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OSEA: Ontario Doesn't Need Nuclear

Posted on December 9, 2011

The Ontario Sustainable Energy Association (OSEA) just released a report suggesting there is no business case for nuclear power and that, without subsidies, the industry would not survive in Ontario. The report, Nuclear Power: Where’s the Business Case, argues that nuclear power retains an unfair advantage over renewable power generators because of federal and provincial subsidies. It also points out that, in Ontario, no nuclear project has ever been delivered on time and on budget, including mid-life refurbishment projects.

The report suggests that Ontario Power Generation (OPG) is planning for a future energy mix based on a 50 per cent grid allocation to nuclear power (the name of that report is not cited). Ontario’s Long Term Energy Plan (OLTEP) allocates 46 per cent of future grid space to nuclear generation. According to OSEA’s report, this plan will result in a centralized energy and transmission system and make it difficult for Hydro One to invest in distribution circuits. According to the report this will “undercut efforts to build out and sustain Ontario’s green manufacturing sector and related jobs. These will only be as robust as the scale of opportunities to build new green generation.”

However, the report fails to explain why a significant investment in nuclear reactors from OPG will actually affect Hydro One’s ability to invest in local distribution systems. The report cites the construction of the Bruce to Milton transmission line as a $650 million subsidy to nuclear power(because Bruce Nuclear required the transmission line to feed power from the newly refurbished reactors at its site), but fails to mention that this transmission line is serving a dual purpose–it also allows major wind farms a connection point for grid access. While it is true that the project is primarily for Bruce Nuclear, the report does not make it clear that major renewable generators will also gain increased transmission access.

OSEA further suggests that Ontario does not require nuclear power for baseload supply because of the availability of hydroelectricity and the opportunities for major industries to adopt Combined Heat and Power (CHP) systems. Yet, the report does not provide any numbers showing how much energy will be required in the future. The OLTEP suggests, under its medium growth forecast, that the province will require approximately 160 TwHs of electricity per year. With no reference to these kinds of numbers in its report, OSEA has a hard time proving that Ontario will not require additional baseload power. In addition, there are no numbers showing the potential available megawatts of power from hydroelectric and CHP projects. This, again, makes it difficult to assert that Ontario will not require additional baseload power.

The report is accurate in its statement that nuclear power is heavily subsidized by taxpayers and that a new system, completely free of subsidies for both renewable power and nuclear, would be a good opportunity for developing the energy grid. Nuclear power is heavily subsidized; nuclear operators do not assume the full risk of cost overruns for construction and refurbishment; the public has paid the vast majority of overruns for every nuclear project.

One exception is the latest refurbishment project at the Bruce Nuclear facility, for which the Ontario government has made an alternative arrangement. The Province is only responsible for 50 per cent of cost overruns up to the first $300 million and 25 per cent up for between $300 million and $3.4 billion.

OSEA’s report also correctly points out that nuclear operators do not pay to fully insure their facilities. Because of the extreme cost associated with cleaning up and rebuilding after a nuclear accident, insurers will not fully insure a nuclear facility; the federal government holds that responsibility. This is in contrast to renewable power operators, who pay the full market cost of insuring their facilities against damage and construction accidents.

The research and development of new nuclear reactors is also subsidized by the federal government, which has paid millions of dollars to keep Atomic Energy of Canada Ltd. afloat. Interest rates for nuclear projects are also subsidized by the provincial government, which offers low interest loans for reactor construction, which in Ontario have historically been over budget and delivered late. In contrast, developers of renewable energy are responsible for securing their own financing and pay interest rates according to their respective deals with private lenders.

While the report does accurately describe the reasons why nuclear power is an incredibly expensive and heavily subsidized form of energy, it does not prove that renewable energy can replace nuclear. By failing to show how much energy could be generated by the suggested baseload replacements, or how much energy Ontario will require in the future, the report fails to demonstrate that Ontario does not need nuclear power.



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