Feds cut nuclear deal with Ontario: buy all the reactors you want, as long as one is CANDU

Read between the lines, and you might get the impression that the Canadian federal government and Ontario have finally come to a deal on the next wave of nuclear investment in Ontario. Attentive readers will recall my speculation that the $538 million Paul Martin promised Dalton McGuinty back in May 2005 (just before the famous Belinda budget vote), ostensibly to help defray the costs of decommissioning Ontario’s four coal-fired power generating plants, will really go for a new CANDU plant.

Has it really happened? Readers will recall that the Ontario Liberals long said they would replace the 6,400 megawatts of provincial coal capacity with a mix of generation types, including 1,000 MW of new nuclear capacity. But the short-listed reactor manufacturers from whom Ontario recently asked for proposals were told the province really wants 3,500 MW of new nuclear.

Why did Ontario suddenly add the extra 2,500 MW?

I think it is because Ontario wants to make sure it gets that $538 million. Before the feds hand over the money, they want Ontario to buy at least one CANDU (manufactured by Atomic Energy Canada Limited, a federal crown corporation). That’s the quid pro quo. The extra megawatts allow Ontario to accommodate the federal demand and run the publicly-promised bona fide competition.

Is it a good deal? Of course it is. The historical record of Ontario electricity shows that non-hydro baseload generation is either nuclear or coal. If we use more nuclear, we use less coal. And we use more coal when there is less nuclear available. It’s that simple.

This was exactly the case as of eight o’clock this morning. At eight a.m. today, there were 8,618 MW of nuclear capacity in service, and 4,169 of coal. If either of the temporarily out-of-service Bruce units were available, nuclear capacity would have been over 9,300 MW and coal’s output would have been 3,400.

As it was, the emission intensity of Ontario’s electricity at 0800 a.m. today was 278 grams per kilowatt hour. Over one year at that rate, the provincial power sector would emit a whopping 41 million tonnes of greenhouse gases.

And if the proposed 3,500 MW of nuclear were available at eight this morning? The emission intensity of Ontario power at 0800 a.m. today would have been 99 grams per kWh. Over a year at this rate Ontario power-sector emissions would be less than 15 million tonnes.

Readers who know their Kyoto numbers will instantly realize that the latter figure would be 10 million tonnes below the official Kyoto target for Ontario electricity generation.

Best of all, Ontario electricity consumers would never notice a difference in service.

The mechanism through which the $538 million might come was hinted at back in December, when the feds announced their new emission targets. There was an exchange in the Toronto Star about whether Ontario’s coal-plant phaseout would qualify for emission credits (see article).

Given the numbers I cited above, might the $538 million be in the form of emission credits?

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