The Carolinas’ Nuclear Cluster
Nuclear or Natural Gas? By Kevin Marsh, chairman and CEO, SCANA Corp.
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uclear or natural gas? Which is the best option for powering South Carolina’s long-term needs for base load electric power? South Carolina Electric & Gas and state-owned utility Santee Cooper are working together to build two nuclear-powered electric generating units at our jointly-owned V.C. Summer Nuclear Station near Jenkinsville, S.C. The project is progressing well and is currently $550 million under the cost originally approved by the Public Service Commission of South Carolina in 2009. However, with natural gas prices at relatively low levels, some are asking if it might make sense for us to stop work on our nuclear project to pursue a natural gas generation strategy. It’s a legitimate question, one we have, in fact, studied. That analysis still points to moving forward with new nuclear. When evaluating options for generating electricity, it’s not just about construction costs. There are many other considerations. First is fuel costs. Although natural gas prices are relatively low right now, it’s still cheaper to produce electricity using nuclear fuel. It’s extremely positive that natural gas prices are low today, but a 20-year historical review will show significant volatility in its cost. The natural gas industry is changing. Today, about 30% of our electric generation is fired by natural gas. Our customers are enjoying the benefits of lower cost gas that shale gas fields and fracking technology have made available recently. However, this same technology is relatively new. Wholesale natural gas prices are currently unregulated, and many question the long-term impacts of fracking. Gas producers are working on strategies to 6
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export their natural gas to overseas markets, which may place upward pressure on price. For all of these reasons, betting South Carolina’s energy future primarily on natural gas is not without risk. Gas has a role — a supporting role — in a balanced portfolio that will protect customers against price swings in any one fuel supply. Nuclear power does not emit carbon dioxide; natural-gas-fired generation does (about half as much as coal). President Obama’s recent introduction of a new Climate Action Plan, specifically targeting carbon emissions, further increases the likelihood of stringent new regulations on carbon emissions. Those regulations will come with significant
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For all of these reasons,
betting South Carolina’s energy future primarily on natural gas is not without risk.
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expense. Once our new nuclear units are complete, our generation production will be roughly 60% non-emitting, reducing the impact of generation emissions on South Carolina’s air quality and helping to ensure we can comply with any new carbon-reducing regulations. Already, our new nuclear project has allowed us to move forward with the retirement of six of SCE&G’s oldest and smallest coalfired units – representing 730 megawatts of coal-fired generation. Nuclear power is economical. Our current nuclear plant is the lowest cost
generating plant on our system today and is scheduled to operate through 2042. Because of the historically stable, low cost of uranium, our two new units should be low-cost generators for 60 years. Nuclear power is available 24/7. Nuclear plants have the highest average capacity factor (a measure of the amount of power the plant produces relative to what it would produce if running at 100% all the time) of any common form of generation. And one uranium fuel pellet — about the size of a pencil eraser — can produce about the same amount of electricity as 17,000 cubic feet of natural gas. Momma always said, “Don’t put all of your eggs in one basket!” That’s sage advice for eggs, investments and for electricity generation. Adding nuclear power to our system will allow us to achieve a very balanced generation portfolio. Once our two new nuclear units are complete, we anticipate our generation mix will be about 30% nuclear, 30% natural gas and 30% scrubbed coal, with the balance in hydro and some biomass. This will give us the flexibility to take advantage of whatever generation option makes economic sense for our customers at any given point in time. Bottom line: Our new nuclear units will provide South Carolina homes and businesses with the most reliable source of electricity available in America today, will help reduce greenhouse gases in our state and will result in a balanced energy portfolio to serve our customers. Our analysis is that it’s simply the best solution for meeting our state’s long-term need for clean, safe, reliable power, and that it will produce electricity more affordably than any other form of large-scale power generation currently available. u