There is a growing perception that the Nuclear Renaissance in the U.S. is dead, killed off forever by low natural gas prices. Some members of the American Nuclear Society (ANS) are not so sure.
At the June 7 President’s Reception for the 2015 ANS annual meeting, there were several intriguing discussions about new projects that might achieve final investment decision and physical ground breaking in the next couple of years. I was allowed to listen on condition of non-attribution and anonymity.
One of the more logical and intriguing prospects for near term new build is North Anna unit 3. Over the past ten years, Dominion, the site owner, has continued to push the project forward.
Progress has not been steady; there have been bumps and jolts along the way. Those include changes in the specified technology from ACR-700, to ESBWR, to US-APWR, and back to ESBWR, which recently received a design certification document from the Nuclear Regulatory Commission.
A sharper-than-expected shudder from the earth happened on August 23, 2011, in the form of an earthquake centered just a few miles from the site, which also inserted a substantial delay in the combined construction and operating license (COL) review.
I carefully used the word “sharper” because though the peak acceleration from the Mineral, VA, earthquake exceeded the expected value documented in the safety analysis, it was a short-lived peak—a spike, if you will—that didn’t contain enough energy to do any damage.
I’m no seismic expert, but those who are have convinced me—and are making good progress in convincing skeptical NRC regulators—that structures like those used in the construction of nuclear power plants don’t get damaged because of short-lived peaks; they need sustained shaking.
The revised site-specific seismic analysis for North Anna 3 is not yet complete and approved, but it has apparently reached a stage where it seems unlikely to prevent the issuance of a COL in 2017.
The NRC COL decision is one of the last remaining “necessary, but not sufficient” conditions for Dominion to make a final investment decision. Other conditions that seem likely to be met at this point include the following:
1. The electricity market in the regulated commonwealth of Virginia will have to remain relatively well-behaved and not experience a decrease due to a strong economic recession ap- proaching a depression.
2. Dominion must complete the addition of a $3.8 billion liquefaction facility at Cove Point, the company’s lightly used LNG import facility. That addition will give the facility the capability to export LNG.
3. The ESBWR vendor, GE-Hitachi, will have to make sufficient progress on the detailed design work that is being done with Dominion funding, to support a positive board decision.
When those conditions are met, probably by the end of 2017, North Anna 3 will likely become the lead ESBWR. Unlike the market near Fermi 3, the designated ESBWR lead plant, Virginia already needs the power.
After California, it is the state that makes the second highest volume of electricity purchases from the open market outside its borders.
Virginia’s need for reliable electricity supply will continue to increase as coal plants retire. The state corporation commission has already indicated that it will ask hard questions about capacity plans that replace all of the coal generation with natural gas, because of a deep concern about the impact of over-reliance on a single fuel source.
It’s worth a little extra space to explain why Dominion chose to invest $3.8 billion into turning Cove Point into an LNG export facility as a more immediate spending priority over North Anna 3, and why the company is unlikely to stop that project even if markets change.
Cove Point, built and placed into service before the Natural Gas Act of 1978, has received far fewer cargoes than expected.
The owners haven’t worried too much because the facility generated solid returns on investment even when there were no ship arrivals.
During periods when natural gas prices were high and imports seemed economical, salespeople successfully obtained long term, “take-or-pay” commitments from well-qualified customers.
Even though Cove Point customers often decided that domestic gas was a better value than imported LNG, they have continued to make their obligatory payments.
Taking advantage of conditions from 2011-2014 that included low domestic prices in the U.S., high prices in Europe, supply uncertainty from Gazprom, an already developed pipeline net- work and U.S. foreign policy, Dominion successfully found long term customers for LNG produced from domestic natural gas.
Even if future market conditions change Dominion will receive an excellent rate of return on its investment, as long as the liquefaction facility is completed.
Take or pay contracts, however, cannot obligate a customer if the service provider is incapable of delivering contracted product because it doesn’t have the capacity to deliver on its promise. That’s why the liquefaction project will be completed.
After that has happened, Dominion will be well positioned to begin an ESBWR at North Anna unit 3.
The above first appeared in Fuel Cycle Week No. 619 • June 11, 2015 under the headline “Whither North Anna Unit 3?”. It is reprinted here with permission.
During the period since I wrote the above article, I received some confirmation that my interpretations were correct. A different person than the people I spoke to at the ANS meeting pointed out that North Anna Unit 3 is in Dominion’s 2014 Integrated Resource Plan as an open option. My source indicated there is a good probability that its planning status will be upgraded in the next version of the plan.