Our present board of directors, Shawn Graham, Jack Keir among others, have come up with a creative proposal in the energy hub concept – a second nuclear power plant at Point Lepreau. However, the shareholders of the province, have not being given much information and no alternatives are being discussed.
In previous columns, I have discussed the urgent need for conservation, and for substitution of NB Power’s oil fired generation, with nuclear being one of the possible options. We are within a few years of the peak of world oil production, supplies are tight and prices are rising. In the current year NB Power will spend roughly $300 million dollars on heavy fuel. Within a short time, the cost of heavy fuel will be extremely expensive and we will have to replace that three million kWh’s from another source.
A privately owned consortium, Team Candu, proposes to construct an 1100 MW nuclear plant adjacent to the existing Point Lepreau reactor on the Bay of Fundy. As part of the “energy hub” developments, we would see Team Candu provide energy to the Maritime Provinces and sell into the export market in New England with the plant operated by NB Power. Team Candu is a consortium of Babcox and Wilcox, GE, Hitachi Canada, AECL and SNC Lavalin who would be the engineers, suppliers of the material, and provide the financing for the project.
What will it cost to build?
If the project were a strictly private merchant power plant, the cost wouldn’t affect us. However, because NB Power will be a major buyer of power in a long-term contract, it does matter greatly. The cost of the original Lepreau station was $1.4 billion in 1983. In present day dollars, that would be $2.8 billion. Although no cost has been officially published by the government, some reports indicate the 4-5 billion range. There hasn’t been a Candu built in Canada for many years so we don’t really know what the ultimate cost might be now. As well, the ACR-1100 is new technology, and design changes during construction could happen, raising costs.
Due to a lengthy licensing process, and since the design process is not yet finished, the roughly four-year construction schedule takes us six or perhaps 8 years to completion (2014 or 2016).
Some concerns arise
Where are the ownership ambitions of the Atlantic utilities? Has AECL nationalism trumped economics? Will the federal government kick in a significant subsidy to compensate for the first build of the ACR class? Does the proposed technology offer the lowest cost construction, and overall simplicity of operation and maintenance? Remember the $25 million maintenance mistake of plywood being left in the piping. Whose responsibility is the waste fuel down the road?
The government approach might raise some flags. As the ultimate owner of Lepreau, only one bidder has been chosen to use the site. (Atomic Energy of Canada – AECL) How will we know the fixed cost construction figure and resultant kWh price from Team Candu is the best deal that we could have received and reasonable value? What value does New Brunswick receive for the use of the Lepreau property?
I do worry that a non-competitive bidding process may leave the door open to charges of “special deals” and that is something that nobody wants, given the volume of dollars involved. A long-term contract with Team Candu will commit NB Power for 6 to10 billion dollars.
The cost of the new plant would be between $3600 and $4500 per kW of capacity ($4 or $5 billion /1100,000 kW). A figure of 500 employees is suggested as the staffing level for the new nuclear plant. Given that the existing plant employs roughly 800 people, one might imagine significantly lower levels due to gains from commonality of function.
Are there alternatives?
One viable alternative could be the proposed Lower Churchill Falls hydro plant at Muskrat Falls and Gull Island, which is estimated between 6 and 9 billion for an output of 2800 MW’s. Even allowing for a lower capacity factor and a submarine cable, the cost is lower or equal to the nuclear option. Operating costs for hydro plants are typically very low and remain almost immune to inflation. Power is expected to be available from the first of two plants in 2015. The cost of power from the original Churchill Falls, which was finished in 1971, is now approximately ¼ of a cent per kWh. The typical life of a hydro plant is 75 to 100 years.
Ironically, it’s another high tech solution that may be one of the competitors eventually for our electric dollars. According to an October article in Fortune magazine, solar has a sunny future. The present cost of 25 to 30 cents per kWh will descend to meet with rising grid power price in the 2015 timeframe. What impact might cheaper solar power have on the sales of a completed nuclear plant?
The MZ consulting report on a second nuclear power plant in New Brunswick has not yet been released to the public and the Team Candu report will not be open to public scrutiny. It may turn out that a second Lepreau unit is a wise investment. One can hope that a little more information would eventually be made available to the general public before we are committed to a multibillion-dollar kWh purchase contract.