Tuesday, July 14, 2009

No shock here

The Star reports on the "shockingly high" price which has forced Ontario to at least shelve for now the possibility of building new nuclear reactors: $26 billion for two reactors similar to the size which the Wall government is looking to push in Saskatchewan:
The Ontario government put its nuclear power plans on hold last month because the bid from Atomic Energy of Canada Ltd., the only "compliant" one received, was more than three times higher than what the province expected to pay, the Star has learned.

Sources close to the bidding, one involved directly in one of the bids, said that adding two next-generation Candu reactors at Darlington generating station would have cost around $26 billion.
AECL's $26 billion bid was based on the construction of two 1,200-megawatt Advanced Candu Reactors, working out to $10,800 per kilowatt of power capacity.

By comparison, in 2007 the Ontario Power Authority had assumed for planning purposes a price of $2,900 per kilowatt, which works out to about $7 billion for the Darlington expansion. During Ontario Energy Board hearings last summer, the power authority indicated that anything higher than $3,600 per kilowatt would be uneconomical compared to alternatives, primarily natural gas.
The bid from France's Areva NP also blew past expectations, sources said. Areva's bid came in at $23.6 billion, with two 1,600-megawatt reactors costing $7.8 billion and the rest of the plant costing $15.8 billion. It works out to $7,375 per kilowatt, and was based on a similar cost estimate Areva had submitted for a plant proposed in Maryland.

"These would be all-in costs, including building a new overpass and highway expansion to get the equipment in," said a source from one of the bidding teams, who asked to remain anonymous, citing confidentiality agreements signed with the province.

Stevens said Areva's lower price makes sense because the French company wasn't prepared to take on as much risk as the government had hoped. This made Areva's bid non-compliant in the end. Crown-owned AECL, however, complied with Ontario's risk-sharing requirement but was instructed by the federal government to price this risk into its bid. "Which is why it came out so high," said Stevens.
In fairness, there are plenty of reasons to think that the actual cost for Saskatchewan might be different. For example, with Bruce Power in the picture, there would be one more actor involved looking to skim off a layer of profits. In the absence of any experience with such projects in the region and need to import labour to get anything built, the contingencies involved might be even more severe. And of course, with Bruce Power looking to build on the old "Ontario model", the party in charge of building wouldn't be the one stuck with the tab, meaning that there would be more risk of overruns than would figure to have been built into AECL's bid.

All those factors aside, though, let's assume for the moment that the $13 billion per reactor cost presented by AECL roughly reflects what the price would be in Saskatchewan as well. That would mean that off the top, the cost of nuclear construction would shoot far past the range where it would compare to natural gas, wind or solar generation. Instead, the more pertinent comparison might be to purchasing an exercise bike for every Saskatchewan resident with the hope of powering the grid by pedaling.

Of course, Ontario is looking to get around the real cost by having the federal government pick up some of the risk to push the sticker price down. But that wouldn't do anything to actually reduce the expected costs, serving only to upload them to a different actor to try to hide the actual costs of nuclear construction. And when it's this glaringly obvious that the nuclear industry can't hold up without massive public giveaways, it should be equally clear that our resources are better put elsewhere.


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