Federal Infrastructure Bank commits $970-million toward Canada’s first small modular nuclear reactor

Open this photo in gallery:

The federal government will provide nearly $1-billion in debt financing toward the construction of a commercial small modular reactor (SMR) – which will be a first in Canada and among the first built worldwide.

The Canada Infrastructure Bank announced Tuesday it will provide a low-interest loan of $970-million for an SMR at Ontario Power Generation’s Darlington Nuclear Generation Station in Clarington, Ont., about 70 kilometres east of Toronto. Infrastructure Bank chief executive Ehren Cory declined to disclose the loan’s interest rate, but characterized it as his organization’s largest-ever investment in clean power.

Mr. Cory added that the government’s objective was “getting this project launched as quickly as possible, and showing the role that nuclear can play as part of that overall clean solution.” OPG officials said Tuesday the reactor will begin supplying power to Ontario’s grid in 2028.

Ontario to extend life of Pickering nuclear plant until 2026

The loan represents by far the federal government’s largest financial commitment since it began promoting SMRs in 2018. Since then, Ottawa has provided tens of millions of dollars in grants to support Canadian-based SMR developers, but those are small sums compared with the billions required to deliver a mature reactor design. The government hopes success at Darlington will spur new SMR projects in Saskatchewan, New Brunswick and Alberta.

“We are doing this because nuclear energy, as a non-emitting source of energy, is critical to the achievement of Canada’s and the world’s climate goals,” Natural Resources Minister Jonathan Wilkinson said at an event Tuesday at the Darlington station.

With outputs of 300 megawatts or less, SMRs are physically smaller than reactors built during the industry’s heyday in the 1970s and 1980s. Darlington’s four reactors were built between 1982 and 1993, and they each provide 935 megawatts. Also, whereas traditional reactors were constructed on-site, most SMRs are intended to be partly fabricated in factories. The industry expects these features will lead to lower construction costs.

OPG said the Darlington SMR will be built at several facilities across Ontario, including by BWXT Canada Ltd. at its manufacturing facility in Cambridge, Ont. Buildings and containment structures will be fabricated and preassembled off-site, whereas Darlington’s concrete structures were poured on location.

In December, 2021, OPG announced it had selected GE Hitachi Nuclear Energy as a partner to build a BWRX-300, which is in some respects an updated version of a previous design known as the ESBWR, which was certified by the U.S. Nuclear Regulatory Commission.

The BWRX-300 is not yet licensed by the Canadian Nuclear Safety Commission. Saskatchewan’s SaskPower also selected the BWRX-300 design, but hasn’t yet decided whether to build one.

Mr. Cory said the Canada Investment Bank views the BWRX-300 as a tested design with a track record of deployments.

“We had technical advice from our side that said that many of the core elements of it, and the components, were well-tested,” he said. “So we view that technology as acceptable and moderate.”

According to the World Nuclear Industry Status Report, released by Mycle Schneider Consulting earlier this month, there have been no major advances in SMR technology in recent years. Many previously announced SMRs are either years – and in some cases decades – behind schedule, or have performed poorly.

What the report did observe was “increasing media attention and some additional public funding commitments.” In February, French president Emmanuel Macron announced US$1.1-billion in funding toward development of an SMR design. The U.S. Department of Energy has announced up to US$5.5-billion in funding for SMRs, in addition to US$1.2-billion it has already spent, although no SMRs have yet been built on American soil.

M.V. Ramana, a professor at the University of British Columbia’s public policy school, specializes in energy and is a co-author of the World Nuclear Industry Status Report. He said OPG’s timeline is unrealistic, and delays are likely.

“This particular design is still very preliminary,” he said. “When a design is submitted to a regulator for a safety review, typically the regulators ask questions, and the design starts getting changed ... and that means there is no way to have an assessment of how much this reactor would cost.”

OPG said the Darlington SMR will be cost-competitive with other forms of generation, but did not provide a cost estimate. “We will issue a cost ahead of construction,” said spokesperson Neal Kelly in a written response to questions. “We’re still in the site preparation phase of the project.”

OPG said it’s taking a “gated approach” to the project, with each phase requiring board approval. Mr. Cory said if OPG decides to abandon the reactor at any stage, the loan’s terms require full repayment. Taxpayers also won’t be on the hook for cost overruns, he added.

The Canada Investment Bank takes direction from the federal government on what sectors it can invest in, and this time last year, nuclear was not specifically designated as a target for investment.

“In Budget 2022, the federal government made clear that within our clean power mandate, they wanted to include in that scope the potential for small modular reactors,” Mr. Cory said. “That gave us the authority to go out and source deals.

“We continue to talk to other jurisdictions who are also pursuing nuclear, so this probably won’t be the last.”