None of the plants were ever built. Peak power demand in 1997 was 22,000 megawatts (MW), not the 57,000 that Hydro had predicted. But the cost of the Darlington nuclear station and the other power plants that were already under construction or approved in the 1970s represented an investment overshoot that would plague Ontario ratepayers and taxpayers for decades.

It was 1989. I was 37, married with two toddlers. My partner and I were running a research and software firm. We had been retained to conduct an independent analysis of Ontario Hydro’s new capital expansion plan, this time calling for 10 new nuclear power reactors, as well as several large fossil-fuelled plants. Ontario Hydro was forecasting peak demand would grow at 2.5% per year and top 35,000 MW by 2014, 50% above its 1989 level. The plan was withdrawn before environmental assessment hearings were even convened and the proposed power plants were never built. Peak demand in 2014 was lower than it was in 1989.

It was 2005. I was 53, vice-president of ICF International, my children were grown, and my wife and I had moved to Cobourg to care for my ailing mother. More than $10 billion in write-offs in the 1990s had effectively bankrupted Ontario Hydro.

The newly formed Ontario Power Authority forecast that peak demand for electricity would start growing nearly twice as fast as it had over the previous 15 years, reaching 30,000 MW by 2025. OPA hired my team at ICF to take an independent look at their projections and we concluded that demand would not grow that fast and could even decline. Nevertheless, the government expedited approval of new gas power plants, and we all know how that went. The gap never materialized. Demand for power reached its all-time high of 27,000 MW in the summer of 2006 and declined to 22,600 MW by 2022.

Now it is 2023. I have two young grandchildren who face a future of climate chaos, my work focuses on the pattern of investments needed for the sustainability transition; and “gap-ology” is once again afoot in Ontario’s electricity planning.

The Ontario Power Authority has been absorbed by the Independent Electricity System Operator (IESO), and it is forecasting an eye-watering 60,000 MW of peak demand by 2050 for Ontario to successfully decarbonize the provincial economy. Like all the ones that came before it, it’s a forecast that will surely be proven both wrong and costly.

It puts the price tag at $400 billion over the next 27 years, not counting the conversion costs for households and firms to electrify, or the costs for local distribution utilities to cope with the transition. Much of the money is earmarked for unproven prototype technologies that have never been built or licensed before, like the four 300-MW enriched uranium light-water reactors slated for Darlington, which will not put power on the grid until who knows when and at who knows what cost.

The government also plans to add four giant 1.2 GW reactors to the Bruce Power nuclear facility, which would make it the largest nuclear plant in the world.  It seems unlikely these will be the Canadian-developed CANDU technology. The newest reactor in this country was built 30 years ago; the supply chains for many of the components are long gone. It’s a perfect storm of risk. 

Yes, it stands to reason that the shift to electric vehicles and heat pumps will add new electricity consumption to the system. But there is a global energy transition underway, and while electrification is a central theme, so too is the development of technologies, materials and techniques that reduce the amount of electricity and the peak consumption required to meet the demand for human amenities that drive all economies.

These new technologies could keep peak demand growth in Ontario well under 1% per year, even as we electrify our vehicles and our natural gas-heated homes and buildings. They are being researched and deployed in countries where natural resources are scarcer and electricity is more expensive than in Canada, but once they’re developed, they move through the global economy in less time than it takes to design, build and license a multibillion-dollar nuclear power plant prototype.

History continues to outrun electricity planning in Ontario, as it has been doing for decades now, and we all pay for the overshoots and malinvestment that result. We cannot afford another round of ill-conceived commitments to multi-billion-dollar megaprojects that will be left half-built and stranded just as technology, market forces, and common sense are converging on a smarter, less expensive, more distributed and renewables-based energy system. One my grandchildren, and yours, can feel good about.

Ralph Torrie is Corporate Knights’ director of research.

A version of this article was first published in the Globe and Mail.

The post Here we go again: Ontario’s reckless nuclear gamble appeared first on Corporate Knights.

The move followed a controversial decision in the European Union to classify natural gas and nuclear investments as green.  

OPG had previously limited its green bond financing to hydroelectric and renewable projects. However, nuclear is a key technology in the corporation’s plan to achieve net-zero carbon emissions by 2040, says chief financial officer Aida Cipolla. OPG closed a $300-million green bond issue in July whose proceeds will help pay for the refurbishment of the Darlington Nuclear Generating Station.  

OPG was the first corporation in Canada to issue green bonds, and the July issue brings its total financing to $2.8 billion.  

The green financing demonstrates to investors and ratepayers OPG’s commitment to the environment, Cipolla says. “OPG strongly believes nuclear will be a critical part of the energy transformation and of handling the increased load” on the power system from decarbonization efforts, she says.  

OPG’s electricity generation was 94% free of carbon emissions in 2021. 

For the $300-million issue, OPG faced demand for the bonds that was six times greater than the supply, as investors are keen to decrease the carbon intensity of their portfolios. 

Cipolla says the “green” label allowed OPG to charge a premium of an estimated three-to-five basis points on the bonds. Many large institutional investors such as pension funds and banks have targets to make their portfolios more sustainable, and green bonds are part of that mix. 

However, the inclusion of nuclear in sustainable financing remains controversial, given ongoing concerns about long-term disposal of radioactive waste.  

The federal government specifically excluded nuclear power projects as well as fossil fuels in its green bond framework released last March. 

OPG strongly believes nuclear will be a critical part of the energy transformation and of handling the increased load.

