Ontario's surprising nuclear decision
In late June, Ontario shelved its plans to construct the province's next generation of nuclear power plants. The government said none of the proposals it had received presented suitable long-term energy costs for the province.
The province's plans had called for a two-reactor plant at the Darlington generating station east of Toronto that would supply between 2,000 and 3,500 MW by 2018.
Ontario launched a 20-year energy plan in 2006 that called for maintaining nuclear capacity at 14,000 MW by replacing facilities as they were retired and doubling renewable capacity, including hydro, to 15,700 MW. Plans also called for eliminating coal-fired generation by 2014.
Half of Ontario's power comes from nuclear plants that were built by Atomic Energy Canada Limited (AECL) between 1970 and 1990, and the province had earmarked C$26.5 billion ($22.8 billion) to update the fleet.
Ontario has been weighing its nuclear options for months, postponing the final decision several times; the first deadline for bids was back in October 2008.
Taking the nuclear option off the table comes as a surprise, but times have changed since 2006. Where Ontario had been anticipating steady annual growth of electricity consumption, power use in the province has actually fallen off and the trend is expected to continue as the economy struggles to recover.
Meanwhile, the projected cost of nuclear power plants has risen as evidenced by recent estimates for U.S. utilities. Ontario was burned by nuclear cost overruns and delays for the original build-out and is wary this time around.
Three vendors were seeking the contract, AECL, Westinghouse Electric Co. and Areva.
Ontario said AECL's bid was the only one to meet its objectives but uncertainty about the company's future was the concern. AECL is in trouble. The Canadian federal government is seeking to privatize the company and restructured it in May but even if it was the hometown team, Ontario said it had no confidence in its pricing or future.
Another problem with AECL's bid was its plan to sell Ontario a new breed of reactor, one that hasn't been tested before. The Advanced Candu Reactor, the ACR 1000, is not even completely off the drawing board. It's no longer a pure heavy-water reactor and uses slightly enriched uranium as opposed to natural uranium used in earlier designs. Building the new hybrid reactor could make cost overruns more likely.
Ontario is the first to open the bidding process to foreign countries but even with promises of jobs for local workers, choosing Westinghouse or Areva is a political hot potato. Westinghouse and AREVA based their bids on proven technologies but much of the engineering and development work would be done in either the United States or France.
Province officials intend to keep nuclear energy in their energy future. "Emission-free nuclear power remains a crucial aspect of Ontario's supply mix," said George Smitheran, deputy premier and energy minister.
In the meantime, in the U.S. the nuclear renaissance is in full swing. A group that includes Duke and Areva announced a new nuclear plant in Ohio and UniStar, NRG, Scana Corp. and Southern Co. will likely share Department of Energy loan guarantees to build new reactors.
The problem for Ontario is after this disappointing experience, when and how will it get back on track?
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