The Toronto Star
November 21, 2012
John Spears


Challenging Ontario’s new nuclear plants

A new nuclear debate is starting to percolate in Ontario.

At industry conferences and in the corridors of Queen’s Park, energy activists are questioning whether Ontario should invest billions in new nuclear energy units.

But these activists aren’t the long-time foes of the nuclear industry, who based their arguments on moral and environmental grounds.

They’re working for corporate clients, and asking hard questions about the economics of nuclear power, given the alternatives like plentiful natural gas.

They’re suggesting that producing electricity with gas may be cheaper, faster and less risky than building new nuclear units.

“In our view it’s going to be extremely challenging for any government in the future in this province to do new nuclear,” Jason Chee-Aloy of the consulting firm Power Advisory LLC said in a recent presentation.

“From a pure dollars and cents cost point of view, there are real issues with it,” he told the Association of Power Producers of Ontario. (APPrO)

Chee-Aloy is not a fringe player. He’s an economist and former senior energy bureaucrat with the Ontario Power Authority.

The skepticism is a direct challenge to Ontario Power Generation’s proposal to build two new reactors, each capable of producing 1,000 megawatts, at its Darlington nuclear station.

Bruce Boland, senior vice president of OPG, puts the case for building new nuclear units:

“Same reason we’ve done nuclear in the past,” he said in an interview: “Reliable, relative low cost power, and very clean.”

Most nuclear jobs are in Ontario, he noted.

“And the fuel cost is extremely low and stable, relative to other types of fuel.

Once you’re past the capital development stage, the costs tend to be very stable.”

Chee-Aloy, by contrast, zeroes in on those up-front, capital costs.

The capital cost of a nuclear plant is five times that of a gas plant, he says, citing figures from the Energy Information Administration in the U.S.

New nuclear units will need to charge 15.5 cents to 19 cents a kilowatt hour for their output, he told APPrO, while gas plants can operate for 8.5 cents to 12 cents a kwh

Chee-Aloy and his partner John Dalton argue that the economics of the alternatives need to be more fully explored – specifically, the flood of natural gas from shale deposits that is now flooding onto North American markets and lowering prices.

“Where you have gas prices where they are, it makes the economics of new nuclear more of a challenge,” said Dalton.

Nuclear advocates disagree.

Denise Carpenter, who stepped down as president of the Canadian Nuclear Association last week, says the gas advocates don’t allow for a possible carbon pricing system that would drive up the price of gas.

“If you’re looking at the short term, you might say gas is the thing to do,” she said. “But in the long term, I question that.”

Boland agrees. Energy planning should have a 40-year horizon, he said – and a lot can change.

“There’s uncertainty on every resource you look at,” he said. “The correct answer – and I think Ontario has got this right over the years – is to rely on a mix of resources.”

It’s dangerous to tilt the table too heavily toward gas, he said.

“If the alternative is putting 100 per cent of your money on one resource, I think there’s a fairly severe risk associated with that, if that resources doesn’t pan out the way you expect.”

He noted that the province has commissioned two nuclear companies –Candu Energy and Westinghouse – to prepare firm, detailed cost estimates for the new nuclear units by next summer.

Boland also noted that the province has invested heavily in eliminating carbon-spewing coal-burning power plants; replacing nuclear plants with gas would put some of that carbon dioxide back in the air.

Chee-Aloy is not the only skeptic.

Adam White, who heads the Association of Major Power Consumers of Ontario (AMPCO) also says hard questions have to be put about new nuclear units.

“The common wisdom always has been that we need to build to accommodate economic growth,” White said in an interview.

“We see now that the economy grows and electricity consumption falls. That’s been happening consistently over the last decade. Who are we building it for?”

White argues that the risk of new nuclear plants is high in part because of the long lead time needed to get regulatory approval, then build the plant.

“With gas, you’re up and running in 18 months,” he said.