–Aida Cipolla, chief financial officer for Ontario Power Generation

The European Union produced a draft taxonomy that excluded nuclear but, under pressure from certain national governments, later amended it to include both natural gas and nuclear. The European Parliament approved that version in a July vote, but the Austrian government has said it will challenge it in court. 

Many environmental organizations were dismayed at the EU decision and broader efforts to include nuclear and gas in transition taxonomies.   

“The more they water down the green-ness of these bonds, the more they lose credibility and undermine the very reason for doing it in the first place,” says Matt Price, director of corporate engagement for Investors for Paris Compliance, a non-profit that monitors sustainable finance activity. “Nukes are only in for relative reasons – [they’re cleaner] relative to fossil fuels. But does that make them objectively green? Nope.”  

OPG’s decision to include nuclear in its green bond framework follows a similar move by Bruce Power, which is refurbishing its massive reactor site on the shores of Lake Huron in Ontario. Last November, Bruce Power issued $500 million in green bonds to finance the extension of the life of its units and to increase output. TC Energy holds a 48.8% stake in Bruce; other equity owners are the Ontario Municipal Employees’ Retirement System (OMERS), the Power Workers’ Union and the Society of United Professionals.  

Both Ontario power generators relied on an outside party to certify the use of proceeds for green bonds for nuclear: CICERO Shades of Green AS, a Norwegian firm that is billed as the world’s largest green bond certifier. 

“Our methodology is based in climate science and provides transparency on climate risk to investors,” Christa Clapp, CICERO’s managing partner, said in an email. “Nuclear power generation is a low carbon energy source that can make it easier to achieve the Paris Agreement emissions targets, but that comes with serious risks that need to be managed carefully.” 

OPG’s Cipolla says the power company had been planning to expand its green bond framework to include nuclear but held off on the announcement until the European Parliament approved its taxonomy. 

In Canada, a private-sector-led effort to publish a transition taxonomy for sustainable financing has been bogged down over disagreements as to whether nuclear and emission-reducing fossil fuel projects should be included.  

The federal government needs to engage more directly to ensure the credibility of the green bond market rather than leaving it to companies to set their own frameworks, Price argued. 

Decisions as to whether nuclear or natural gas should qualify under green finance frameworks should not be left to the private sector, Price argues. 

“In the vacuum left by the feds refusing to run a credible taxonomy process, anything goes,” he says. 

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Ironically, OPG is proposing to build two of those projects on the sites of coal-fired power plants recently taken out of service – up to 50 megawatts at the Nanticoke Generating Station in Haldimand County, and up to 30 megawatts at Lambton Generating Station near Sarnia.

Another 40 megawatts is planned for the Lennox Generating Station, a still-operating facility in Greater Napanee that’s designed to burn either natural gas or oil.

“We’re new in the world of solar,” said OPG spokesman Neal Kelly. “But what I would say is that we bring a lot of expertise in project management with a proven track record.” He pointed to recent hydroelectric projects, such as the Lower Mattagami project, which the company delivered on time and on budget.

While also new to competitive bidding, Kelly said OPG plans to “put our best foot forward” and see how the process plays out. “We’ll compete as everybody else does.”

The Nanticoke plant, which discontinued operation in 2013, was capable of generating nearly 4,000 megawatts of power and was considered the largest coal-fired power facility in North America. Lambton, about half the size of Nanticoke, was taken out of service the same year.

OPG, a publicly owned crown corporation, has historically been held back from bidding on renewable energy projects, given that its sheer size and influence were seen as unfair advantages in a competitive, open market procurement process. The company supplies roughly half of the province’s power, mostly through nuclear and large hydroelectric facilities.

In June 2013, however, the Ontario government restructured its feed-in-tariff program such that only smaller renewable-energy projects could participate. Larger project proposals, those generally more than 500 kilowatts in size, would need to compete through a request-for-proposal (RFP) process.

And in a controversial twist, Energy Minister Bob Chiarelli directed the Ontario Power Authority to allow OPG to participate in all renewable energy procurement rounds. The latest round will include solar for the first time, and – whether OPG is successful or not – will finally give ratepayers a chance to see just how far solar prices have dropped in the Ontario context and without a local content rule keeping costs artificially high.

John Gorman, president of the Canadian Solar Industries Association, said he couldn’t comment on OPG’s involvement because the competitive procurement process is already underway.

But David Butters, president of the Association of Power Producers of Ontario, did say the procurement process laid out by the government has specific rules that ensure OPG doesn’t have an unfair competitive advantage over smaller, independent power producers. The association, he added, is “focused on a successful procurement, not who wins or loses.” If OPG does manage to win, it will show that they are competitive and have good locations to develop, he said.

For its three proposed solar projects, OPG plans to use land it currently owns and lease adjacent property where necessary. At both Nanticoke and Lambton, projects would partially cover areas once used to store massive piles of coal.

The province’s Independent Electricity System Operator is expected to award large renewable contracts by the end of 2015. If OPG is successful, it plans to begin construction in 2016 with an aim to have all three projects operational in the 2018-2019 timeframe.

“We’re excited to be part of this process,” said Kelly. “We’ll learn many things as we go.”

He emphasized that it’s “early days” and community consultations have just started. He also didn’t rule out future projects down the road, pointing out that OPG owns several parcels of land throughout the province – from Kenora to Cornwall and from Bruce County to the Niagara Region.

“We have footprints in many, many communities,” he said.

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