Electricity from nukes too cheap to meter!
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.
It means a single project would have wiped out the province's nuclear-power expansion budget for the next 20 years, leaving no money for at least two more multibillion-dollar refurbishment projects.
"It's shockingly high," said Wesley Stevens, an energy analyst at Navigant Consulting in Toronto.
Energy and Infrastructure Minister George Smitherman announced on June 29 he was suspending a competitive process for the purchase of new reactors for Ontario. He cited the price tag as "billions" too high, but would not reveal the amount of the bid from AECL, deemed the only compliant proposal out of three offers.
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.
Much of the dramatic price increase relates to the cost of labour and materials, which have skyrocketed over the past few years. Nuclear suppliers and their investors also have less tolerance for risk.
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. (SO WHO'S ASSUMING THE RISK IN MARYLAND?)
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.
