Ontario: Stop the Nuclear Renaissance we want to get off.

Have the wheels fallen off the Nuclear Renaissance in Canada?

 

The Ontario government has announced that it’s suspending its competition for new nuclear reactors because only the AECL bid met its requirements but even so their price was much too high.

 

Media reaction was muted and at first many including me assumed the suspension to be a political ploy on the part of Ontario government to induce the federal government to subsidize its new nuclear plants. In fact, many approving noises were made in the media, mainly making the point that there’s no particular need to rush to a decision. This because electricity demand is declining in Ontario due to the recession (but for how long?), additional generation facilities (including refurbished nuclear stations) are due to come on line in the next few years and the delay will give us time to see how other supply choices work out.

 

However, rumours (or more likely deliberate leaks) are now emerging that the bids received were very high. One report said that the AECL bid was $26 billion for two ACRs. That in my view is absurdly high.

 

So what are the facts? As regular readers of this blog will guess, the aspect that annoys me most about the Ontario competition is the continuing secrecy and lack of transparency surrounding the whole process.

 

For example, we need to know such things as:

  • Why were the AREVA and Westinghouse reactors rejected?
  • Did the evaluators consider the ACR technically superior to the other two reactors?
  • What were the prices quoted for each of the reactors?
  • What does the Ontario government consider a reasonable price as compared with the AECL bid price?

General answers to these questions and others must be forthcoming.  After all the citizens of Ontario have spent a lot of money on the answers although of course we’ll never know how much. We don’t need to know a high level of detail. Nevertheless, we must be told enough to have confidence in the soundness of the judgment that was made.

 

In the end it may be that the prices of new nuclear plants have simply become so high that few jurisdictions can afford them.  If Ontario can’t afford new reactors then the same must hold for New Brunswick, Alberta and Saskatchewan. In that case there will be no Nuclear Renaissance in Canada which would be a shame since we need this energy option but not at any price.    

15 Responses to “Ontario: Stop the Nuclear Renaissance we want to get off.”

  1. Sami Says:

    The federal Government should take into consideration when deciding on backing up Ontario request for support to AECL bid, or not, the following points;
    – The value for maintaining the Canadian Nuclear Industry as a distinct and well recognized entity,
    – The future price for energy
    – The choice to pay EI and loose rare technical expertise that can be used in other provinces (as -ve), or support the project and account for taxes being paid for jobs and purchases for the projects (as +ve) and figure out the balance.
    – The support the government provided for the auto industry (!!!?)
    – The risk (or almost assurance) of excessively higher price of oil when competitions (alternatives) fade out .
    Just a thought… !

  2. Dr Singh. Says:

    Current circumstances for new build are far from rosy. If anything “ghastly” would be more suitable.

    From the very beginning, my understanding was Ontario would NOT expand nuclear capacity (which I approve), and that new build was in place of refurbishment, whenever its more economical (which I also approve).

    Thus, for new build to proceed at this time, the pertinent question is which existing power station its replacing and what were the costs and other factors that lead to the decision.

    So far, no cost estimates from any of the bidders have been revealed. A newspaper only “rumoured” that it was $26 billion, giving ammo for nuke-haters for a slew of “we told you so” and “how many windmills you can build for that amount”.

    Regardless of the economy, power demand, year or decade, we know what nuke-haters would say, so no point in repeating.

    Moving onto the people who are pro, I dont understand their rationale:
    – save AECL!
    And how is a crown company the responsiblity of Ontario taxpayers and ratepayers?

    – we need the jobs!
    By the time construction starts, recession over. At best we show favoritism to nuclear industry (over many others that are struggling) and provide a couple thousand jobs in a sea of a half a million unemployed.

    – 2014 coal shutdown deadline!
    In OPA plan, nuclear played no part whatsoever in coal shutdown. At earliest new nuclear would be running in 2017-2018: too late.

    – current drop in demand is temporary. Soon we’ll be back to record power demand!
    Consumers wont throwaway new high efficiency lighting, appliances, heaters and air conditioners and dig up old ones from the grave. Likewise, home renovations wont undo themselves. And almost everybody has conceded that tens of thousands of manufacturing jobs are never coming back. What then is there to cause this demand?

    – current public sentiment. Who here is willing to step into the Premier’s shoes, make the decision accepting full responsiblity and then bear the public wrath for up to 4 years?

