New Build

The Tennessee Valley Authority’s Chief Operating Officer, Bill McCollum, is at a major juncture of his career at the government-owned utility. While like many of his counterparts he is learning the pros and cons of integrating renewable power into a mass energy transmission network.

By Peter Taberner

The TVA-owned Bellefonte site in Alabama, where construction on its units 1 and 2 was suspended in 1988 twelve years after the plant was commissioned, has become the focal point of a debate on whether rebuilding over previously incomplete sites represents value and safety.

“TVA suspended Bellefonte construction due to slower than expected demand growth years ago,” says the authority in a statement made earlier this month. “Following the TVA Board vote last month to complete Bellefonte 1, it is now scheduled for completion in the 2018-2020 timeframe.”

Chief Operating Officer Bill McCollum has been slammed by some onlookers for what is effectively recycling existing TVA assets. But others could see McCollum and the TVA making the most out of an unprecedented industry situation and economic climate.

Challenge or opportunity?

Re-building over an incomplete site could be looked at not so much as a problem, but as a new opportunity for the industry—a testing base, which will ultimately house a 1,200+ megawatt pressurized water reactor. According to TVA, Bellefonte once completed will be one of the nation’s most modern nuclear plants and would produce enough low-emission electricity to supply approximately 750,000 households.

Unit 1 will be where the rebuilding will take place, and is approximately 55 per cent complete due to the suspension and the asset recovery process, where plant equipment and parts were removed for sale to third party vendors or used in other TVA power plants. The time frame the TVA confirms is for the plant to be in full service between 2018 and 2020.

A NRC spokesman says of the re-build: "We will continue to review the applicant for an old style construction permit, as they are currently under old rules where there was a construction permit then an operations licence, it’s still a pending issue which will be resolved at the appropriate time and we will consider their requirements."
 
In terms of cost effectiveness, the TVA has argued that the 1260 MW plant will provide carbon free energy at an increased capacity, allied to a consistent cost replicating six of the federally owned corporations’ other plants.

Financial analysis

Ray Golden, the owner and soon to be operator of the Bellefonte unit 1 nuclear plant and manager of nuclear communications for TVA, explains: “TVA has done an extensive financial analysis prior to deciding to finish construction on Bellefonte 1. The analysis shows that it is in the best interest of TVA customers to complete Bellefonte Unit 1 as opposed to doing any other similar sized generation facility.

“While nuclear has high start-up costs, its on-going production costs are significantly less than other types of generation. TVA recently announced a renewed corporate vision that contains three components, more nuclear (Watts Bar Unit 2, 1150 Mw) and (Bellefonte Unit 1, 1260 Mw); less coal, idling at least 2,700 megawatts, and more energy efficiency and demand-side management,” says Golden.

The arguments that TVA has put forward have not satisfied all the critics, including the Southern Alliance for Clean Energy, a leading voice on energy policy which opposes the proliferation of nuclear power plants, which commissioned a report from Fairewinds Associates (FA) to review the TVA’s plans.

The report read that there are seven areas of substantial risk including the design of the plant by the Babcock and Wilcox company, who FA claim have only built eight reactors globally, and have criticised other areas of the plant, such as excess ground water and inadequate quality assurance. They went on to urge the utility to follow the path of more natural gas and greater energy efficiency, and suggested that the cost of Bellefonte may be higher than the figures released.

“We have addressed issues raised by Southern Alliance, as mentioned, our analysis shows nuclear being cheaper long-term, than natural gas. It is important to note, that TVA just purchased an operating gas plant for about 50 per cent of its original cost, we are also building a combined-cycle gas plant at the John Seiver site, west of Knoxville, Tennessee,” Ray Golden says.

Safety and regulation verification

TVA’s policy has also raised issues over the regulatory and safety aspects of building on unfinished nuclear plants, even though plants like Bellefonte have never been fully operational.

The main safety concerns comprise of ensuring that the existing infrastructure of the plant, where construction began decades ago, has not succumbed to too much wear and tear. Other risks will arise from replacing parts of the facility and the refurbishment of plant equipment.

“The regulatory headache that this created was the need to verify proper construction and safety of operation. Doing so pushed the costs to complete these reactors to very high levels, forcing many utilities to re examine the need for them in light of uncertain demand,” says Chris Gadomski, Lead Nuclear Analyst for Bloomberg New Energy Finance.

“We have to clarify that these are projects that are a resumption of construction on previously started projects, but that they were otherwise stopped due to regulatory and demand uncertainty. The regulatory uncertainty stemmed from additional NRC scrutiny following changes to design and safety inspection following the Three Mile Island event. During that time period, each nuclear reactor was somewhat unique as opposed to the standardized designs.”

Going digital

While doubts have been spread over Babcock’s track record and a perceived lack of public meeting discussions, it is Areva that will serve as a key member of the team of contract partners helping the TVA complete the partially finished Bellefonte 1 plant. As the owner of the reactor design, Areva will be responsible for engineering, construction and component-replacement work on the plant’s nuclear systems as well as fuel design and fabrication.

Areva will also supply a state-of-the-art digital reactor Instrumentation & Control (I&C) system, a completely modernized control room, and a plant simulator for training operations personnel. It will be the only digital I&C system licensed by the NRC and installed in a US nuclear plant.

Also news of former Areva chief executive Thomas Christopher has been named to Babcock & Wilcox’s board of directors. Christopher most recently vice chairman of Areva, where he was president and CEO from 2000 to 2009. Before that, he spent 27 years with

Testing but exciting times 

Given that the Tennessee Valley Authority is a corporation owned by the U.S. government and provides electricity for utility and business customers in most of Tennessee and parts of Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia, it has had to make some big decisions – financial, environmental and technical in the past year.

The TVA may in fact be the centre of more debate and assessment over the next 12 months, especially by bond rating agencies, which will be keeping a keen eye on its debt position. TVA’s Ray Golden says that no definite decision on the course of financial action and confirmed that there is a $30bn federal cap on its debt, which is currently sits at $24bn. The choices include issuing bonds or alternative finance that means the asset will be offered to the financial community on a loan then rent pay back.

With all factors considered, it will be paramount for the authority to build upon strong operational skills not just for the Bellefonte re-build, but throughout the overall business as it keeps the power on for a population of 9 million people.