated in these paragraphs shortly after that first one:

“We began our inspection assuming the broadly held public opinions and views that the site was in a dramatic state of decay with much material and equipment having been sold or removed from the site were correct.

“To the contrary, the observations of the September 12, 2024 visit contained in this report indicate that, conditions and considerations being satisfied, that there were no technical obstacles to a more detailed examination of the potential completion of the facilities.”

In the aftermath of the abandonment of the VC Summer project in July 2017, I stood on the senate floor and argued that the infrastructure on the site and the equipment should be protected and not allowed to deteriorate. My reasoning then was that the project to build Westinghouse’s AP-1000 was essentially a “beta” project – in other words, it was the very first attempt to construct this new plan design, and that over time the technical problems associated with building it would be sorted out and that it might be feasible at some point in the future to restart the project.

That has turned out to be the case, with Southern having recently completed an AP-1000 at Vogel in Georgia, and the Chinese having finished construction on at least three AP-1000s in China. There were a lot of lessons learned during those projects which make restarting the project at VC Summer more feasible.

[I also argued on the floor of the Senate in 2018 that roughly $9 billion had been “invested” in the project and that a substantial portion of that cost was in the rate base and being paid by ratepayers in their bills, and that it made sense to explore all possible ways of getting some sort of return on that outlay.]

Also, new federal incentives make restarting the abandoned VC Summer project more feasible: new federal tax credits in the amount of 30 percent of qualified nuclear construction expenditures, a federal tax credit of $25 per megawatt-hour for the first ten years of plant operation, and an additional $40 billion of federal loan guarantees for nuclear projects.

The marketplace elsewhere is already responding to these incentives, as evidenced by stories in the Wall Street Journal and the Washington Post regarding “Pennsylvania’s dormant Three Mile Island nuclear plant would be brought back to life to feed the voracious energy needs of Microsoft under an unprecedented deal announced Friday in which the tech giant would buy 100 percent of its power for 20 years.” (Quoting from the WaPo piece.) 

Serendipitously, restarting the abandoned VC Summer project by leveraging the private capital of companies that have massive energy needs would not only make use of an existing asset, but also address concerns recently expressed by some elected officials about the cost of new construction to accommodate data-center needs being subsidized by existing residential ratepayers.