Roofing company in Santee, SC

Santee Cooper and Dominion Energy are starting down what’s sure to be a windy road for a new power plant they want to build together in Colleton County.

At least one figure in the reams of paperwork they’ll be submitting to the S.C. Public Service Commission this week is sure to jump out: the rapidly escalating cost.

According to the latest estimate, the price has roughly doubled to about $5 billion since the project was first proposed a couple of years ago.

Santee Cooper CEO Jimmy Staton acknowledged the spike and went to great lengths to explain it to lawmakers this month. The original projection was in the $2.5 billion to $3 billion range, he said.

“That was based on everything that we knew, everything that had been built up to that point in time,” he told the General Assembly’s Joint Bond Review Committee on Dec. 3 as he sought and received approval to spend the first big slug of money on the new plant.

“Over the last two years we’ve seen an incredible change,” Staton added.

The biggest expense driver is a spike in global demand for a critical piece of equipment that’s made by a select number of manufacturers, Staton said.

The going rate for gas-fired combustion turbines built by the likes of GE Vernova in Greenville, Siemens Energy in Charlotte and Mitsubishi Heavy Industries in Savannah has skyrocketed. By Staton’s math, the cost has jumped to about $2,300 from $1,200 for every kilowatt hour of electricity the huge units generate.

“This is not happening just to Santee Cooper and Dominion,” he said. “If you look at about any project anywhere in the Southeast or the United States you’re going to see similar numbers.”

Time is critical, said Staton.

“What we’re asking for here is $120 million to get the process started. We need to make down-payments on the combustion turbines themselves,” he said.

Staton said he was optimistic the new cost estimate is accurate and that a sizable financial buffer has been built in to the figure just in case.

The heavy-duty behemoths are the power industry’s equivalent of a souped-up car engine. The largest versions can tip the scales at more than 400 tons.

According to the U.S. Department of Energy, turbines draw in and pressurize air before injecting it at high speeds into a chamber ringed with fuel infectors. The flammable mixture is ignited, reaching temperatures of more than 2,000 degrees. The combustion then produces a stream that rotates an elaborate array of discs and blades that convert the energy into electrical power.

Demand is through the roof. With coal out of favor as a fuel source, utilities are scrambling to snap up gas turbines to replace aging plants and to support power-hungry data centers, new factories, artificial intelligence tools and electric vehicles.

“There’s a finite number of resources to actually be able to construct something of this magnitude,” Staton said.

The wait times can now range from 12 months to eight years, depending on the delivery location and the model, according to numerous reports and studies.

"Three to four years sounds about right if you are not already in the queue for a turbine," Paul Sotkiewicz, president of E-Cubed Policy Associates, told S&P Global earlier this year.

"We are seeing this across all the components needed to build a gas-fired power plant," he added.

The issue came back into focus last week when GE Vernova provided an investor update that blew away Wall Street’s expectations. CEO Scott Strazik expressed “high confidence” that the General Electric spinoff’s existing $135 billion order book for turbines and other equipment will climb to $200 billion within three years.

“I think you have to first take a step back and just say the world needs a lot more energy than it has today, and it needs a much larger proportion of that energy to be electric power,” he said during an appearance on CNBC.

The three biggest manufacturers are investing to meet the demand, though none seems willing to overextend themselves should the market suddenly tank.

GE Vernova, for instance, announced a $160 million, 600-worker expansion of its Upstate factory in February to boost output by 45 percent, to about 80 units a year from roughly 55.

“Beyond the immediate jobs additions and capacity expansion, this investment will allow Greenville to maintain and strengthen its position as the world’s center of gas turbine manufacturing,” the General Electric spinoff said in a statement

Industry rivals Mitsubishi and Siemens also are planning to add capacity at their U.S. factories, according to a recent report in The Wall Street Journal.

But the expansions aren’t unlikely to put an immediate dent in the backlog.

Santee Cooper and Dominion plan to kick off the review process Monday for the Canadys plant, where gas turbines would generate enough electricity to run about 250,000 homes. Their boards approved the joint 50-50 deal on Oct. 31, with a goal of completing the project near the Edisto River around 2032 if regulators approve it.

The ballooning cost of the Lowcountry plant is likely to be in the mix as the proceedings get underway in Columbia. In a Dec. 5 email to its members, the Charleston-based Coastal Conservation League described the decision to go “all in” on the $5 billion power station as risky, adding that the higher price tag will “drive up electric rates for everyone.”

The second annual South Carolina Nuclear Summit held last week featured utility executives and legislators from the state, as well as leaders from Brookfield Asset Management, which is being considered to restart construction on the two abandoned reactors at the V.C. Summer nuclear power plant in Fairfield County. The summit, at the University of South Carolina’s Colonial Life Arena, attracted more than 350 attendees. The event was hosted by the university’s Molinaroli College of Engineering and Computing.

Some history: Construction of the two Westinghouse AP1000 reactors at V.C. Summer was halted more than eight years ago by utility company Santee Cooper and South Carolina Electric & Gas (which was later taken over by Dominion Energy). The project had been plagued by delays, cost overruns, and fraud, including federal convictions of former executives. Santee Cooper’s subsequent debt was passed on to its customers.

If executed, the $2.7 billion sales agreement with Brookfield for the partially built reactors would remove the debt from customers’ utility bills. However, Brookfield has not yet finalized the agreement. At least six months of engineering and financial feasibility studies must be completed first.

Restart reasoning: During the summit, a Brookfield executive spoke publicly at length for the first time about the reactor construction restart. Regarding the company’s decision to consider investing in the construction restart, Mitch Davidson, a managing partner in Brookfield’s Renewable Power and Transition Group, said, “It’s a bit of a no-brainer for us. . . . There are parts of this project that are already there, big parts that are there—equipment is there, foundations are there. So, this seems to be the perfect opportunity for us as a start.”

Government partnership: Also noted was the partnership deal that Brookfield, Westinghouse Electric Company, and Cameco Corporation have recently signed with the U.S. government. As part of this partnership, at least $80 billion will be directed at the Westinghouse AP1000 reactors.

Private business: Peter McCoy, board chairman of Santee Cooper, emphasized that utility customers will not bear the burden of the renewed construction. “This is not going to be on the backs of rate payers,” he said. “It’s not going to be on the backs of our taxpayers in the state. . . . This is private business stepping up, with help from the federal government.”

Data centers: Davidson added comments on the electricity demands being driven by data centers, noting, “We haven’t seen load growth, like true load growth, in this country for a decade. The data centers have been the driver behind all of this. The data centers, and the size that they’re getting to today, are the genesis.”