Ontario revives Darlington nuclear projects
- Dec 2, 2010 3:44 am GMTJul 6, 2018 9:25 pm GMT
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It projects spending C$33 billion on two new reactors and refurbishing ten more. However, the future of AECL is in doubt as the government wants to sell it.
The Canadian provincial government in Ontario is making a second run at a plan to build two new nuclear reactors at the Darlington site. The energy plan would refurbish 10 other reactors over a two decade period as well as invest in renewable energy projects.
Under the revised plan, Ontario expects to spend C$87 billion over 20 years. The goal is to provide 50% of the province’s electricity from nuclear energy. Whether the government can execute the plan is an open question. Two years ago the bid process for two new reactors at Darlington was cancelled as a result of the government getting cold feet. AECL and Areva were the only bidders.
Ontario says it needs at least 2 Gwe of new nuclear powered electricity generation, which could be met by two of AECL’s new ACR1000 (advanced Candu) reactor. However, the ability of AECL to make an offer on the new reactors is questionable since the federal government is evaluating bids for it from SNC-Lavalin Group and Bruce Power. Both firms have stated they have no interest in completing the costly development of the new reactor design.
In addition to new reactors, 10 other reactors in Ontario need refurbishment and could be offline for as long as three years. During these outages, Ontario would rely on natural gas plants. Ratepayers would see higher costs for energy for several years as a result.
Additional spending on energy under the plan included C$9 billion for solar projects, C$4 billion for biomass, and the remainder for enhancements to existing gas plants.
What it really costs to build two new reactors
Of the C$87 billion to be spent on new energy projects, C$33 billion is allocated to reactors work. When the bids were submitted two years ago for two new power stations, the price of the reactors alone was about $2,700/Kw. Assuming this cost hasn’t changed, 2,000 MW of building this power would come in at C$5.4 billion. That doesn’t include future fuel loads and decommissioning costs.
The bulk of the nuclear funds, $27 billion, will be spent on refurbishment or just under C$3 billion each to extend their service lives by at least another 20-30 years.
The high estimated cost of refurbishment may be a reflection of the unanticipated high cost overruns, C$446 million, which have occurred at the AECL reactor in Port Lepreau, New Brunswick.
AECL’s troubles with the Port Lepreau refurbishment project contributed significantly to the New Brunswick provincial government cancelling plans for two new reactors.
Ontario asks for delay in sale of AECL
In a letter released to the Canadian news media Nov 10, McGuinty made it clear that the Darlington new build would use AECL reactors which would be a confidence booster for possible exports.
This may be a faint hope as both India and China, which bought AECL reactors in prior decades, have ruled them out for their massive new builds which are now taking place. South Korea, which also bought Candu reactors, now has its own 1,400 MW unit based on the System 80+ design. It inked a deal in December 2009 to build four of them for the United Arab Emirates.
All Ottawa wants is cash on the barrelhead
Canadian Natural Resources Minister Christian Paradis isn’t buying the arguments from McGuinty. He said he wants the sale of AECL “to take place sooner rather than later.” However, he hasn’t made any statement about whether the two bids he has in hand are acceptable or if not, what terms would close the deal. Press reports indicate the bids came in far below the government’s expectations.
Paradis says continuation of federal government ownership of AECL “is unsustainable,” and points to more than C$500 million spent on development of the ACR1000 and losses racked up by AECL on other projects.
Separately, the government has had to pour millions into repairs at the Chalk River reactor that makes radioactive medical isotopes. Previously, the government had hoped to replace it with two smaller reactors. The twin Maple Reactors were never put into production due to unresolved technical problems and cost overruns.
Is ACEL another Studebaker?
If Ottawa sells off all or pieces of AECL before Ontario can close a deal for the two new reactors, then AECL will be relegated to a niche player maintaining the installed global fleet. This is what happened to the Studebaker car company which went out of business in Ontario after a series of business mis-steps in the U.S.
The Organization of Candu Industries (OCI), which represents about 150 firms that supply components and services to Canada’s 18 AECL reactors, has issued an angry statement demanding that the provincial and federal governments stop “finger pointing,” and make sure Ontario buys AECL reactors. Presumably, that includes finding the funds to complete the design and licensing of the ACR1000.
As for exports, OCI president Neil Alexander told wire services, “It is very difficult to convince the rest of the world to buy from you when you’re not selling in your home territory.”
The anti-nuclear group Greenpeace criticized efforts to save AECL. Shawn-Patrick Stensil, a spokesman, told wire services the financial issues could be set aside if Ontario would invest all of its C$87 billion on renewable energy technologies.
Export potential questionable
Ontario’s energy minister Brad Duguid says the federal government’s drive to sell off AECL in the middle of the procurement process “is very troublesome to us.”
He complained that without the orders for two new reactors, AECL will not provide an economic stimulus to the nuclear industry in Ontario. Dugid also promoted the exports argument calling the opportunity a “trillion dollar market.”
While such an estimate might play well in Ontario, few in the industry think AECL has that kind of sales potential. The case for exports as leverage to keep AECL in one piece seems to be a weak hand.
Anyway you look at it, AECL is caught in a squeeze play caused by not innovating fast enough with new technology, failing to win the original Darlington bid, and having high legacy costs from Candu reactors that only it can fix. AECL would have a stronger position if it could wrap up the Port Lepreau project and apply lessons learned from it to control costs for the refurbishment of the 10 reactors in Ontario.
Prior coverage on this blog
- December 18, 2009 – Want to buy a used reactor company?
- July 18, 2009 – Is AECL down for the count?
- March 8, 2009 – AECL’s destiny to be decided at Darlington
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