Power market developments
Nuclear: necessary15 February 2006
The long-awaited supply mix advice and recommendations report by the Ontario Power Authority finds that nuclear should be the backbone of electricity supply in the Canadian province for decades to come.
Ontario is the most populous province of Canada, itself one of the coldest countries in the developed world. In Ontario, the two factors of sheer demand for electricity and high environmental awareness have led to a potential energy crisis.
The province’s government was elected on a promise to phase out its 6400MWe of coal-fired generation from the electricity mix by 2007. And although that deadline has slipped to 2009, the sentiment of saying ‘no’ to coal, as former energy minister Dwight Duncan put it, remains. But the problem is not just that 6400MWe of demand must be met by other means, but also that the nuclear infrastructure that currently provides 51% of electricity will require replacement or refurbishment over coming years.
Ontario’s administrators are well aware of their situation. The 2004 Electricity Restructuring Act transformed the Ontario Power Authority (OPA) into a strategic planning office with an explicit mandate to forecast electrical supply and demand in the medium and long term. In May 2005, the OPA was requested to give advice on how to achieve an appropriate energy mix by 2025, taking into account conservation targets and new sources of renewable energy.
“With supply already tight as a result of this underinvestment, the sector faces the loss of a major part of its current supply mix as most units of its nuclear fleet reach the end of their design life over the next several years,” the report says, adding: “The loss of nuclear generation would come immediately on the heels of replacement of coal-fired stations, scheduled for completion by 2009. Together, the combination of demand growth and generation retirements would create a gap of roughly 24,000MWe by 2025, equivalent to about 80% of Ontario’s current capacity.”
The OPA report explains in plain English that “planning supply mix would be simple if a single resource were superior to others in all areas – environmental impact, reliability and costs – and could meet equally well the needs of base, intermediate and peak load. The reality is that no such single resource exists – a combination of resources and technologies is needed, and tradeoffs and synergies among them must be considered.” Comments on the report from the public and energy minister Donna Cansfield will be considered by the OPA before it prepares the province’s first 20-year Integrated Power Plan, which will be presented to the Ontario Energy Board in the summer. The plan will be reviewed and updated every three years and it is hoped that this new effort at long-term thinking will quickly begin to counter a decade of underinvestment.
Amir Shalaby who headed the report team as the OPA’s vice president of power system planning said: “We believe we have created a careful balance between urgency and opportunity. Our role as planners is to address the urgent problems with solutions that don’t foreclose on our tremendous opportunities for the future.”
The OPA’s recommendations form a three-pronged strategy for the future energy mix. Most importantly, coal generation will indeed be phased out on health grounds by 2009, although it could again begin to play a role towards the end of the pre-2025 timeframe as ‘clean coal’ technologies mature. It is expected that environmentally acceptable new natural gas will make up most of the lost coal capacity, playing a “targeted but critical” role, being deployed quickly for combined heat and power plants, load-following and renewables shadowing. The OPA said that small hydro and wind are very attractive, but a lot of time and money would need to be spent on them to get a lot of power. The report states that renewables could not be expanded to do more than meet the expected increase in demand, let alone replace retiring coal and nuclear plants, but that together, natural gas and renewable sources can replace coal.
Conservation is one of the most cost-effective ways to stretch supplies and the OPA thinks the provincial government should work to create a conservation culture. Shalaby said the opportunities for conservation in Ontario were considerable but “we do not know exactly how much we can bank on. For the advice we make it clear that Ontario can benefit from as much economical conservation as we can get.”
A range of gains were explored between 1800-4300MWe (5-12% of requirements), coming from efficiency, demand reduction and demand response measures. 1000MW of gas-fired cogeneration was also assumed. A saving of 1800MWe was considered a “reasonable and prudent assumption because of the high level of certainty that it will be achieved,” though it is not the limit to demand reduction ambitions. The OPA has a conservation bureau with the objective of achieving the greatest possible savings – it considers that the contribution from conservation and renewables would probably be about equal to projected demand increases.
According to the OPA, nuclear technology must remain at the heart of Ontario’s electricity supply: “Nuclear generation has a continuing role for baseload needs,” it says. “The role of nuclear is not expected to change from its current contribution of 50% of electrical energy in Ontario.”
The OPA’s analysis shows that through its lifecycle, a nuclear plant has less overall environmental impact than an equivalent gas-fired plant and operates at lower cost for baseload needs. In fact, gas is described as being unsuited to a baseload role because “it presents risks across all three dimensions of cost, environmental impact and financial risk.”
The OPA report does not raise any potential problems with nuclear power in Canada, either in waste management or financial risk. It states: “Changes in the Ontario electricity sector over the past few years make it possible to better manage the major risks of nuclear construction, which are cost overruns and delays” and cites the “significant progress” that has been made in recent years on the problem of long-term spent nuclear fuel management. The Nuclear Waste Management Organization released a carefully consulted study in November 2005 advocating a strategy of adaptive phased management for stocks of used Candu fuel.
Refurbishing existing units, rebuilding on existing sites and undertaking new build can all contribute to maintaining the share of nuclear in Ontario’s supply mix at roughly its current level. Indeed, the restarts of Pickering A units 1 and 4 have already added 1180MWe since 2003, and Bruce A 1 and 2 would provide another 1540MWe on their restart in 2010 and 2009 respectively. Bruce A units 3 and 4 are also slated for refurbishments for extended lifespans.
The OPA is calling for C$56-83 billion to be spent on power generation overall of which, in order for nuclear to maintain a 50% share, up to C$40 billion ($34.8 billion) would go on new nuclear power projects, most likely to include at least one new four-unit station.
In an interview with The Canadian Press, Pierre Charlebois, Ontario Power Generation’s (OPG’s) chief nuclear officer said: “If a decision is to be made… our Darlington site clearly would be an ideal site for a new build.” The Canadian government has reportedly been looking at the possibility of building two 900MWe Candu reactors at the site.
AECL’s vice president of marketing and business development, Patrick Tighe, said recently in London, UK that the company was expecting its first order for a pair of ACR1000 units in the 2012-2014 timeframe. He added that the Canadian Nuclear Safety Commission was in the process of reviewing the design and that there were “no obstacles” to an in-service date of 2015. Tighe was very confident of ACR1000 deployment in Canada – not least because other vendors’ designs have only a theoretical chance of breaking AECL’s preferential position.
Robert van Adel, AECL’s chief executive, welcomed the report: “We are very encouraged by the the OPA’s recommendations regarding the importance of maximising the capabilities of existing nuclear plants and the role of new nuclear power plants in Ontario’s future energy mix.” He added: “We also agree with the OPA recommendation to move swiftly with decisions on the best way to ensure the nuclear option will be there when Ontario needs it.”
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