On July 10, 2023, Ontario’s Ministry of Energy released Powering Ontario's Growth – Ontario’s Plan for a Cleaner Energy Future (“the Plan”). While it looks at energy in a holistic sense, the Plan is predominantly focused on the electricity sector, stating that electricity demand is expected to grow significantly more than oil and natural gas. The government cannot be faulted for moving forward with the recent procurements of the storage and generation resources needed to meet the near-term demand driven by electrification, economic growth, and population growth.
One of the main take-aways from the Plan is that Ontario is making a significant commitment to nuclear energy by announcing:
1. The addition of three more small modular reactors (SMRs) at the Darlington Nuclear Generating Station;
2. A 4,800 MW expansion of Bruce Nuclear Generating Station; and
3. The possible refurbishment of Pickering B, by asking Ontario Power Generation (OPG) to investigate the feasibility of refurbishing the units.
The Independent Electricity System Operator (IESO) was also asked by the Minister to start pre-development work on new nuclear generators.
Ontario has a long history of nuclear power, with Pickering Unit 1 beginning construction in 1966 and achieving commercial operation in July 1971. Currently, Ontario has 18 operating CANDU (acronym for Canadian Deuterium Uranium) reactors at its three nuclear generating stations. Nuclear power meets about 60 percent of Ontario’s electricity demand. To date, the safety record of these units has been excellent. There has been no serious injury or loss of life to plant operating personnel or members of the public in more than 50 years of operation.
The rationale for the commitment to nuclear energy is based on the forecast growing demand for electricity in the province, with the IESO forecasting that by 2050 Ontario may need to double its generating capacity from 42,000 MW to 88,000 MW to meet demand for electricity. Nuclear energy is also non-emitting, which aligns with the province’s commitment to clean energy.
The province’s commitment to nuclear energy, however, can be risky. The recent announcement from OPG that Unit 3 at Darlington had come on line earlier than planned is a very positive development. However, this was a refurbishment and not a new-build project. Some nuclear new-build projects have experienced cost overruns and schedule delays. For example, TVO’s Olkiluoto Unit 3 in Finland began construction in 2005 and the reactor was supposed to be in service in 2009. The original cost was estimated to be €3 billion, but the final cost is now estimated to be €11 billion – more than 13 years late and almost four times the original cost. Similarly, Southern Company’s Alvin W. Vogtle Electric Generating Plant in Georgia began construction of two Westinghouse AP 1000 reactors in 2009. The original budgeted cost was $14 billion. As of 2021, the estimated cost to complete the reactors had ballooned to $28.5 billion. Unit 2 was to have been completed in 2016 with Unit 4 being completed a year later in 2017. Both units are still under construction with completion targeted for late 2023 or early 2024. While these issues may not arise with the development of new nuclear projects in Ontario, all stakeholders need to be mindful.
In selecting SMRs, Ontario is embracing what is essentially an early-stage technology. There are no commercial SMRs in operation yet, with one being completed this year in China. OPG has chosen the GE Hitachi Nuclear Energy BWRX-300 SMR for its Darlington nuclear new build project. There are no BWRX-300 units in operation, although there are several proposals to build such units. Using nuclear industry terminology, Ontario is taking on first-of-a-kind approach with its SMR development plans.
Despite potential risks, the planned nuclear projects will create considerable economic opportunity for the province’s nuclear sector and related supply chains, which collectively employ tens of thousands of people. Overall, the fact that the province is moving forward to ensure adequacy of supply (both via the IESO’s procurement processes and these nuclear announcements) is good news for Ontario’s citizens, businesses, and net-zero goals.