S.C. officials want to spend millions of state tax dollars on a new “clean electricity” strategy that includes a type of nuclear technology currently not in use by any U.S. utility, an investigation by The Nerve has found.
In recently passing its version of the nearly $41 billion total state budget for fiscal 2024-25, which starts July 1, the Republican-controlled S.C. House designated $50 million out of a state “rainy-day” fund for the "South Carolina Nexus for Advanced Resilient Energy,” or “SC Nexus” for short.
In an application submitted last year – which The Nerve recently reviewed – for federal designation as an inaugural “Tech Hub,” the S.C. Department of Commerce said the state’s expanding manufacturing sector, along with the scheduled closure of two of three regional coal plants by 2030, “provides opportunity to innovate, scale, and export new electricity technology and intellectual property.”
That includes developing “small nuclear” technology, according to the application, which listed nuclear power company Westinghouse as an industry “partner” of SC Nexus and noted the company’s efforts to obtain federal approval to test its “small modular reactor” (SMR) model. Westinghouse has a facility near Columbia that manufactures nuclear fuel assemblies used in power plants throughout the U.S.
But a U.S. Nuclear Regulatory Commission spokesman told The Nerve earlier this month that Westinghouse’s AP300 SMR model has not been approved, and that only one other SMR design by another company has been certified, though it’s not currently in commercial use by any utility in the country.
Westinghouse was in the spotlight seven years ago with the failed $9 billion V.C. Summer nuclear-expansion project in Fairfield County – a joint project involving private utility South Carolina Electric & Gas and state-owned utility Santee Cooper. The project collapsed in July 2017 several months after Westinghouse, which was supposed to construct two large reactors at the plant site, filed for bankruptcy.
Asked if any of SC Nexus’ listed industry “partners,” including Santee Cooper and Virginia-based Dominion Energy, which acquired SCE&G after the V.C. Summer project was abandoned, are planning to use SMRs in South Carolina, Commerce spokeswoman Kelly Coakley in a written response last week directed The Nerve to contact the utilities to "determine how they are considering using or deploying SMRs.”
“Each industry partner plays a critical role in SC Nexus,” according to the application for federal Tech Hub designation, which Coakley said Commerce submitted in August.
Representatives for Dominion, Santee Cooper and Westinghouse, which is headquartered in Pennsylvania and recently was sold to two Canada-based companies, didn’t respond to The Nerve’s written requests last week for comment.
Duke Energy, which also is listed in the federal application as an industry “partner” with SC Nexus, said SMRs will “play a significant role in our Carolinas operations,” according to a utility spokeswoman who was quoted in a November story in the E&E (energy and environment) News publication.
The Nerve last week sent written questions to Charlotte-based Duke Energy seeking specifics about potential SMR plans for South Carolina but received no response.
Asked whether the S.C. Department of Commerce plans to use existing state funds toward the development or use of SMRs in the Palmetto State, Coakley in her written response said that “at this time, no determination has been made as to how funds would be used.”
In the federal application, Commerce said the “ambition” of SC Nexus is to “create a globally leading hub driving innovation in core technologies that enable an end-to-end resilient, sustainable energy ecosystem across clean-electricity generation, distribution, and grid-scale storage.”
Besides “small nuclear” technology, other “technology-focused initiatives” include efforts to develop “innovative and accelerated processes to manufacture, test, and certify components” for “offshore wind, hydrogen, batteries, and photovoltaic (PV) solar,” according to the application, which noted SC Nexus is made up of more than 30 members, including government agencies, universities, private industry and the Savannah River National Laboratory.
The U.S. Department of Commerce’s Economic Development Administration (EDA) in October approved South Carolina’s application for designation as one of 31 inaugural “Regional Technology and Innovation Hubs” under the 2022 CHIPS and Science Act, which authorized $10 billion to launch regional Tech Hubs nationwide.
Coakley in her written response said with the Tech Hub designation, SC Nexus, which geographically covers the Midlands and Upstate in South Carolina, as well as Augusta-Richmond County in Georgia, last month applied for approximately $40 million to $70 million in initial federal funding expected to be awarded to each of five to 10 designated hubs.
