A Bold New Chapter for Ontario's Energy Sector

The Ontario government has given the green light for a groundbreaking $21 billion investment in small modular reactors (SMRs). The ambitious plan revolves around a hefty $7.7 billion earmarked for constructing the first SMR in a G7 nation, signaling a pivotal shift in nuclear energy.

Big Costs, Big Ambitions

The Ontario Power Generation (OPG) is set to invest a staggering $6.1 billion to build its first BWRX-300 reactor next to the existing Darlington Nuclear Generating Station. An additional $1.6 billion will fund essential shared infrastructure. This colossal project is projected to total $20.9 billion by 2024, factoring in interest and contingencies.

Are These Costs Justified?

However, experts argue that these costs are far higher than necessary for a successful widespread adoption of SMRs. For context, a recent natural gas power plant in Saskatchewan, with a capacity significantly below what the SMR aims to achieve, came in at just $825 million.

A Hesitant Nuclear Comeback

The high expenses and prolonged delays have historically led to a decline in nuclear energy, especially across advanced economies like the U.S. and Canada. Since the 1990s, the global capacity of nuclear reactors has stagnated, with most new units being built in China and Russia. Currently, the only reactor under construction in the Western Hemisphere is Ontario's.

Global Eyes on Ontario

The Darlington New Nuclear Project is being closely monitored worldwide, as the BWRX-300 reactor presents potential for future projects in several countries, including the U.S. and U.K. Thursday’s announcement marks a significant milestone, progressing from mere proposals to actionable plans in the nuclear domain.

Delays and Financial Strategy

Originally set to be completed by 2028, the construction timeline has been pushed back due to a delayed construction license from the Canadian Nuclear Safety Commission. OPG clarified that the costs will not be covered by government funding; instead, Ontarians will gradually see costs reflected in their electricity bills.

Comparing Energy Options: The Lower-Risk Choice?

OPG estimates electricity costs from the new reactors will hover around 14.9 cents per kilowatt-hour, contingent on federal investment tax credits. Alternatives, such as expanding wind and solar energy, would require significantly more generation capacity and infrastructure, leading to costs potentially ranging from 13.5 to 18.4 cents per kilowatt-hour.

Future of SMRs Depends on Costs

A recent report from the think tank Clean Prosperity highlights that the ultimate cost of the BWRX-300 will play a pivotal role in determining global interest in building similar reactors. Successful examples from countries like India and South Korea have demonstrated that lower construction costs of around $3 million per megawatt can stimulate rapid adoption.

Looking Ahead: The Stakes Are High!

The International Energy Agency warns that to ensure rapid uptake of SMRs, costs must drop to $4.5 million per megawatt by 2040 — a far cry from OPG's projected figures. OPG remains optimistic about staying on schedule and budget, with 80% of project spending set to benefit Ontario companies, keeping local interests at the forefront.

A Future Fueled by Nuclear?

With legislation recently passed to prioritize nuclear energy for future electricity demands, Ontario is not just investing in reactors; it’s investing in the future of energy. Plans for new nuclear capacity at both Bruce and a proposed new station in Port Hope illustrate a strong commitment to moving forward as part of an evolving energy landscape.