Tuesday, July 14, 2009

The numbers are out. Or in. Or something.

Two weeks ago the government of Ontario notified the public that the bid by Crown Corporation AECL was being abandoned because the price was too high. What we didn't know was how high the bid had been, and whether Smitherman was right to balk. (I assumed so, but the Province has been throwing so much good money after bad in the auto sector...) Well, the Toronto Star has the numbers today (via The Jurist):
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.

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.
That's extraordinary. The economics of wind+storage are becoming so favourable, so quickly, that AECL (and every other fission-monger) has an enormous incentive to wring out every possible efficiency early on to try and guarantee some kind of path dependency for future governments. But, when confronted with a government that demands even a bare measure of transparency in its accounting[1], they can't even do that.

This is not a great day for the nuclear industry in Canada. Having said for years that if they couldn't sell an ACR to Ontario, AECL was going to go out of business, they simply cannot bring their costs down to make nuclear a viable option. (This doesn't imply incompetence on AECL's part -- you can't do the impossible, and my guess is this basic scenario will be played out in a bunch of different countries in coming years.)

There are plenty of options left. If the province still has a hard-on for nuclear, building the previous generation of CANDUs -- the ones that Darlington was built to accomodate in the first place -- may save some money, though I imagine they'll still be more expensive than gas. Natural gas supplies have recently been uprated with the addition of enormous shale gas resources (I'm skeptical about these claims, however.)

What will probably happen is some variant of the following: the new nuclear build will be conclusively terminated, the refurbishment will go ahead (and extend the lifespan of some of our reactors) and the explosive growth in Ontario's wind energy industry will continue or even accelerate. Because of our ample nuclear and hydro capacity, we have baseload and spinning reserve to accommodate a high percentage of wind power (though certainly less than 50%) until somebody cracks the energy storage nut. Whether it's ZENN's Eestor-powered cars, or more mundanely some pumped-hydro or compressed-air variant, there are plenty of options for energy storage (and anybody who's still carping about intermittent renewables is basically not a credible voice.)

We won't go entirely nuclear-free for decades, but if the government is smart they'll put us on a mildly greener path than the one we were on only a month ago.

[1] The McGuinty government insisted on price transparency from the fission-mongers, but has been incredibly, notoriously secretive with its employers -- i.e., the Ontario public. It's worth noting that there's not a single government confirmation in the Star piece. It's pretty shameful to have a matter of public importance played out like a Balinese puppet show.


Brad F said...

Like you, I'm having trouble stomaching the reported $26B price tag. After all, AECL's new design ACR was aupposed to cost 40% less per MW than the Candu 6. That makes me wonder what is in that rather large number. Financing costs? Operating costs over X years? All development costs for the ACR program thus far? A "commercial" return for AECL to satisfy their political overlords? How much of the cost is due to the requirement for a fixed price? The point is, we don't have a clue what $26B means. It's just a big number that was leaked to scare everyone.

The economics of wind+storage are becoming so favourable, so quickly...

Ummm, not so much. Small amounts of wind can be accomodated in our existing power systems by using the existing resources in those systems. Except perhaps for some demonstration projects, no one is building storage to accomodate wind power. It is too expensive. Wind already has a high capital cost and it is NOT dropping. Add the cost of storage and any business case gets blown out of the water.

...they simply cannot bring their costs down to make nuclear a viable option. (This doesn't imply incompetence on AECL's part -- you can't do the impossible...

As I pointed out above, we have no idea what's in that number. But your suggestion that it is impossible to lower costs is without merit. It is true that heavy water reactors are expensive to build, but AECL has built reactors on time and on a modest budget in Asia. Not all of the low cost can be attributed to lower labour costs, although that's certainly a factor. The cost of regulation is probably a big uncertainty in AECL's bid, as is the cost of labour and interest rates 5+ years from now. By many accounts AECL has done an admirable job in learning from the mistakes of the past by minimizing construction time and therefore uncertainty. But those learnings are not evident in a whispered $26B number.

We won't go entirely nuclear-free for decades...

You say that like it's an admirable goal. I disagree. Our modern lifestyle is dependent on large quantities of cheap energy. Fission is the one technology that can provide that kind of energy without environmental devastation. I note you've mentioned Bussard fusion elsewhere. That would certainly be the cat's meow, if it works. If it doesn't, how about liquid fluoride thorium reactors? Check out thoriumenergy.blogspot.com if you're curious.

Brad F said...

From another online source: "First, $26 billion is an aggregate number that includes two reactors, turbines, transmission and distribution infrastructure (power lines or T&D), plant infrastructure, and nuclear fuel for 60 years as well as decommissioning costs. The most important number in the whole controversy has gone largely without notice and that is the delivered cost of electricity from the plants is in the range of five cents per kilowatt hour."

Take that, and the original $26B number, with a large dose of salt. But if true, is kinda explains the high number. And suggests that someone want to kill the project politically.