The Nerve recently sent written questions to Republican Gov. Henry McMaster and House Speaker Murrell Smith, R-Sumter, about the potential use of small modular reactors in South Carolina, as well as a related House bill sponsored by Smith and co-sponsored by more than 60 mostly Republican House members, which critics contend would create another V.C. Summer-type debacle for ratepayers.
Neither McMaster nor Smith responded.
‘Transformative potential’
McMaster in his state budget proposal released in January recommended $15 million for SC Nexus as a required state match to be eligible for federal funding. Coakley said Commerce in its budget recommendation sought a total of $10 million in recurring state funds and another $40 million in non-recurring dollars.
The House’s state budget version allocates a total of $50 million for SC Nexus out of the state Capital Reserve Fund, which represents more than 12% of the House’s proposed appropriation for the “rainy-day” fund for next fiscal year. State voters in 2022 approved increasing the Capital Reserve Fund from 2% to 3% of general fund revenues from the latest completed fiscal year.
To put it into some perspective, the proposed $50 million is larger than the total current budgets of several dozen state agencies.
“SC Nexus is the culmination of groundwork laid in prior years through the collaborative public-private initiatives,” McMaster wrote in his budget proposal, contending that “no endeavor illustrates our state’s leadership better.”
McMaster in his proposal said the state Commerce department developed SC Nexus in “collaboration with our research institutions of higher education, technical colleges, state agencies, the Savannah River National Laboratory, economic development non-profits, and private businesses,” though he provided no specifics about potential projects.
Likewise, a controversial House energy mega-bill also lacks details on proposed SC Nexus projects. The House Labor, Commerce and Industry Committee last week passed an amended version of the bill, which is expected to be debated this week by the full House.
The bill notes that the Legislature “acknowledges the transformative potential of advanced nuclear generation, such as small modular reactors.” Separately, the lawmakers last month approved a joint resolution that originated in the Senate supporting the goals of SC Nexus, including the “development and commercialization of small modular nuclear reactors.”
But neither piece of legislation provides specifics about how SMRs would be used in South Carolina or any details on Westinghouse’s SMR plans.
Outside of SC Nexus, critics of the House bill contend that the bill would put many utility ratepayers in South Carolina on the financial hook if Dominion Energy and Santee Cooper, which is headquartered in Berkeley County, are allowed to construct a large natural gas plant in Colleton County.
Last week, the South Carolina Policy Council – the parent organization of The Nerve – released an analysis of the bill, drawing similarities to a 2007 state law that made the failed V.C. Summer project possible and contending, among other things, that the legislation would put broadly defined economic needs at the center of ratemaking decisions, which could conflict with consumer interests.
No use in U.S.
Unlike the much-larger reactors used at commercial nuclear plants, many small modular reactors, which have up to 300 megawatts of electric capacity per unit, can be factory-assembled and transported to locations for industrial applications or to serve remote areas with limited grid capacity, according to the International Atomic Energy Agency (IAEA).
One megawatt is one million watts of electricity.
Elsewhere in the world, SMRs are under construction or in the licensing stage in Argentina, Canada, China, Russia and South Korea, the IAEA noted in an article last September.
In a March 11 written response to The Nerve, U.S. Nuclear Regulatory Commission (NRC) spokesman Scott Burnell said the NRC has “yet to receive” an application from Westinghouse to “certify (approve) the AP300 for general U.S. use, nor to approve construction and/or operation of the design at a specific site.”
Burnell said only one SMR design by Portland-based NuScale Power Corp. currently has been certified by the NRC, though he added no U.S. utilities have applied to use that model.
In November, NuScale and the Utah Associated Municipal Power Systems jointly announced they were scrapping the years-long planned “Carbon Free Power Project,” which was to be based on NuScale's SMR model. NuScale blamed the failed project on high inflation costs for certain parts, according to media reports; Burnell told The Nerve that the company was working with the project on "pre-application activities until late last year."
Last May, Westinghouse submitted a “pre-application Regulatory Engagement Plan” to the NRC for its SMR model, which noted that the SMR “conceptual design phase” would be based on “proven AP1000 plant technology,” according to the application, which was reviewed by The Nerve. The much-larger AP1000 model was planned for the two reactors in the now-abandoned V.C. Summer project.
