The two big-name companies that won't be designing Ontario’s next nuclear reactor

OPINION: The province has passed over two major players on its shortlist for a small-modular-reactor design. Will that mean a more competitive process?
By John Michael McGrath - Published on Oct 09, 2020
Ontario Power Generation has announced it will be working with three companies to refine their engineering and design work for small nuclear reactors. (Lars Hagberg/CP)

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The Ontario government — along with the governments of New Brunswick, Saskatchewan, and (probably) Alberta — wants to develop a new generation of nuclear reactors in Canada. This week, the provincially owned Ontario Power Generation announced it was taking the latest step toward that goal and would be working with three different companies to refine their engineering and design work so that eventually one can be selected for completion.

The three lucky companies are Terrestrial Energy (covered previously on TVO.org), GE Hitachi (with generations of nuclear experience in the United States), and X-energy. At least as notable, however, are two major omissions: NuScale and SNC-Lavalin, which makes the CANDU reactors that Ontario has relied on for decades.

NuScale is probably the company that makes a real-world product closest to the kind that Ontario is looking for — a small modular reactor that can be produced more economically in greater numbers. NuScale has spent hundreds of millions of dollars to advance its design through the U.S. approvals process and received its final certification from the American Nuclear Regulatory Commission in August.

The problem for NuScale is that its design is meant to be packaged in clusters of up to 12, which is fine if you need 12 — but, right now, Ontario is looking to find one reactor that it could build reasonably quickly, to prove the design works and can be built economically, and then to reproduce it in other provinces, such as Saskatchewan (where retiring coal-fired power plants and replacing them with nuclear power could mean a relatively easy win for the climate).

The reason SNC-Lavalin and its CANDU division was passed over is more complicated — and more interesting. Until earlier this year, it wasn’t even clear that anyone was thinking about a CANDU reactor in the SMR class: the company has focused on the much larger reactors that have traditionally been the backbone of systems that use nuclear power.

In June of this year, however, SNC-Lavalin announced it was submitting a reactor design to the Canadian regulator in the 300-megawatt range — putting it on the larger end of the spectrum for something that’s still supposed to be “small” but is still smaller than traditional CANDU designs. Terrestrial Energy, by comparison, is offering a 195-megawatt design. Canada’s nuclear industry tried to market a 300-megawatt CANDU reactor in the 1980s (the CANDU 3) but never found a buyer.

This presented the government with a dilemma it has faced repeatedly over many political generations: Should it support a local industrial employer with deep roots in the province, or should it go with a different vendor that might be more competitive and offer Ontarians better value for the money? (Technically, OPG isn’t “the government,” but its sole shareholder is the minister of energy, northern development and mines, which currently means Greg Rickford.) The complicated history of municipal-transit procurement in general — and of the Bombardier plant in Thunder Bay in particular — indicates how the dilemma can distort policymaking.

For now, OPG has opted not to include a CANDU on its shortlist of vendors.

“OPG’s fleet of CANDU reactors are among the top-performing CANDU units worldwide, which is why OPG is investing in Canada’s largest clean energy project — the refurbishment of the reactors at Darlington,” OPG spokesperson Neal Kelly told TVO.org in an email. “However, the demand forecast for Ontario does not currently anticipate the need for CANDU-sized reactors in the near-term, nor do the demand forecasts for other provinces who are seeking to phase out coal generation.”

SNC-Lavalin spokesperson Ken Chiu told TVO.org via email that the company isn’t out of the SMR market by any means: “The urgency of climate change has prompted us to bring a 300 MW reactor back to the table. We did engage with OPG late last year, and we will continue to engage with other interested Canadian and international parties” on the CANDU. He also noted that, while it has developed its own reactor design, SNC-Lavalin also works with other nuclear vendors looking to build SMRs.

Nobody’s rending their garments or throwing a tantrum over this news, then. But is it good news for Ontario?

If you’re opposed to nuclear power in any form, the answer is simple: no, because any kind of official interest in nuclear power is bad. Sorry you made it this far!

The optimistic argument is that, because the province didn’t move heaven and earth to shoehorn CANDU into the process, the people of Ontario will actually get one that’s reasonably competitive. That’s still no guarantee of value — indeed, this whole program is largely aimed at trying to keep the province’s nuclear industry active after the current refurbishments at Bruce and Darlington are complete.

But there are better and worse ways to do that, and simply handing the prize to SNC-Lavalin out of nostalgia for the CANDU design would have been a poor guarantee of value for electricity customers.

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