Nuclear power – the smart path

Lisa Raitt: Thank you for tuning in to The Raitt Stuff. I’m your host Lisa Raitt, former cabinet minister in Stephen Harper’s government from 2008 to 2015. I’m here now at CIBC Capital Markets and in this podcast, I’m going to share insights on current hot topics in the areas of public policy, politics and business with some guests along the way. Hi and welcome back to The Raitt Stuff. In the summer of 2021, The Globe and Mail published a piece on small modular reactors, and the title was, Governments, utilities and the nuclear industry hopes small modular reactors will power Canada’s future. A pretty optimistic title. But it went on to say that they didn’t know whether or not these could actually get built. In December of 2021, Ontario Power Generation announced that they had selected BWRX-300 SMR for the Darlington new nuclear site, with a completion date as early as 2028. And I’m delighted to have with me today Ken Hartwick, who is the president and CEO of OPG, to talk about this announcement and this exciting project and what it means to the Canadian economy and to our climate goals as well. Ken, thanks for joining me.

Ken Hartwick: Thank you. I really appreciate the invite. Look forward to the conversation.

Lisa Raitt: Absolutely. So why SMR? Why is small modular reactors so important? I mean, you’ve got the big ones, you’re dealing with those, you provide Ontario really important baseload and now you’re looking at the smaller ones. What’s the interest in that?

Ken Hartwick: So I think there’s two primary reasons to consider the SMR path. The first one is if you look to the history of nuclear and the problem of constructing large nuclear plants, it’s complex when you’re building a very sophisticated machine as a construction project. The intention on the SMR side is that for the most part, the reactor’s made in a factory, it’s shipped, it’s installed. And so it takes a lot of the construction risk out. The second key feature on an SMR is what the first letter is, they’re small. So again, the applicability to place them around the grid where they’re needed at a size that helps support electrification is now there versus big, large reactors that might be too much in one position or too much for one province or country in one position that is looking at it. So it’s really those two reasons take us towards the SMR profile.

Lisa Raitt: Right. So three hundred megawatts. I understand that could power a small city. How many houses is that, would that be powering?

Ken Hartwick: It’s about two hundred and seventy thousand houses. So you’re right, it’s a decent sized city for each reactor.

Lisa Raitt: Yeah. And can you couple these up to get a larger reactor out of it if you have like a population of four million?

Ken Hartwick: Sure. At our Darlington site where we would propose to build it, we actually have enough land there to put four of them side by side, and I think we’ll build the infrastructure to support more than one. And over time, as electrification takes hold, we’ll look to add to them. I think the important thing is to get the first one right and then then worry about number two, three and four. So task at hand is number one.

Lisa Raitt: Yeah, exactly. But they’re scalable and they’re buildable, and they’re not only just for baseload. My understanding of SMRs is that they have this capability and capacity to power up and power down a lot more quickly than the larger nuclear reactors.

Ken Hartwick: You’re right. On the CANDU technology, the large ones, they’re meant to run basically full tilt all the time. Most of the SMR technologies have flexibility now to be able to cycle them to full power and less power, which then helps deal with profile issues around wind and solar and intermittency that happens around these technologies. So the technology has advanced as well to support, I think, where the grid is broadly moving.

Lisa Raitt: Yeah, supply chain, I want to talk about for a second. The CANDU reactors allowed for the creation of an incredible supply chain in southwestern Ontario. So many industries popped up, so many industries that created great jobs, manufacturing jobs, as well as innovation. Can we look forward to the same kind of thing happening with your purchase of the SMR?

Ken Hartwick: Yes. So our goal definitely was to be first to develop an SMR on our site. And it’s really first of all, the Ontario power system needs it. So it was an obvious reason. But secondly, we think we can give that same supply chain that is amazing around our CANDU reactors, sort of reinvent themselves onto the new technology. So I think the advantage of going first and going with General Electric Hitachi as the technology, is it’ll give our supply chain the ability to, I think, be the leader as these look to be developed around the world. And a few days ago, I was in Cambridge at BWXT, which is one of our big suppliers, and they’ve signed a deal with GEH and The Polish Group to build the same technology in Poland. So it’s a great example. Canada can lead here. We just have to decide we want to.

Lisa Raitt: Yeah. And, you know, we’ve led in the past in nuclear and it’s great to have both the technology innovation and the uranium here. I mean, we’re the full service shop for all that stuff. Ken, I’m wondering, you mentioned electrification. Now there’s lots of policy levers being put in place to encourage Canadian consumers to purchase electric vehicles. And there’s also a mandate being put in that they’re going to stop selling vehicles that aren’t electric by, I think, 2035 or at least that seems to be the goal. If everybody goes home at night and plugs in their electric vehicle, can the system handle it?

Ken Hartwick: The short answer, if they did that today, is no, because it’s not just vehicles. Vehicles is the biggest one, but you know it’s buses, it’s trucks, it’s heavy equipment. We see arc furnaces in the steel industry converting to electric, and all of these things will drive a demand onto the system that is very different. You know, we’ve looked at the projections for Ontario and we would say the power system, if everyone electrifies the way we think it does, needs to be about double the size it is now. So if you did that today, the system simply does not work. It’s not ready for it, but you presumably have a few years to get ourselves ready for that eventual occurrence.

Lisa Raitt: Yeah. And do you guys have a mandate of how much power you’re going to be expected to generate?

