A $120 Billion Westinghouse Reactor Plan Is Taking Shape. Here’s What History Says Happened the Last Time the U.S. Built Them.
The last AP1000 builds in the U.S. blew past their budgets and bankrupted Westinghouse. This time the structure looks different, and that’s what matters.
In 2008, Westinghouse signed fixed-price contracts to construct four AP1000 reactors, two at Plant Vogtle in Georgia and two at V.C. Summer in South Carolina. The projected costs were $14 billion and $9.8 billion respectively, but due to numerous delays, the expenses escalated significantly. Westinghouse eventually filed for bankruptcy in 2017, leaving the utilities responsible for the entirety of the cost overruns.
The project at V.C. Summer was abandoned in 2017 after the cost had ballooned to $25 billion, even though $9 billion had already been invested. Southern Company took over construction management at Vogtle, eventually completing Units 3 and 4 in 2023 and 2024, respectively, spending over $30 billion, more than double the initial estimate.
This time around, the U.S. government is funding the reactors at federal sites, with financial backing from South Korea. This marks a significant shift from the previous utility-led projects, where the utilities were on the hook for the full cost. Westinghouse's role has also evolved, providing design, engineering, procurement, maintenance, and fuel services for the reactors.
The company anticipates around $2 billion per reactor from intellectual property licensing, engineering and procurement services, subcontracting opportunities, and long-term fuel fabrication services. However, this doesn't mean there are no risks. The South Korean investment is non-binding and subject to final negotiations, and the deal could fall apart or result in a significantly lower figure.
Delays and cost overruns could still impact returns. Brookfield Renewable and Cameco investors should closely monitor the definitive agreements with South Korea, the construction contracts and cost-bearing responsibilities, and Westinghouse's direct involvement in the investment build-out. If the contract structure limits Westinghouse's risks, the likelihood of repeating the past mistakes diminishes.
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