  3. Sami Says:

    With the “ghastly” picture Dr Singh visualized for the proposed new build Nuclear Plant, one may have the luxuray of playing brain storming exercise. If we are going to put the project to sleep for few years, and since the ACR1000 design is based on low enriched fuel couldn’t we postulate combining both options AREVA & ACR1000, using the LWR spent fuel as MOX fuel to the ACR1000 ? The Japanese tried that on a prototype for at least two decades (Fugen reactor), now being decommissioned). That imginary proposal may add economic values to the two options. I wander if it was postulated by AECL? Again this just a brain storming exercise since we have “all the time” or don’t we?

  4. Steve Aplin Says:

    Dr Singh: invoking the 2014 coal shut-down is legitimate, since the deadline is arbitrary anyway and the gap between 2014 and 2018 is thereby also arbitrary.

    It all boils down to where we want our baseload to come from: nuclear or gas. I prefer nuclear. Of course, the province is hell-bent on switching to gas so maybe this point is already moot. The anti-nuclear green crowd has essentially already won.

    Ontario will still need jobs, even when the recession is over. And if the jobs are in an area of Canadian-developed power generation technology and expertise, and if we’ll need the power anyway, then what’s wrong with buying Canadian? I still haven’t heard a good argument in favour of replacing Canadian nuclear technology with foreign—they all make steam, so let’s use ours.

    And when we’re talking about burning LWR fuel in CANDUs, let’s not forget the CANDU 6 is proven, with a good operating record in five couintries. There’s a reason AREVA is pushing the MOX-in-LWR option so hard in the U.S.—there’s a mountain of spent fuel down there, and an administration and congress hostile to Yucca Mt.. Which means utilities have to do something with the stuff. Again, since Canadian technology is capable of dealing with the problem, why don’t we push it? A few CANDUs parked among all those LWRs would look pretty good.

  5. Dr Singh Says:

    I am pro nuclear technology, but not stupid to give AECL blank cheque.

    There are few environmentalists. Many are hypocrits. They are against nuclear, but everyday half of their power comes from it – certainly if its as incredibly dangerous and extremely expensive as they say, they could move to another province. But instead, they enjoy the comfort of 5c/kW reliable power. Part of these people are utterly clueless regarding magnitude of scale, whereas the majority are trying to solicit lucrative “renewable” contracts (notice all suggest more wind/solar/geo, but few ever mention conservation).

    How do these people respond to recent newspaper articles?
    – new build on hold: Nuclear is bad, and expensive. Nuclear is dead. Wind, Geo etc.. are the way.
    – $26B too costly: See we told you so. Nuclear is bad, and expensive. Nuclear is dead. Wind, Geo etc.. are the way.
    – nuclear on track, McGuinty: Nuclear is bad, and expensive. Nuclear is dead. Solar, Wind, Geo etc.. are the way.

    Yes my friends, a bunch of parrots. Not to say the “build ACR’s now” camp doesn’t have their share. Between them, not an ounce of sobber rational thought.

    Search any newspaper comments section or any forum thread… I bet you’ll never find a nuke hating “environmentalist” commend the Ontario government for constructing 1000MW (689) wind turbines. They are completely not interested in studies, reports, fact and figures – their very existence is focused on vehemently condeming anything and anyone remotely related to “nuclear”.

    The opposite of open minded.

    I am shrewd with money, and expect my government to be even more so. I’m openly critical of anything: Big Becky grossly delayed and overbudget, extremely high feed in tarrif for solar, etc.

    WHO HERE WOULD LIKE TO TRY TO CONVINCE ME TO SPEND $BILLIONS ON AECL TO BUILD ACRs TODAY?

  6. Steve Aplin Says:

    Dr Singh: good points, all of them. You’re right, we should not hand AECL a blank cheque. The problem is, we have very little information on what went into that $26 billion. My guess is that the bid included data on how the $26 billion would nevertheless be an economical investment, i.e. that it would result in income (from power sales) in excess of $26 billion, over the reactors’ lives.

    Instead, we know only about the $26 billion. Viewed in isolation, that is a lot of money—especially when the original cost was estimated to be $7 billion.

    Call me a conspiracy theorist, but isn’t it interesting that only the $26 billion was put out to the media? That almost guarantees that it will be rejected, and that the feds will shy away from the negotiation.

    I said it was a victory for the anti-nuclear greens. Turn the coin over, and you can also say it is a victory for the gas industry. Notice how none of the greens opposes gas.