Burnell said Westinghouse’s AP1000 design, which he noted was certified at the end of 2011, currently is used in Georgia. The 1,114-megawatt reactor began operating last summer with two existing reactors at the Vogtle nuclear plant near Waynesboro, Ga.; another AP1000 reactor was expected to go online at the site by this year, according to an August U.S. Energy Information Administration release, which said the expansion project ran into “significant construction delays and cost overruns.”
Similar issues also plagued the failed V.C. Summer project, though the S.C. Public Service Commission over the years approved nine rate hikes for SCE&G customers to help finance the project, which was made possible by the quietly passed 2007 state law known as the Base Load Review Act, as The Nerve reported.
Asked how a pre-application differs from a formal licensing application, Burnell in his written response said pre-applications “help ensure applicants and the NRC staff have a common understanding of the issues involved in certifying a reactor design or applying for permission to build/operate a reactor.”
Burnell said pre-application reviews are done at the request of the applicant, which would have to “make a decision on when to move to a full, formal application that undergoes a separate review.” Asked how long the pre-application review period could take, he replied, “Westinghouse is in the best position to offer an estimate of how long they expect to continue pre-applications with the NRC; the agency has no set timetable for such work.”
The are two basic NRC review paths that Westinghouse could take to gets its reactor design certified and obtain a construction permit and operating license, both of which could take at least six years based on agency review goals, Burnell said, though he added the timetable could be shortened if certain review stages overlap.
'Global leader'
In her written response last week to The Nerve, Commerce spokeswoman Coakley said as a federally designated “Tech Hub,” SC Nexus will be able to directly apply for future Tech Hub funding and will have “priority status for other federal grants.”
She added that the federal Economic Development Administration will provide SC Nexus “support in attracting foreign direct investment," though she didn't provide details on what types of projects would receive that funding.
Under Commerce’s $50 million state budget proposal, $10 million in recurring funds would be used to set up a division within the agency, including the creation of six full-time positions; and implementing a state grants program “related to the SC Nexus mission,” Coakley said.
The other $40 million in proposed nonrecurring state funds under the Commerce plan would be used to provide matches for federal grants and support the state grants program, she said.
Commerce’s total state budget for this fiscal year, which includes state, federal and “other” funds, is nearly $316 million – one of the larger overall budgets among state agencies.
SC Nexus’ first six projects – the provided descriptions of which are laden with technical jargon – include, according to Coakley:
- The Carolina Institute for Battery Innovation (CIBI): The University of South Carolina will “expand pilot manufacturing infrastructure to accelerate innovation and commercialization of Battery Energy Storage Systems (BESS) at reduced costs and with improved features.”
- H2 Resilience Demonstrator and Testbed (H2RDT): Rolls-Royce plans to work with “experienced third parties” to construct a “replicable modularized Hybrid Energy Storage System (HESS”) at its Aiken campus for “H2 firms to affordably demonstrate and test HESS components.”
- Economic Development through Grid Emulation (EDGE): An “upgrade to Clemson University’s existing eGRID testing facility” for GRTs (Grid Resilience Technology) will create a “versatile, reconfigurable, and mobile 25MW test facility and real-time power grid emulator.”
- The Grid Enabled Cyber Operations (GECO) Range: The Savannah River National Laboratory will develop a “full-scale multi-modal grid operations center to conduct cyber-physical assurance on grid hardware and software, and train grid cyber defenders.”
- The Entrepreneurship and Innovation eXchange (eiX): The state-created South Carolina Research Authority will support the “region’s GRT entrepreneurs and businesses” by “intentionally connecting them to mentorship, subject matter experts, and intellectual property; providing comprehensive training to launch and grow their businesses; and increasing capital formation, deployment and access.”
- The Education and Workforce Center (EWC): The S.C. Technical College System will “house initiatives that elevate citizen awareness of GRT careers, advance current and future GRT workers’ technical and soft skills and address the lack of critical support services to workforce engagement.”
“S.C. Commerce assessed what is needed for the state to fully take advantage of and realize the long-term benefits of being recognized as a global leader in advanced energy,” Coakley said about agency’s $50 million budget proposal.
Any state funding for SC Nexus for the fiscal year that starts July 1 would have to be approved by both legislative chambers and McMaster. The Senate currently is considering its version of the state budget.
Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or
