Johnsonville Aeroderivative Combustion Turbine Project

July 29, 2026

2025-17599

Inspection / Evaluation

In August 2019, the Tennessee Valley Authority (TVA) Board of Directors approved the installation of aeroderivative combustion turbines (CTs), a first-of-its-kind technology for TVA.  The site of the former Johnsonville Fossil Plant was selected for the aeroderivative generation.  TVA initiated the Johnsonville Aeroderivative CT project in September 2019 with a planned project cost of $498.5 million and an in‑service date of September 2023.  In December 2021, the planned project cost increased to $598.9 million due to changes in the model of CTs purchased; increased costs of the engineering, procurement, and construction (EPC) contractor; and increases in labor and material costs. As of December 2024, planned project costs had increased to $652.2 million, and the in‑service date was extended to April 2025.  Due to aeroderivative technology being new to TVA, we conducted an evaluation of the Johnsonville Aeroderivative CT project.  The objective of this evaluation was to determine how project costs were monitored and controlled.  Our scope was the Johnsonville Aeroderivative CT project costs. We determined that TVA did not effectively monitor and control project costs for the Johnsonville Aeroderivative CT project, resulting in $20,899,732 in avoidable costs, $8,966,617 in unsupported costs, and overpayment of $1,108,987.  Specifically, TVA did not hold the EPC contractor or an owner‑furnished equipment (OFE) contractor accountable for performance issues.  The performance issues included the EPC contractor not managing OFE contractors as required or completing a scope of work included in its contract.  These EPC contractor performance issues resulted in $834,301 of increased project costs for TVA.  In addition, TVA (1) received equipment from an OFE contractor “well below…cleanness standards,” which increased project costs by $5,839,205 and (2) did not enforce the liquidated damages contract clause with an OFE contractor for missing milestones.  TVA also paid the EPC contractor $14,226,226 for costs related to safety, labor productivity, and schedule impacts they were not entitled to under the terms of the contract.  However, TVA amended the contract to formalize approval of the PCRs related to the $14,226,226 in costs, which indicates TVA’s acceptance of the changes.  Additionally, the EPC contractor and TVA are negotiating an additional $7,662,220 for reimbursement of technical advisory hours, which they are also not entitled to under the contract.  Further, TVA paid $1,108,987 for duplicative or disallowed markups; $8,966,617 for PCRs that did not have sufficient support; and $111,380 for a miscalculated labor inefficiency factor.  In addition, while reviewing costs related to safety, we found an EPC contractor safety issue that could increase risk to TVA.   

No

Yes (agency-wide)

$0

$0