  7. Sami Says:

    I am not that skeptical about AECL potential to build ACRs as DR Singh . I agree the quoted $ bids are exagerated, but we should ask ourselves what are the key differences between AECL now and AECL in the sixties and seventies building Pickering with reasonably close to budget amount , not attracting any debate. Even considering how inexperienced the industry was then? The key difference I believe is, then politics weren’t part of the equation. Moving forward to Bruce and Darlington constructions, politicians used the projects to cover and support other socio-economic needs at the time (example delaying Darlington for 2 years, freezing the planned amount to increase the price of KW-h when DN started, delaying scheduled maintenances at Pickering and Bruce for years, then bring American Experts to help politiciancs blaming the Canadian Nuclear Industry (that being AECL and OH ). So if we imagine, we can freeze politicians interferences with AECL project planning/executions to the level of the sixties and seventies and leave it to scientists, engineers, business planners, construction and technical skills I believe ACR can be built within reasonable budget and schedule, the key word here is “imagine”. In the sixties and seventies Nuclear project like Pickering was considered highly scientific /techical exercise, with litte political and greedy nozes entering the ride to completion.

  8. Don Jones Says:

    The bid evaluation process by Infrastructure Ontario was to select the new reactors based on levelized unit energy cost (LUEC), ability to get on line by 2018 July 1, and level of investment in Ontario. The LUEC was going to get 80% of the evaluation weighing in vendor submissions. The level of investment in Ontario was to be measured on basis of GDP impact and would represent 20% of the evaluation weighing. They used this 80:20 “because the economic benefit of cost of power and ability to deliver on time is more than four times greater than the economic benefit gained through the level of investment in Ontario through local spending”.

    Since the ACR was selected it must have been the best at meeting these requirements. Does this mean that despite the high cost (reputed to be $26 billion) the LUEC and on-line date of the ACR was better than those of the competing AREVA and Westinghouse bids? It seems pointless to discuss all this until more information becomes available, if it ever will.

  9. crf Says:

    It isn’t pointless to discuss this. AECL is a crown corp. The way it does business must have the full support of cabinet. It is Stephen Harper who has decided that AECL had to bid 26 B and commit suicide.

    Harper has had 3 years to think about AECL, and he clearly wants it dead. If Canadians don’t want it dead, they have to get rid of Harper, because he will not likely change his mind.

  10. Don Jones Says:

    Just for everyone’s interest and to put the $26 billion (Canadian) into perspective, Florida Power and Light’s application to the USNRC for two new AP1000 units at its Turkey Point site was just made public by the USNRC. They were priced at $12 to $24 billion. Quite a spread. I believe originally the application covered two units of 2,200 MW total for between $12 and $18 billion or two larger units of 3,000 MW total for between $16 and $24 billion. Could be they settled on the two 1,100 Westinghouse units but kept the upper $24 billion figure “just in case”!!! Both units expected on line by 2020.

  11. Dr Singh Says:

    MYSTERY SOLVED (by a calculator!)

    http://www.thestar.com/article/668157
    “facility’s lifetime electricity output, costs during the construction period, cost of fuel, ongoing operating expenses, as well as decommissioning, disposal and financing costs,” Infrastructure Ontario

    “The Star reported Tuesday that the bid from Atomic Energy of Canada Ltd. was around $26 billion for a new plant at Darlington generating station that would contain two 1,200 megawatt Advanced Candu Reactors. It also reported that Areva’s bid totalled $23.6 billion.”

    They are not constructon costs but total lifetime costs! We can conveniently figure out price per kwh 🙂

    $26 billion bid/(60 years x 8760 hr/year x 24 million kW) = $0.02061
    For AREVA its $0.01403.
    But this value needs to be divided by lifetime capacity factor – typically in 0.8-0.95 range. Effectively price per kW would be up to 2.5c/kW.

    Good news!
    – current regulated plan residential price is 3x higher. 5.7 – 6.6c/kW
    – when assessed as lifetime cost, the value is reasonable (especially if its worst case scenario!). Project pay for itself in about 20 years.

    Bad news!
    – Ontario = stupid? AECL bid is 47% higher than AREVA. If 80% bid weight was the LUEC, even with AREVA scoring 0 for remainder, still better. Doesn’t make sense.
    – $26B rumour and plethora of news articles was powerful fuel for nuke haters for an “I told you so”. Damage on public opinion can be priceless.
    – $26 billion…
    “I know what you think it means sonny. To me it’s just a made up word. A politicians word so that young fellas like yourself can wear a suit and a tie and have a job. What do you really wanna know?”
    Doesnt change/help AECL limbo ownership status, or loss of confidence after MAPLE and NRU mishaps.
    – IESO repeatedly asked nuclear generators to shutdown due to excess surplus. Recently, 3000 MW of gas and wind power was added, and another 6000 MW is coming in a couple years.
    – and #1. Irreversable drop in power demand: home renovations, efficient appliances and lighting, feed in tariffs, loss of manufacturing, conservation. Even if economy recovers from recession, all factories wont go back to full-time production, and people wont tear out new AC and look for old one at scrap yard.

