After months of excruciating uncertainty, the CANDU situation has been resolved somewhat. As everyone predicted, SNC-Lavalin has agreed to purchase the CANDU reactor part of Atomic Energy Canada Ltd. I won’t go into the ins and outs of the deal. I’ll just focus on what needs to happen now.
Assuming the deal is indeed finalized in October, CANDU Energy Inc.—the SNC division that will absorb AECL’s CANDU business—faces good prospects in the following three places:
- Ontario, where OPG plans to add new nuclear capacity to the Darlington station.
- Jordan, which short-listed pre-privatization AECL in a vendor competition that includes Russian and French/Japanese vendors.
- Rumania, which plans to add two new CANDUs at its Cernavoda station but which has no money to make the project happen.
… and that is about it. Sure, there is potential all around the world, including in China, Turkey, Ukraine, and Argentina, all of which countries have ambitious plans to radically increase nuclear generating capacity. But Ontario, Jordan, and Rumania appear the best prospects at this time.
And of those three, Ontario is by far the firmest prospect. The provincially-owned generating company, Ontario Power Generation, held a vendor competition in 2009 for new reactors at Darlington. I have covered it extensively in this blog. The competition was between AECL, Areva, and Westinghouse. AECL was declared the only compliant bidder but the Ontario government, which owns OPG, shelved the process because of the high price of AECL’s offering.
And that was why the federal government of Canada, which owns AECL, decided to privatize the company. The high price of AECL’s offering was due to the feds’ refusal to agree to pay for cost overruns that could well be due to Ontario decisions. Ontario would have argued that the immediate overrun risk had to do with licensing the reactor in question, which was the ACR-1000 (a new design and a significant departure from classic CANDUs). That was a federal responsibility, Ontario would have said. To which the feds may have responded, if you’re unsure of the design then why did you (Ontario) ask AECL to pitch that particular machine. Etc.
In any event, AECL was forced to include that unknown in its bid; hence the high price. (I should add that the commonly touted figure, $26 billion for two reactors, has been the subject of much derision among those in the know. But as I said in “The Anchoring Trap” back in July 2009, once a figure gets anchored in the public mind, it tends to stay anchored.)
Since then, the Ontario government has signaled its continued desire to put new reactors into Darlington. But the signals have been weak. The premier has not gotten involved, other than by sending a letter to the prime minister (the contents of which were leaked months after). He has let his energy ministers do most of the public lobbying, and only the current minister, Brad Duguid, has strongly reiterated the province’s commitment.
All of which could be moot, since there will be a provincial election in October—around the time the SNC purchase of AECL is to be finalized.
How strong will Ontario’s commitment be after the election? It all depends on who wins. The nuclear industry should not wait, though. Most Ontarians still don’t realize that most of their power, by far, comes out of nuclear plants. Most also don’t realize that nuclear is, again by far, among the cheapest sources. And most do not know that nuclear is far cleaner than the wind power which is touted as green but which requires massive backup from fossil sources.
This means there are what I will euphemistically call “communication opportunities” for the industry. Unless it seizes these opportunities and skillfully exploits them, the nuclear sector in Ontario—an enormous engine for high-skilled jobs and leading technology—will dwindle.
Regardless, if and when the SNC purchase is indeed finalized, the company will still be in line for lucrative refurbishment contracts. Currently there are projects in progress: on Bruce units 1 and 2, Point Lepreau in New Brunswick, and Wolsong 1 in South Korea.
In the future, there will be refurbishment opportunities at the whole Bruce B station (4 units), Darlington (another 4), Gentilly-2 in Quebec, the rest of Wolsong (3), as well as Embalse in Argentina and eventually Cernavoda in Rumania.
Those refurbishment opportunities don’t belong solely to CANDU Energy, of course. They belong to whichever firm can persuade the utilities whose reactors need refurbishing to hire them.
While AECL and now CE were and are shoe-ins as participants on CANDU refurbishment projects, their position as prime contractor was and is by no means guaranteed. When New Brunswick Power decided to refurbish Pt. Lepreau, it asked for proposals from AECL and Bruce Power. AECL’s bid beat Bruce’s by $450 million. That project is well behind schedule and over budget, but CE won’t be eating the cost of the budget overrun: under its purchase agreement with the federal government, the feds will pick that up.
That won’t be the case in future refurbishments.
Does this mean Bruce Power might have another go at another non-Bruce refurbishment project? You could argue that NB Power gambled that AECL’s low-ball bid for Lepreau would in the end be backed up by Canadian taxpayers; and that if it was a gamble, it paid off.
If Bruce Power does have the stomach to compete for another CANDU refurb, how would it and CE position themselves in the eyes of customer utilities?
Beyond claims of superior project management, one way would be to show prospective customers how their refurbishments would address a major operational issue, unique to CANDU plants, that derives from the phenomenon of diametral creep in the pressure tubes. (In CANDUs, the fuel rods are horizontal.) This forces utilities to derate power in the years before refurbishment, which causes loss of revenue.
Can this loss be minimized, without sacrificing safety? If so, it would mean hundreds of millions of dollars of avoided losses to the utility, and many millions of tons of avoided carbon dioxide emissions from the viewpoint of the environment. Utilities whose reactors are heading into the derating period, or slated for refurbishment soon, will be very interested to know how they can realize these extra efficiencies. Their home governments will also be interested in the additional carbon-free power can reduce their national GHG inventories.
A world with two or more competing CANDU refurbishment companies would present some interesting problems of competitive differentiation. I say “two or more” because it’s not just CE and Bruce Power that refurbish pressurized heavy water reactors. India’s nuclear fleet is dominated by PHWRs—CANDUs or CANDU knock-offs—most of which have been or will be refurbished. The world is more interesting than it was before the U.S.-India nuclear deal of 2005.
There is no point in OPG or anybody else spending a nickel more on AECL since the Fascists at SNC Lavalin will not spend any money on R&D at all and have no access to the financing that would let them try to compete with the obsolete Candu product.
Their purpose here as a company that already gets 90% of it’s revenue from Big Oil, is to carry the Big Oil mandated Harper’s religious and philosophically based destruction of a nuclear base crown corporation.
The Darlington quote was for a modern competitive Gen III+ ACR-1000 which potentially could have created a huge export industry in Ontario.
Obviously it would be far less expensive in the long run to replace the Candu’s with far superior Westinghouse and Areva product, than refurb the old junkers.
Nope Big Oil and Canada’s Supreme Fascist Leader won this one. Canada’s nuclear industry is dead.
“The Darlington quote was for a modern competitive Gen III+ ACR-1000 which potentially could have created a huge export industry in Ontario”
AECL was making that claim for 35 years and it never came true. It became less and less true as their designs fell ever further behind the technology curve.
Who’s going to buy a ACR-1000 when they can get a System/80 or AP1000 for less money and lower operating costs? No one, which is why they basically gave up on it and went down the EC6 path instead.
Maury, let’s not forget the EPR. There are four of those babies in various stages of construction around the world at this time: one in Finland, one in France, two in China.
You could argue that both the AP 1000 and EPR are totally viable non-CANDU choices for OPG at Darlington. Westinghouse at least appears to think so: the AP 1000 has passed Phase 1 of CNSC’s pre-project design review.