Being the largest source of electricity in Canada’s most populous province, the nuclear power industry and how it is handled by public agencies are serious issues with wide-ranging consequences for Canadians and especially Ontarians. Yet nuclear energy, and particularly nuclear power policy, is not well understood. It may be the backbone of the province’s electric supply, but there are major unknowns as to exactly when and how nuclear capacity will be added to the system.
Much depends on the rates of future growth in power demand, on policy decisions related to the supply mix and on the evolution of a technology that is responding to changing market expectations. What is behind the current challenges facing the nuclear industry? And how is the sector likely to deal with them? These are questions of deep significance not just to the nuclear industry, but also to the broader energy business – and to society as a whole.
Owing to a downturn in nuclear construction over the last couple of decades, worldwide nuclear investment has been overlooked by some experts in forecasting future energy scenarios. Yet in reality the world is building and considering large amounts of new nuclear capacity, primarily in the new emerging markets like China, India and Southeast Asia. The scale of global nuclear construction is astounding, representing one of the largest economic factors on the planet. At the same time the technology is evolving: There are continuous advances in technology, including new reactor designs, applications, and potential use of new fuel cycles.
Ontario’s nuclear industry has always been a long term player. Being in a state of transition, adapting to new circumstances, recognizing changing conditions, these terms all carry special meaning to those in the nuclear power business. Capital-intensive and minimal-carbon like renewables, but delivering a steady stream of predictably-priced base load energy, the technology does not fit easily into policy models designed for either renewables or gas-fired power generation. In these respects, nuclear resembles large hydro more than any other power source, with one crucial exception: Ontario has relatively few large hydro sites remaining undeveloped, yet it has only begun to tap the potential of nuclear generation. While the potential locations for large hydro are physically limited, the limits on new nuclear development are primarily a function of capital availability and political readiness, although the latter varies over time and from locality to locality.
Requiring a high degree of co-ordination in public policy and relatively long-term thinking, it is not easy to initiate new nuclear energy projects, even refurbishments, with their long timelines and multi-billion dollar price tags. The benefits of nuclear energy (being virtually carbon-free, stable in terms of costs, non-intermittent, etc.) are not always fully appreciated by a public that is rarely able to devote the time required for a full understanding of technical questions. In the absence of technical grounding, members of the public are often susceptible to messaging from secondary sources, including everyone from nuclear critics to competitors to amateur comedians, who can easily stoke fears about safety, spent fuel storage, radiation and the like.
How to meet a physical requirement of society that depends on long-term policy support from a decision-making apparatus that often focuses on short term issues and almost always places a high value on flexibility and just-in-time decision-making
Fortunately, the Canadian nuclear power industry has become pretty good at adapting. Once seen as the primary driver of energy policy in the province, it is now perceived as the workhorse, underpinning the more fluid parts of the supply mix.
The key problem seems to be that the nuclear industry is struggling to get enough clarity on what the government and the public really want it to build in the next decade. Despite producing more than half the province’s power and serving as the bedrock of the Long Term Energy Plan, provincial decision makers have continually pushed back the timeline for establishing the specific terms as to how much will be built and when. Several distinct considerations may have been behind the various revisions of the timelines for finalizing nuclear decisions. A key one is probably the slow, uncertain recovery of power demand since the 2008 financial crisis and subsequent recession. But another has almost certainly been a growing recognition of the need to adopt new approaches that manage and share development risk more cautiously. A prime example of this was the announcement in June that OPG would hire two competing companies to prepare cost estimates for building new reactors, before any definite commitment is made to construction. Clearly, OPG and the government are focusing their efforts to identify, reduce and manage major project risk.
The prospects for maintaining nuclear power’s 50% market share in Ontario seem to depend on one of two things: either a more decisive approach from government or a general recognition of the sturdiness of overall long term growth in demand. In either case there will need to be a high degree of confidence that a new nuclear project can be delivered on time and on budget and that risk is being shared and managed appropriately. It could be that policy makers’ apprehension as to whether demand will grow enough to support significant additions to nuclear capacity is the main obstacle to establishing a more definite path forward. Or it could be related to what is certainly a complicated process of developing long-term risk-sharing approaches.
With this special feature IPPSO FACTO examines the interplay between the resolution of nuclear decisions and the development of the rest of the province’s energy plans. One can only hope that through such a process will emerge a greater degree of clarity and certainty for the system as a whole.
See related stories:
Throwing open the window: Ontario's nuclear industry looks to the future
Manufacturers identify spinoff benefits from nuclear refurbishment
Canada’s nuclear supply chain – generating innovation and creating jobs
Nuclear regulator enhances safety systems in wake of Fukushima
“Build for the future, even if you can’t see the future perfectly” - Interview with Denis Carpenter, President of the Canadian Nuclear Association