All eyes will be on Shaw's Power Group as it builds reactors for S.C., Ga. plants.
bhenderson@charlotteobserver.com
The long and winding road of America's nuclear renaissance runs down South Tryon Street on its way to the first U.S. power plants to be built in a generation.
Headquartered one block off the Square, Shaw's Power Group shares contracts with Westinghouse to build two additional reactors at both the Summer nuclear plant northwest of Columbia and at the Vogtle plant in eastern Georgia.
The projects are billion-dollar prizes loaded with risk for their owners and builders.
No U.S. nuclear construction permit has been granted since 1978, and the industry's history is riddled with cost overruns and plant cancellations. Demand for electricity has stagnated as the economy soured, and investors have hesitated to back nuclear projects. The reactor meltdowns in Japan last March stunned the world, prompting some nations to shut down their plants or ditch plans for new ones.
Against that backdrop, utilities, regulators, investors and power engineering competitors will have all eyes on the $9.8 billion Summer and $14 billion Vogtle projects. The Nuclear Regulatory Commission is expected to issue construction and operation licenses for both any day now, but bulldozers already have sculpted their red clay sites. Foundations have been sunk and massive cranes readied.
"Nothing beats performance," said Leslie Kass, a senior business policy official at the Nuclear Energy Institute, an industry group in Washington. "These guys know it. It's theirs to lose in a sense, to show that they can do it."
At stake, Kass said, is a chance to prove that a new generation of nuclear plants can be built on time and on budget.
Risk is nothing new in Shaw Power's wide-ranging work on nuclear and coal- and gas-fueled power plants, said senior vice president Jeffrey Merrifield. Contracts can be canceled, government policies can change, subcontractors can fail.
Shaw has a running start on the South Carolina and Georgia nuclear plants. It's managing construction in China of four nuclear units that will use the same Westinghouse reactor design.
"There is a level of risk in any type of power facility that we build, but we try to craft a contracting and deployment structure that minimizes that to the greatest extent we can," Merrifield said. "We think that the work we're doing in China, all of which is readily translatable to what we're doing here, is going to go toward significantly reducing that risk."
Merrifield, a Georgetown Law graduate, joined Shaw, after eight years as a member of the Nuclear Regulatory Commission. He served as an industry spokesman in the hectic two weeks after the Fukushima disaster as Duke Energy and other utilities scrambled to review their plants and procedures.
Energy analysts say successful completion of Summer and Vogtle will go a long way toward restarting the long-promised nuclear renaissance.
"If Shaw can hit the ground running and not only come in on budget but on time ... it would not only help their reputation but go a long way toward validating the nuclear industry," said BB&T Capital Markets energy analyst Robert Norfleet.
But problems during construction could be "extremely damaging," he added. "Any time you have a stumble and a problem project, it typically weighs heavily on stock prices and the credibility of corporate leadership."
Shaw in Charlotte
The Power Group is part of Baton Rouge, La.-based Shaw Group Inc., a Fortune 500 firm that started in 1986 as a pipe fabricator. Shaw gobbled up other companies in amassing a workforce of 27,000 that works in energy, chemicals, environmental and emergency response. About 1,100 of its people work in Charlotte.
Shaw came to Charlotte for the same reason as many of the other 240 companies that comprise the region's energy hub, which revolves around one of the nation's largest utilities, Duke Energy.
Shaw won a contract in 2004 to install air-pollution control equipment devices at Duke's Marshall power plant on Lake Norman, then got work at much of Duke's power plant fleet and opened a Charlotte office.
By 2007, Shaw Group named Charlotte the headquarters of its Power Group. In 2010, the company said all future engineering, procurement and construction contracts would go through Charlotte.
Shaw Power has nearly finished the $1.8 billion expansion of Duke Energy's Cliffside coal-fired power plant 60 miles west of Charlotte. It services 44 of the nation's 104 nuclear reactors when they're shut down for refueling.
Like other energy companies, Shaw saw opportunity in the fast-growing Southeast. More people would need electricity. Power plants would hum, needing maintenance, and new ones would have to be built.
"If it's good for Duke, we hope it's good for us as well," Merrifield said.
Recent business has dropped as the economy struggled. Revenues from Shaw's power work fell about 8 percent in 2011, to $2.1 billion, but it still has a $10.8 billion backlog of unfilled orders. Shaw Group, the parent company, lost $175 million in 2011.
Energy companies come to Charlotte, Merrifield said, to enhance their relationships with Duke and be near other energy companies. The workforce is sound, housing affordable, the airport well-connected.
Merrifield envisions UNC Charlotte's new Energy Production & Infrastructure Center conducting innovative research that draws investors like North Carolina's version of Silicon Valley.
"People have now come to the conclusion that Charlotte is the place to make energy deals," he said. "There are a number of things that we are working on that would not have happened or would have been much more difficult if we were spread all over the country."
Shaw-Westinghouse
Shaw Group entered the nuclear construction field in 2000, acquiring Stone & Webster, a company with 18 nuclear plants already under its belt. When it bought a 20 percent stake in Westinghouse in 2006, Shaw won exclusive rights to bid on nuclear projects that would use Westinghouse's new reactor design. Shaw announced last fall that it would sell its Westinghouse stake.
Shaw and Westinghouse have a contract to build Progress Energy's two-reactor AP100 plant in Levy County, Fla. Progress last week denied reports that the contract had been canceled, saying it will assess whether to build the plant once it gets a combined construction and operation license in 2013.
Duke Energy intends to use the AP1000 at its Lee plant near Gaffney, S.C., expected to be licensed next year, but like Progress has made no final decision on whether to go ahead with the project.
Shaw had planned to build another nuclear plant, in Texas, with reactor maker Toshiba. The owner pulled financing for the plant after Fukushima.
The AP1000 is designed to safely shut down even without electrical power. It has detractors - anti-nuclear groups insist design flaws make it vulnerable to accidents - but the Nuclear Regulatory Commission certified the design in December.
Westinghouse, which also has a presence in Charlotte, will be responsible for design and procurement of the "nuclear island," including reactor modules and support buildings at Summer and Vogtle. Shaw will be responsible for nearly everything else, engineering, buying materials and putting the pieces of the plants together.
Shaw will build much of the plant in modules at a specially built facility in Louisiana, aiming for quality that can't be achieved at a construction site. It's also taking responsibility for the concrete to be used, a critical issue for the massive projects.
In the five years it will take to build the plants, the construction workforce at each plant is expected to reach 3,500, most of them working for Shaw.
Because of the magnitude of the projects, companies from across the industry will lend expertise and problem-solving, said NEI's Kass.
"With anything this big, it's all about diversifying the risk and spreading the risk," said Andrew Wittmann, an analyst at Milwaukee wealth management firm Robert W. Baird & Co. "Losing money on projects sinks a reputation. There are real dollars at risk and there's real reputational risk as well."
Read more here: http://www.charlotteobserver.com/2012/01/29/2965421/a-new-generation-of-nuclear-plants.html#storylink=cpy
Read more here: http://www.charlotteobserver.com/2012/01/29/2965421/a-new-generation-of-nuclear-plants.html#storylink=cpy
Read more here: http://www.charlotteobserver.com/2012/01/29/2965421/a-new-generation-of-nuclear-plants.html#storylink=cpy
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