    But, ending on a bright note! USA opposes Iran’s Uranium enrichment. AECL sells reactors that run on natural uranium. Seems like no-brainer solution to AECL’s financial woes.

  12. Sami Says:

    How many Ontarians are aware of the shocking explanation Dr Singh kindly placed above that the quoted $26 billions covers far beyond constructions of the proposed 2 ACRs ,or even the $23 billions submitted by AREVA for 2LWRs. Does ANY newspaper explained that this amount covers the lifespan of the plant. I seriously doubt it. And how many polticians at any level clarified the mess being published? Thanks Dr Singh.

  13. Don Jones Says:

    Not too sure if we should take the $26 billion as the installed cost to calculate LUEC. It contains a significant cost overrun allowance so it would only be true if the installed cost actually reached this amount. Anything over this $26 billion would be covered by Ottawa. Of course the best estimate installed cost would give a much better LUEC and it seems that Queen’s Park wants AECL to “sharpen its pencils” to go with this lower amount and get Ottawa to cover any overrun. The question is, what is this best estimate amount? We need to know more.

  14. Randal Leavitt Says:

    If you want to eat an elephant you have to manage it one mouthful at a time. Ontario should build new reactors in sizes that it can swallow. Lets get one CANDU 6 online and then take a look around. The market and the technology will be much improved by then. Getting something clean going will be much better than arguing forever and getting nothing done. Unless getting nothing nuclear done is your goal, and a transition to gas as our replacement for coal has already been determined. (Oh yeah, I get it now light goes on at this point!) The predetermined winner of all this nuclear fuss in the gas industry, not AECL.

  15. Dr Singh Says:

    Rationalization behind new build
    =======================

    OPA 2025 power outlook plan:
    ~1000MW new build if PickB is refurb (replace 2 mothballed PickA).
    ~3000MW new build if PickB is not refurb.

    How did we get to current ~11380MW nuclear capacity in last decade?
    1990 Oct9 – 10300MW – after first Pickering retube, but prior to first Darlington unit
    1993 Jun14 – 13824MW – Darlington 4 online
    1997 Dec31 – 8764MW – shutdown of all “A” units
    2003 Aug22 – 9279MW – Pick4 (515MW) refurb
    2003 Oct7 – 10029MW – Bruce4 (750MW) refurb
    2004 Jan9 – 10779MW – Bruce3 (750MW) refurb
    2005 Nov5 – 11294MW – Pick1 (515 MW) refurb
    and finally, the extra ~100MW from uprating BruceB units from 90% to 93% power.
    I believe Bruce Power will expand CANFLEX fuel use to all units.

    And the future…
    2011 – 12880MW – all BruceA running
    2016 – 10820MW – all PickB shutdown (either if we do nothing, or if being refurb).

    Whats my point? For 3 1/2 brief years, exluding outages and LOC incidents, Ontario had “at best” 13 800 MW of nuclear capacity.
    Yet, oddly Ontario government and OPA treat it as the “norm”. With decade record high of 11380MW installed, its tough to convince to build more.
    Early morning demand is about 12 000 MW, so new build would be underutilized.

    So, why is OPG running all Pickering units 100%?
    Eager to reach end of service life (and when too much power, why shutdown Bruce or Darligton unit)?
    Why not run 3/4 units on rotating schedule to extend station life?

    In 2003 and 2005, the Pick4 and Pick1 refurb cost about $1-1.1B each.
    Refurb only gives about 25 years, and performance unlikely to match new units.
    But, less political/public opposition, 2 years vs 6+, and fraction of ~$7-10B for new units.

    It not be cool new and shiny, but slowly refurbing PickB units as needed (one at a time) is a cheap easy option.
    Afterall, who said we must refurbish all of them at once?

    As for new build options:
    I stand by my choice of ABWR. All were built on schedule in about 4 years. Slightly higher cost offset by lower risk since not first of its kind.
    Not as many bells and whistles, but it works – well.


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