Ken Hartwick: It’s sort of a little bit of a chicken and an egg right now. So you know, everyone you know, most governments have announced a climate target. You know, how much GHG reduction, et cetera, needs to be done by certain dates. You back that up into what needs to be electrified in order to have a chance to get there. And then that starts to tell you the power demand and like I said, we think if you looked out to 35, if you were serious about hitting a climate target, power systems need to be double the size they are now. And that’s every technology. You know, nuclear, we think is going to be a big part of it. But so is solar. So is wind, so is hydroelectric. But this task should not be underestimated. It’s much bigger than anyone thinks.

Lisa Raitt: Yeah, and these SMRs are really good backup for the intermittency of solar and wind, too.

Ken Hartwick: Yeah. And as I said right at the beginning, you know, the size of them makes them much more system grid friendly because it’s not like you’re dropping. Our Darlington site is basically thirty six hundred megawatts on one site. SMRs gives you the ability then to locate them, you know, with community approval closer to where the loads are actually needed.

Lisa Raitt: Right. So we’ve talked about all the whys and the great benefits that will come from it. But we both know, Ken, devil’s in the details. So you’ve gone through a process so far, but you have a lot of process to go through. So can you give us an idea of what it’s like to try to build and position a nuclear reactor in Canada? Because I have an idea, because I’ve been through it, but I like for you to explain to the folks who are listening just how intensive this is.

Ken Hartwick: Yeah. So, you know, the first thing I always got told was don’t go first. But we’re going to do that anyway. But I think if you look to having something operational in 28, the first step in that is an application to the Canadian Nuclear Safety Commission. So the regulator. Which we would target for the end of 22. That’s about a two year process to get the approval for it. And it’s very technical, very heavy on engineering, safety, all the things you would think. And while we’re going through that process, we will start site preparation with the intention of starting construction and all the pieces that go along with it in 24. And then it’s around a four year build to put it in place. And I do want to go back to your opening comment around The Globe and Mail article around this being done. It wasn’t that long ago that we were told that you could never do a refurbishment of a nuclear station on time and on budget. And I do want to remind people that our Darlington project, which is twelve point eight billion, we brought the first reactor back on time, on budget and it’s running great. We’re in the middle of the second unit on time, on budget and is progressing well. And so again, I think on the SMRs, we’ll prove like we are at Darlington. This can be done. It just requires a little bit of concentration.

Lisa Raitt: Yeah, I still have the scars from the Point Lepreau refurbishment, Ken, so that’s where we got the bad reputation. (laughs)

Ken Hartwick: The industry has learned a lot. So it’s taking lessons learned and actually applying them versus writing them down is the mantra inside our company. So I think we’re applying them. I think Bruce Power is and that’s why I think we see nuclear getting ready for a resurgence as the key technology to allow anyone to get to climate change.

Lisa Raitt: Yeah, I’ve noticed on television that OPG has done a pretty large advertising buy of educating Ontarians about SMRs. Tell me a little bit about your public advocacy side.

Ken Hartwick: Sure. I think it’s to in part, it’s exactly that. It’s educational. We had two sort of themes in this. One is to ensure people will recognize it’s not nuclear as opposed to something, it’s nuclear and other things. You know, the other renewable technologies that we’ve talked about. And the second thing is on the safety front, is it is an exceptionally safe technology. All of them are. CANDU is, the other ones around the world. And if you talk to anyone in Durham region where our two big plants are, Pickering and Darlington and Bruce County, the community there, everybody lives beside the plant. They probably work at and or have somebody in the family that works there. And so it’s just broadening that out, and it’s interesting what we’re seeing increasingly is younger people, so call it, you know, late teens to 30 all now are starting to say, yeah, this is the right choice, the right technology. And that’s where we wanted to get the education targeted to make sure they had the right information because there’s lots and lots of, I’d say, poor information out there. So we just want to make sure it’s balanced.

Lisa Raitt: No, it’s great. Any other interest from other provinces? Are they watching you carefully? Because, you know, nuclear power is something that’s going to happen in provinces where it needs to happen, where there’s no other alternative to coal or fossil fuel based carbon emissions. So anyone else talking to you about this or are they watching?

Ken Hartwick: I’d say that the group watching is around the world. So in Canada, you know, New Brunswick already has nuclear. So they’re obviously part of the conversation. Saskatchewan has said they’re going to go nuclear to replace coal plants. Alberta is now active in the conversation, and that’s really a different process. They went for processing oil, so oil and gas, so to reduce carbon emissions that way. But the large parts now of Europe and the United States are wanting to join in on our group and our team, and we think this is just a great opportunity for Canada and we should not let it escape us the way the CANDU opportunity did. And that’s really what we’re very focused on, ensuring that we’re the leaders in this.

Lisa Raitt: Great, well, you’re being a trailblazer and it’s a good combination of private ingenuity and public confidence, I think is the best way to put it. So best of luck, looking forward to 2028 and thank you so very much, Ken, for joining us again today on The Raitt Stuff. Thanks.

Ken Hartwick: Great. Thanks, Lisa. I appreciate it.

Lisa Raitt: Thanks so much for tuning in. Now, if you have any questions or comments or even requests on topics to discuss, drop me a line at lisa.raitt@cibc.com. Your interactions actually will make this better. I’m your host, Lisa Raitt, and this has been The Raitt Stuff. I’ll talk to you next week.

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