Doug Ford”s $400 Billion Nuclear Fantasy

Ontario Premier Doug Ford’s proposal to bury the 401 Highway from Brampton or Mississauga in the west to Scarborough or Markham in the east, with an estimate price tag of at least $100 billion, has been described as being a “fantasy that would ‘bankrupt’” the province.

      Although the 401 proposal has drawn the most attention among the Ford government’s increasingly grandiose infrastructure proposals, it actually isn’t the largest. That status goes to the government’s plans to dramatically expand the province’s now aging fleet of nuclear reactors. A 10,000 megawatt (MW) facility proposed just before the election call for Wesleyville, Ontario, between Coburg and Kingston, could break the $200 billion mark in capital costs alone.

    That estimate is based on the actual costs of the most recently completed nuclear construction project in North American, the Vogtle plant in Georgia. That facility, completed last summer, came in at US$36.8 billion (~Cad$50 billion) for 2200MW capacity. A simple extrapolation of those costs to the Wesleyville project would give a figure of over $200 billion.

    But there is even more to the Ford government’s nuclear plans. A proposed new 4800MW facility at the Bruce Nuclear site, would come in around $100 billion on the same basis. New estimates by the US Tennessee Valley Authority on the costs of the type of the four 300MW reactors proposed for the Darlington site suggests costs in the range of $25 billion. To this has to be added the costs of the refurbishments of the existing reactors at Bruce, Darlington and potentially, the Pickering B sites, with potential total costs of between $35 and $50 billion.

    For context, the scale of Ontario’s nuclear proposals, relative to provincial GDP, would be comparable to that of the Muskrat Falls hydro project in Labrador. That project really did push the province of Newfoundland and Labrador to the brink of bankruptcy, save for a massive federal bailout.

     At least the Muskrat Falls project was subject to external economic and environmental reviews. Unfortunately the warnings flowing from those reviews about of the project’s risks were ignored. In contrast, none of Ontario’s proposals have been subject to any form of meaningful external review in terms of their economic, technological or environmental rationality.

     The Ford government’s nuclear heavy strategy appears to be premised on an assumption that a massive nuclear expansion program will turn Ontario into an electricity production and export ‘superpower.’

     The fundamental problem with strategy is that Ontario has no comparative advantage in electricity production. Comparative advantage in energy tends to be a product of accidents of geography. Ontario did have such an advantage through the first half of the 20th century, where hydro-electricity, principally from Niagara Falls, provided the foundation of the industrial base that was built through the ‘golden horseshoe’ around the western end of Lake Ontario, from Niagara to Oshawa. But that advantage was lost from the early 1960s onwards when the province ceased to be a hydro-dominated system, turning first to the construction of coal-fired plants, and then a massive nuclear construction program from the 1960s to the 1990s, ending in the effective bankruptcy of Ontario Hydro.

    Ontario turned out to be no better at building and operating these types of plants than anyone else in North America. The province therefore lost its comparative advantage in electricity production. The recent experience with attempts at constructing new nuclear facilities in the US and Europe, like the Vogtle project, suggest that such advantage cannot be restored through a nuclear expansion program. Renewable energy sources, combined with energy storage offer much more cost-effective, lower-impact, and lower-risk options.

    When it comes to energy, any economic strategy for Ontario has to focus on controlling energy costs and improving energy productivity, not energy production. The province is already taking $7.3 billion/yr from general revenues, funds that otherwise would be spent, for example, on schools and hospitals, to artificially lower hydro costs for industrial and residential consumers.

   The Ford government has given no indication of how its nuclear expansion program will cost or how it wil be financed. Past experience tells us it will be Ontario electricity ratepayers and taxpayers who are likely to be ultimately stuck with the bills.

    Ontario needs to engage in a serious debate about the future of its energy systems. But it needs to look to pathways to decarbonize the province without risking bankrupting it in the process.

    The good news is that there has been more research and modelling done on what those pathways might look like in Ontario than in any other jurisdiction in Canada. Ontario residents need to push all of the major parties for their answers about the province’s energy pathways as they consider their choices for February 27th.