nuclear-news

Will Susan Holt’s new government continue New Brunswick’s nuclear fantasies?

despite the governments’ support, after more than six years of trying, the companies have been unable to entice private investors.

Keeping the Point Lepreau and SMR fantasies alive will require considerable effort from the new government. Susan Holt’s handling of the nuclear file will be an early test—both of her leadership and her commitment to wishful thinking.

BY SUSAN O’DONNELL | October 31, 2024, The Hill Times https://www.hilltimes.com/story/2024/10/31/will-susan-holts-new-government-continue-new-brunswicks-nuclear-fantasies/439671/

Successive New Brunswick governments have been bewitched by two nuclear fantasies: first, that its beleaguered public utility NB Power can connect two experimental reactors to the electricity grid, and second, that the small province can successfully run a nuclear power reactor.

Both fantasies will confront Susan Holt early in her new Liberal government’s tenure. Will she break the spell and end the province’s nuclear delusions? Nuclear energy was not raised during the recent election campaign, but a 2023 CBC interview with Holt offers clues.

The biggest fantasy is connecting two experimental “small modular nuclear reactors” (SMRs) to New Brunswick’s electricity grid. In 2018, Holt was a business adviser to then-premier Brian Gallant when his Liberal government invited two nuclear start-up companies from the U.K. and the U.S. to set up shop in the province and promote their SMR designs, although it’s unknown if she was involved in that decision. 

The Gallant government had chosen two “advanced” reactor designs—molten salt and sodium-cooled— that have never operated successfully in a commercial setting. The government gave each company a $5-million incentive and support to apply for federal funding to develop their designs. A recent expert report from the U.S. Academies of Sciences predicted that such designs would have difficulty reaching commercial viability by 2050.

During the subsequent reign of PC premier Blaine Higgs, the province gave $25-million more to the start-ups and the federal government added grants totalling $57.5-million. Both governments also invested in building an SMR business supply chain in New Brunswick and encouraged some First Nations to support the projects.

The Higgs government further supported its plan to have the experimental designs built and connected to the grid by 2035 by passing legislation forcing NB Power to buy electricity, at any price, from SMRs if they are ever built and actually work.

However, despite the governments’ support, after more than six years of trying, the companies have been unable to entice private investors. Each company claims to need $500-million to develop its reactor design to the point of applying for a licence to build one. Where this money will come from is an open question. 

This summer, the CEO of one SMR company, ARC Clean Technology, left suddenly and some staff at the Saint John office received layoff notices. The second company, Moltex, was notably absent from an Atlantic energy symposium in Fredericton this September. Until Moltex secures matching funds for its three-year-old $50.5-million federal grant, further federal funding is unlikely. 

In her CBC interview last year, Holt said SMRs must be part of the energy transition, but: “I don’t think it needs the province to subsidize the businesses … buying power produced by an SMR is different than putting money into a company building SMR technology.”

The second fantasy—the Point Lepreau nuclear reactor on the Bay of Fundy—has been offline for repairs since April. Cost overruns for its original build and refurbishment represent two-thirds of NB Power’s $5.4-billion debt and crippling (94 per cent) debt-to-equity ratio. The reactor’s poor performance is the main reason the utility loses money almost every year.

Around the globe, it is hard to find an electrical grid as small as NB Power’s with a nuclear reactor. The province’s oversize nuclear ambitions were identified early. In 1972, a federal Department of Finance official warned against subsidizing a power reactor for a utility with “barely enough cash flow to finance its present debt,” calling New Brunswick’s nuclear plans “the equivalent of a Volkswagen family acquiring a Cadillac as a second car.”

New Brunswick lacks even the internal capacity to operate its reactor. When the plant re-opened in 2012 after refurbishment, NB Power first contracted a management team from Ontario Power Generation (OPG) and later hired a manager living in Maine who billed the utility for travel expenses in addition to his salary which reached $1.3-million despite no improvement in the reactor’s performance. In 2023, NB Power ditched the American, and contracted OPG management again.

In her 2023 CBC interview, Holt’s statement that the province’s energy strategy needs to include “wind energy, solar energy, SMR energy, hydro energy, nuclear energy” suggests that her government will continue to support the Point Lepreau plant. However, new developments may give her pause to reconsider.

A recent expert report linked the poor performance of NB Power’s nuclear reactor to the utility’s failure since refurbishment to spend enough on maintenance. If this trend continues, “It is likely that performance could drop even further in the late 2030s into the 2040s.”

The plant’s shutdown for maintenance and upgrades on April 6 this year was originally planned for three months, but the work uncovered serious problems with the main generator. In July, NB Power suggested the plant would re-open in early September and then in August, pushed that date to mid-November.

Energy watchdogs expect the Lepreau plant to remain off-line longer than November due to the serious nature of the generator malfunction. NB Power will be looking to the new government to reassure the public that the utility has its nuclear operations under control. New Brunswickers are facing a 19.4 per cent increase in electricity rates, due in large part to the poor performance of its nuclear reactor, although Holt has already promised to eliminate the 10 per cent PST on NB Power bills to ease the pain.

Holt plans to re-convene the New Brunswick Legislature before the end of November. At that point the Point Lepreau reactor will likely still be mothballed, and the two SMR start-ups will be on life support.

Keeping the Point Lepreau and SMR fantasies alive will require considerable effort from the new government. Holt’s handling of the nuclear file will be an early test—both of her leadership and her commitment to wishful thinking.

Dr. Susan O’Donnell is adjunct research professor and primary investigator of the CEDAR project in the Environment and Society program at St. Thomas University in Fredericton.

November 3, 2024 - Posted by Christina Macpherson | business and costs, Canada, politics