by Susan O’Donnell and M.V. Ramana – November 23, 2023
The major news in the world of nuclear energy this month is the collapse of the Carbon Free Power Project in the United States. The project was to build six NuScale small modular nuclear reactors (SMRs). Given NuScale’s status as the flagship SMR design not just in the U.S. but even globally, the project’s cancellation should ring alarm bells in Canada. Yet SMRs are touted as a climate action strategy although it is becoming clearer by the day that they will delay a possible transition to net-zero energy and render it more expensive.
The NuScale project failed because there were not enough customers for its expensive electricity. Construction cost estimates for the project had been steadily rising—from USD 4.2 billion for 600 megawatts in 2018 to a staggering USD 9.3 billion (CAD 12.8 billion) for 462 megawatts. Using a combination of government subsidies, potentially up to USD 4.2 billion, and an opaque calculation method, NuScale claimed that it would produce electricity at USD 89 per megawatt-hour. When standard U.S. government subsidies are included, electricity from wind and solar energy projects, including battery storage, could be as cheap as USD 12 to USD 31 per megawatt-hour.
A precursor to the failed NuScale project was mPower, which also received massive funding from the U.S. Department of Energy. Described by The New York Times as the leader in the SMR race, mPower could not find investors or customers. By 2017, the project was essentially dead. Likewise, a small reactor in South Korea proved to be “not practical or economic”.
Ignoring this dire economic reality, provincial governments planning for SMRs – Ontario, New Brunswick, Saskatchewan and Alberta – published a “strategic plan” seemingly designed to convince the federal government to open its funding floodgates. Offering no evidence about the costs of these technologies, the report asserts: “The power companies assessed that SMRs have the potential to be an economically competitive source of energy.”
For its part, the federal government has coughed up grants totalling more than $175 million to five different SMR projects in Ontario, New Brunswick, and Saskatchewan. The Canada Infrastructure Bank loaned $970 million to Ontario Power Generation to develop its Darlington New Nuclear project. And the Canada Energy Regulator’s 2023 Canada’s Energy Future report envisioned a big expansion of nuclear energy based on wishful thinking and unrealistic assumptions about SMRs.
Canada’s support is puzzling when considering other official statements about nuclear energy. In 2021, Environment Minister Steven Guilbeault said that nuclear power must compete with renewable energy in the market. The previous year, then Environment Minister and current Energy and Natural Resources Minister Jonathan Wilkinson also emphasized competition with other sources of energy, concluding “the winner will be the one that can provide electrical energy at the lowest cost.” Given the evidence about high costs, nuclear power cannot compete with renewable energy, let alone provide electricity at the lowest cost.
Investing huge amounts of taxpayer money in technologies that are uncompetitive is bad enough, but an equally serious problem is wasting time. The primary justification for this government largesse is dealing with climate change. But the urgency of that crisis requires action now, not in two decades.
All the SMR designs planned in Canada’s provinces are still on the drawing board. The design furthest along in the regulatory process – the BWRX-300 slated for Ontario’s Darlington site – does not yet have a licence to begin construction. New Brunswick’s choices – a sodium cooled fast reactor and a molten salt reactor – are demonstrably problematic and will take longer to build.
Recently built nuclear plants have taken, on average, 9.8 years from start of construction to producing electricity. The requisite planning, regulatory evaluations of new designs, raising the necessary finances, and finding customers who want to pay higher electricity bills might add another decade.
SMR vendors have to raise not only the billions needed to build the reactor but also the funding to complete their designs. NuScale has spent around USD 1.8 billion (CAD 2.5 billion), and the reactor still has many unresolved safety problems. ARC-100 and Moltex proponents in New Brunswick have each asked for at least $500 million to further develop their designs. Moltex has been unable to obtain the required funding to match the $50.5 million federal grant it received in 2021.
Adverse economics killed the flagship NuScale SMR project. There is no reason to believe the costs of SMR designs proposed in Canada will be any lower. Are government officials attentive enough to hear the clanging alarm bells?
Susan O’Donnell is adjunct research professor and primary investigator of the CEDAR project at St. Thomas University in Fredericton. M.V. Ramana is the Simons Chair in Disarmament, Global and Human Security and professor at the School of Public Policy and Global Affairs, University of British Columbia.
An earlier version of this commentary was published by The Hill Times.