Ontario Energy Minister Bob Chiarelli confirmed Thursday a report in The Globe and Mail that the province scrapped a plan to spend as much as $10-billion new nuclear reactors as part of its long-term energy strategy. Declining demand for electricity in the province, the potentially huge nuclear build-out costs and decreasing prices for natural gas and other power sources undercut the economic justification for nuclear plants. Ontario will, however, continue an ongoing refurbishment of Darlington Nuclear Generating Station’s four reactors.
The Energy Ministry’s decision “is a psychological blow, although not a huge surprise,” said Mark Winfield, an environmental studies professor at York University in Toronto, who follows the nuclear industry. “The writing has been on the wall for several years,” he said, since the provincial government balked at an earlier plan for new reactors back in 2009.
Indeed, SNC Lavalin made it clear when it bought Atomic Energy of Canada Ltd. (now Candu Energy) from the Canadian government in 2011 for $15-million, that it was picking up the operation mainly for its refurbishment business. That’s one reason the price was so low, Mr. Winfield said.
Maxim Sytchev, an analyst who follows SNC Lavalin at Dundee Capital Markets, said the company’s acquisition of AECL “was always viewed as a way to play the refurbishment cycle, not a new build cycle.” As a result, Ontario’s decision “is not a make or break situation” for Candu Energy or for SNC Lavalin, he said.
Candu Energy said Thursday that it is disappointed with the Ontario decision, but that it still has “promising opportunities” for sales of new reactors offshore, particularly in China and Britain. The company said it doesn’t think the prospects for those sales will be hurt by the Ontario decision, which it hopes will eventually be reconsidered."
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